nep-bec New Economics Papers
on Business Economics
Issue of 2016‒05‒08
seventeen papers chosen by
Vasileios Bougioukos
Bangor University

  1. Making (Small) Firms Happy. The Heterogeneous Effect of Trade Facilitation Measures By Lionel Fontagné; Gianluca Orefice; Roberta Piermartini
  2. “Innovation, heterogeneous firms, and the region” By Enrique López-Bazo; Elisabet Motellón
  3. Estimating Production Functions of Multiproduct Firms By Valmari, Nelli
  4. Do Recessions Accelerate Routine-Biased Technological Change? Evidence from Vacancy Postings By Brad J. Hershbein; Lisa B. Kahn
  5. Subsidizing new technology adoption in a Stackelberg duopoly: Cases of substitutes and complements By Hattori, Masahiko; Tanaka, Yasuhito
  6. Entrepreneurial Choices of Initial Human Capital Endowments and New Venture Success By Vera Rocha; Mirjam van Praag; Timothy B. Folta; Anabela Carneiro
  7. Gender Quota inside the Boardroom: Female Directors as New Key Players? By Rebérioux, Antoine; Roudaut, Gwenael
  8. Collusion under Imperfect Monitoring with Asymmetric Firms By Luke, Garrod; Matthew, Olczak
  9. Waiting for the paycheck : individual and aggregate effects of wage payment By BERNIELL, Inés
  10. Innovation Strategies in Indian Textile Sector – Evidence from Surat Textile Cluster By Pohit, Sanjib; Jamal, Tabassum; Suman, Yogesh; Kumar Yadav, Nitesh; Kumar Saini, Mahesh
  11. Bank Capital Pressures, Loan Substitutability, and Nonfinancial Employment By Lee, Seung Jung; Stebunovs, Viktors
  12. Kansas Farm Profitability Persistence: Do Top Farms Remain Top Farms? By Griffin, Terry; Ibendahl, Gregg; Stabel, Jayce
  13. Banking Consolidation and Small Firm Financing for Research and Development By Chang, Andrew C.
  14. Strategic delegation effects on Cournot and Stackelberg competition By Michelacakis, Nickolas
  15. The Evolving Role of Large and Middle Size Farms in Brazilian Agriculture By Ferreira Filho, Joaquim Bento; Freitas Vian, Carlos
  16. Shipping in dire straits: New evidence on trends and cycles in coal freights from Britain, 1919-1939. By Klovland, Jan Tore
  17. Measuring Financial Cycles in a Model-Based Analysis: Empirical Evidence for the United States and the Euro Area By Gabriele Galati; Irma Hindrayanto; Siem Jan Koopman; Marente Vlekke

  1. By: Lionel Fontagné; Gianluca Orefice; Roberta Piermartini
    Abstract: This paper considers the asymmetric effect of Trade Facilitation Agreement (TFA) policies on heterogeneous exporters, based on matching a detailed panel of French firm exports to a new database of Trade Facilitation Indicators (TFIs) released recently by the Organisation for Economic Cooperation and Development (OECD). We analyze the effect of these TFIs on three trade-related outcomes: (i) exported value (firm intensive margin), (ii) number of products exported (product extensive margin) and (iii) average export value per product exported (product intensive margin). We find strong evidence of a heterogeneous effect of trade facilitation across firm size. While better information availability, advance ruling and appeal procedures mainly benefit small firms, the simplification of documents and automation tend to favor large firms' trade. This is coherent with the idea that while some elements of the TFA simply reduce the fixed cost of exporting (favoring small firms in particular), other chapters in the TFA reduce the scope for corruption at borders, making large firms less reluctant to serve corrupt countries.
    Keywords: Trade Facilitation;Heterogeneous Firms;Extensive Margin;Intensive Margin
    JEL: F13 F14
    Date: 2016–04
  2. By: Enrique López-Bazo (AQR Research Group-IREA, University of Barcelona); Elisabet Motellón (AQR Research Group-IREA, University of Barcelona. 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
  3. By: Valmari, Nelli
    Abstract: Despite the fact that multiproduct firms constitute a considerable share of firms and account for an even greater share of production, virtually all production function estimates are based on the assumption that firms are single-product producers. The single-product assumption is made due to lack of data on input allocation across the various product lines multiproduct firms operate. I provide a method to estimate product-level production functions without observable input allocations. The empirical application and Monte Carlo simulations show that the single-product firm assumption leads to biased parameter and productivity estimates and overestimated productivity differences between firms.
    Keywords: Multiproduct firm, production function, productivity
    JEL: D24 L11 L25
    Date: 2016–03–08
  4. By: Brad J. Hershbein (W.E. Upjohn Institute for Employment Research); Lisa B. Kahn (Yale University)
    Abstract: Routine-biased technological change (RBTC), whereby routine-task jobs are replaced by machines and overseas labor, shifts demand towards high- and low-skill jobs, resulting in job polarization of the U.S. labor market. We test whether recessions accelerate this process. In doing so we establish a new fact about the demand for skill over the business cycle. Using a new database containing the near-universe of electronic job vacancies that span the Great Recession, we find evidence of upskilling—firms demanding more-skilled workers when local employment growth is slower. We find that upskilling is sