nep-bec New Economics Papers
on Business Economics
Issue of 2016‒04‒30
seventeen papers chosen by
Vasileios Bougioukos
Bangor University

  1. Firm Organizational and Payoff Imbalances: An Aggrievement Model with Cooperatives and Private Firms By Schamel, Guenter H.; Santos-Arteaga, Francisco J.
  2. ICT use, competitive pressures and firm performance in Mexico By Iacovone,Leonardo; Pereira Lopez,Mariana De La Paz; Schiffbauer,Marc Tobias
  3. Incomplete contracts and the internal organization of firms By Philippe Aghion; Nick Bloom; John Van Reenen
  4. “Innovation, heterogeneous firms, and the region” By Enrique López-Bazo; Elisabet Motellón
  5. Search and matching frictions and business cycle fluctuations in Bulgaria: Technical Appendix By Vasilev, Aleksandar
  6. Import Penetration, Intermediate Inputs and Firms’ Productivity in the EU Food Industry By Olper, Alessandro; Curzi, Daniele; Raimondi, Valentina
  7. Reconciling the Firm Size and Innovation Puzzle By Anne Marie Knott; Carl Vieregger
  8. Firm Size, Employment and Value-added in African Manufacturing Firms: Why Ghana needs its 1 per cent By Francis Teal
  9. Regulation and Firm Value: Curious Case of Transparency and Disclosure Laws in Russia By Banerjee, Suman; Masulis, Ronald; Pal, Sarmistha
  10. On regional innovator networks as hubs for innovative ventures By Uwe Cantner; Tina Wolf
  11. Influence of voluntary GMO-free production standards on the reputation and flexibility of agricultural value chains By Venus, Thomas; Punt, Maarten; Wesseler, Justus
  12. Competition in Treasury Auctions By Helmut Elsinger; Philipp Schmidt-Dengler; Christine Zulehner
  14. Foreign Firm Ownership and Productivity Spillovers in the Southern African Development Community (SADC) Region By Paul J Dunne and Nicholas Masiyandima
  15. Identifying gazelles : expert panels vs. surveys as a means to identify firms with rapid growth potential By Fafchamps,Marcel; Woodruff,Christopher M.
  16. Strategic orientation of hotels: evidence from a contingent approach By Vincenza Odorici; Manuela Presutti; Marco Savioli
  17. Farmers’ willingness-to-pay for farmland based on machinery efficiency and precision technology adoption By Griffin, Terry; Shockley, Jordan

  1. By: Schamel, Guenter H.; Santos-Arteaga, Francisco J.
    Abstract: Firm Organizational and Payoff Imbalances: An Aggrievement Model with Cooperatives and Private Firms
    Keywords: Firm Organization, Behavior, Cooperatives, Wine., Agribusiness, Agricultural Finance, D1, L66, Q13.,
    Date: 2015
  2. By: Iacovone,Leonardo; Pereira Lopez,Mariana De La Paz; Schiffbauer,Marc Tobias
    Abstract: This paper presents a set of stylized facts on the relation between information and communications technology (ICT) use, firm performance, and competition. Taking advantage of a novel firm-level data set on information and communications technology for Mexico, the study finds that firms facing higher competition appear to have more incentives to increase their use of information and communications technology. Accordingly, although there is indeed a positive relation between information and communications technology use and firm performance, this effect is greater for firms that face higher competition pressures, which is consistent with the theoretical predictions of the trade-induced technical change hypothesis.
    Keywords: E-Business,ICT Policy and Strategies,Education for the Knowledge Economy,Knowledge for Development,Information and Communication Technologies
    Date: 2016–04–11
  3. By: Philippe Aghion; Nick Bloom; John Van Reenen
    Abstract: We survey the theoretical and empirical literature on decentralization within firms. We first discuss how the concept of incomplete contracts shapes our views about the organization of decision-making. We then overview the empirical evidence on the determinants of decentralization and on the effects of decentralization on firm performance. A number of factors highlighted in the theory are shown to be important in accounting for delegation, such as heterogeneity and congruence of preferences as proxied by trust. Empirically, competition, human capital, and IT also appear to foster decentralization. There are substantial gaps between theoretical and empirical work and we suggest avenues for future research in bridging this gap (JEL O31, O32, O33, F23).
    JEL: L22 L23
    Date: 2014–05
  4. By: Enrique López-Bazo (AQR Research Group-IREA. University of Barcelona); Elisabet Motellón (AQR Research Group-IREA. Universitat Oberta de Catalunya)
    Abstract: This paper investigates the role of regional determinants on innovation performance controlling by the firm’s absorptive capacity and other sources of firm heterogeneity. The findings for a sample of firms in Spain support the hypothesis that regional determinants matter, though their role is subtler than the one frequently assumed. Rather than a direct influence on firm’s innovation, the regional context moderates the effect of internal determinants. In the case of product innovation the most important mechanism of interaction seems to be operating through cooperation in innovation, whereas for process innovation it seems to be through highly skilled labour.
    Keywords: product innovation; process innovation; firm; multilevel modelling; Spanish regions. JEL classification: D21; O31; R10; R15
    Date: 2016–04
  5. By: Vasilev, Aleksandar
    Keywords: general equilibrium,unemployment and wages
    JEL: D51 E24
    Date: 2016–02–22
  6. By: Olper, Alessandro; Curzi, Daniele; Raimondi, Valentina
    Abstract: The aim of this contribution is to study empirically the effect of trade liberalization on productivity growth exploiting a large micro-dataset of more than 20,000 French and Italian food firms, over the 2004-2012 period. This relationship has been studied focusing on import penetration at both industry and upstream sectors level, to investigate the role played by imports in intermediate inputs. Main findings show that import penetration in both final products and intermediate inputs systematically contributed to firm-level productivity growth. Yet, the productivity growth effect induced by import penetration in upstream sectors is 10 times higher than the one at the industry level. Horizontal import competition coming from the EU15 and OECD countries exerts the strongest effect on productivity growth. By contrast, when vertical import penetration is considered, also sourcing intermediate inputs from emerging markets appears important for firms’ productivity growth. Finally, we also find a strong confirmation that the effects of import penetration are increasing with the initial level of firms’ productivity. All these stylized facts may have interesting policy implications.
    Keywords: import penetration, intermediate inputs, firm-level TFP, food industry, Agricultural and Food Policy, F14, F15, F61, L66, Q17,
    Date: 2015–06
  7. By: Anne Marie Knott; Carl Vieregger
    Abstract: Since Schumpeter, there has been a long-standing debate regarding the optimal firm size for innovation. Empirical results have settled into a puzzle: R&D spending increasing with scale while R&D productivity decreases with scale. Thus large firms appear irrational. We propose the puzzle stems from the fact that product and patent counts undercount large firm innovation. To test that proposition we use recently available NSF BRDIS survey data of firms R&D practices as well as a broader measure of R&D productivity. Using the broader measure, we find that both R&D spending and R&D productivity increase with scale—thus resolving the puzzle. We further find that while large firms and small firms differ in the types of R&D they conduct, there is no type whose returns decrease in scale—there are merely types for which the small firm penalty is less severe.
    Date: 2016–03
  8. By: Francis Teal
    Abstract: In this paper three censuses of manufacturing firms in Ghana for 1962, 1987 and 2003 are used to investigate changes in the firm size distribution and changes in the employment and value-added share across that distribution. It is shown that the censuses for 1987 and 2003 excluded self-employed enterprises with employees which were a rapidly growing part of the industrial structure over the period 1987 to 2003. Using a wider definition of firm, which includes those enterprises, there has been a substantial shift in employment to small firms where productivity is low. Using the wider definition of a firm in 2003 the top 1 per cent of firms produced 63 per cent of value-added. If the narrow definition of firm used in the manufacturing census is applied than the top 1 per cent of firms in 2003 were producing 72 per cent of value-added. These findings are related to the view there is a ‘missing-middle’ in the firm size distribution in Africa.
    Keywords: African manufacturing firms; missing-middle; census data
    JEL: O14 O17 O55 J21
    Date: 2016
  9. By: Banerjee, Suman (University of Wyoming); Masulis, Ronald (University of New South Wales); Pal, Sarmistha (University of Surrey)
    Abstract: We provide novel evidence on the effectiveness of mandated changes in Russian transparency and disclosure (henceforth T&D) rules in boosting shareholder welfare. We focus on the staggered implementation of these T&D reforms initiated in 2002 and implemented during 2003-07. Using difference in difference method, we find that the reforms improved earnings quality, which on average reduced the operating performance (i.e., EBIT/Assets) of treated domestically-listed (relative to our control group of cross-listed) Russian firms, but had no significant impact on their market valuation. We argue that low tax alignment, where financial statements are not used for tax purposes, made it possible for managers of domestically-listed firms to inflate pre-reforms earnings, which became difficult post-reforms, leading to a drop in operating earnings. Yet, firm values, on average, remained unchanged because the drop in earnings was roughly offset by a decrease in the required market return due to more reliable accounting information post reform. Also, T&D reforms had negligible effects on cross-listed firms that act as our control group. Further, for domestically listed firms without a domestic controlling shareholder, post-reform reported earnings did not drop, while firm value increased significantly. For the domestically listed firms with a controlling shareholder, just the opposite occurred. Thus, a key finding of our study is that a strong governance structure is a prerequisite for significant gains in shareholder wealth following improved reliability of firm accounting information.
    Keywords: transparency and disclosure rules, quasi-experimental analysis, domestic vs. cross-listed firms, firm performance, Tobin's Q, EBIT-to-Asset ratio, difference-in-difference method, Russia
    JEL: G3 K2 P2
    Date: 2016–04
  10. By: Uwe Cantner (School of Economics and Business Administration, Friedrich-Schiller-University Jena); Tina Wolf (University of Southern Denmark, Odense)
    Abstract: At least since Schumpeter published his work 'The Theory of Economic Development' (1912), a wide body of literature has focused on the evolutionary process behind firm growth and survival. Recently a growing interest is devoted to the variable 'location' as a critical factor, shaping firm performance. However, less attention has been paid to the region-specific characteristics that may play a relevant role in determining the growth and survival of a firm. Some works see university-based knowledge spillovers as one such factor (Audretsch and Lehmann 2005, Cassia et al. 2009). This paper extends this approach to the regional innovator network, promoting region-specific knowledge spillovers. Two data bases are applied. First, patent data delivers the innovator network for Thuringia. The second data base contains firm specific information on innovative ventures founded in Thuringia in the period between 1990 and 2006. The results show that the firm's individual probability to be innovative and connected to the innovator network positively influences the chances of this firm to survive.
    Keywords: Innovation, Entrepreneurship, Networks, Inventor, Patents, Survival
    JEL: L26 D85 P25 O31
    Date: 2016–04–15
  11. By: Venus, Thomas; Punt, Maarten; Wesseler, Justus
    Abstract: We analyze dairies’ decisions to invest in voluntary GMO-free certification. Using a real-option model, we find the maximum precautionary investment in a single-firm setting. The model is extended to a non-cooperative game framework where dairies’ decisions are linked by their reputation gains and losses from investing and waiting, respectively. We show two main results: (1) smaller firms are more likely to invest; (2) both small and large firms may be worse off when it is optimal for both firm types to invest.
    Keywords: Reputation, Private quality standard value chain, Real option, Game theory, Agribusiness, Crop Production/Industries, Livestock Production/Industries, C72, D21, Q10,
    Date: 2015
  12. By: Helmut Elsinger; Philipp Schmidt-Dengler; Christine Zulehner (WIFO)
    Abstract: Austria's EU accession led to an increase in the number of banks participating in treasury auctions. We use structural estimates of bidders' private values to examine the effect of increased competition on auction performance. As the results show, increased competition reduces bidder surplus substantially, but less than reduced form estimates would suggest. A significant component of the surplus reduction is due to more aggressive bidding. Counterfactuals establish that as competition increases, concerns regarding auction format play a smaller role.
    Keywords: treasury auctions, multi-unit auctions, independent private values, competition, bidder surplus, auction format
    Date: 2016–03–08
  13. By: Péter Bauer (Magyar Nemzeti Bank (Central Bank of Hungary)); Marianna Endrész (Magyar Nemzeti Bank (Central Bank of Hungary))
    Abstract: The ultimate aim of this paper is to generate micro-level risk measures, which can provide a useful input for further research. To this end, this paper estimates bankruptcy probabilities for Hungarian firms using probit estimation. The estimated models show reasonable performance in distinguishing surviving and failing firms. We combine macro and micro information, as the addition of macro variables is needed to capture the aggregate dynamics and level of risk, especially during the crisis period. Controlling for the non-linear impact of firm characteristics and allowing heterogeneity by firm size improves the model’s performance significantly. The distributional characteristics of the micro-level risk indicators provide some interesting insights regarding the development of risk dispersion and the risktaking of the banking sector.
    Keywords: bankruptcy risk modelling, probit, micro data
    JEL: C23 G33
    Date: 2016
  14. By: Paul J Dunne and Nicholas Masiyandima
    Abstract: The study uses firm level data from the World Bank Enterprise Surveys and employs alternative techniques to identify and estimate the within and intra-industry productivity impact of firm foreign ownership in SADC. Using firm labour productivity and employing sector fixed effects to identify the impact of foreign firm ownership on productivity, we find results that strongly suggest the existence of positive within firm and intra-industry FDI productivity spillovers for both small and large firms in the region. The productivity gains are, however, larger for small firms than for large firms suggesting greater productivity spillover advantages for the relatively technologically backward small firms. Similarly, there is heterogeneity with regard to productivity spillovers across individual countries, with the relatively technologically advanced countries such as South Africa and Mauritius experiencing larger intra-industry spillovers while less technologically endowed countries enjoy larger within firm gains.
    Keywords: Growth; development; firm; technology; spillovers; productivity; FDI; SADC
    JEL: O33
    Date: 2016
  15. By: Fafchamps,Marcel; Woodruff,Christopher M.
    Abstract: A business plan competition is conducted to test whether survey instruments or panel judges are able to identify the fastest growing firms. Participants submitted six- to eight-page business plans and defended them before a three- or four-judge panel. Applicants are surveyed shortly after they applied and one and two years after the competition. Follow-up surveys are used to construct measures of enterprise growth and baseline surveys and panel scores to construct measures of enterprise growth potential. A survey measure of ability correlates strongly with future growth, but the panel scores add to predictive power even after controlling for ability and other survey variables. The survey questions have more power to explain the variance in growth. Participants presenting before the panel were given a chance to win customized management training. Fourteen months after the training, there is no positive effect of the training on growth of the business.
    Keywords: Business in Development,E-Business,Financial Literacy,Business Environment,Competitiveness and Competition Policy
    Date: 2016–04–20
  16. By: Vincenza Odorici (Department of Management, University of Bologna, Italy); Manuela Presutti (Department of Management, University of Bologna, Italy); Marco Savioli (Department of Economics, University of Bologna, Italy; The Rimini Centre for Economic Analysis, Italy)
    Abstract: Hotels have to act in a competitive business environment that calls for a continuous emphasis on both customers' needs and innovativeness strategies. Analysing a sample of 120 small hotels operating in April 2014 in Rimini, Italy, probit regression models allow us to ascertain that two dimensions of strategic orientation, entrepreneurial orientation and market orientation, significantly and positively impact the likelihood of achieving superior performance. In contrast, learning orientation, measured by external networks, is not an important driver of lodging firm performance. In opposition to mainstream theory suggesting the importance of growth in size, hotel size has a significant negative influence on hotel performance achievement. Finally, the results show that the relationship between strategic orientation and performance is contingent on internal firm-related moderators (size and quality). Both the number of rooms and star classification reinforce the performance achievement of hotels able to introduce innovations and follow a customer-oriented approach.
    Date: 2016–04
  17. By: Griffin, Terry; Shockley, Jordan
    Abstract: With farmland prices near record highs and machinery management becoming critical to whole farm profitability, understanding the interactions between the two becomes important. Machinery costs are one of the largest factors influencing the variation in net farm income among farmers. For a given machinery complement, the field efficiency is a leading factor in the value of the machinery to the farm. Field efficiency will vary based on field geometry such as shape and size. Farmers with a large proportion of small irregularly shaped fields would have lower realized field efficiencies compared to farmers with more acres in rectangular shaped fields. The ability to capture maximum machinery efficiency, hence lower machinery costs, should impact the willingness to pay for farmland. We evaluate the relationship between field shape and size and the associated willingness-to-pay for that land given a representative equipment set. Building upon the baseline scenarios for a range of field characteristics, we evaluate the relative benefit of adding precision technologies such as automated guidance and automatic section control that potentially increase field efficiency. Along with input savings, we evaluate how much farmers would be willing-to-pay for farmland given an increase in machinery efficiency in the field due to these technologies.
    Keywords: precision agriculture, automated guidance, automatic section control, machinery, field efficiency, farmland values, Land Economics/Use, Q10, Q15,
    Date: 2016

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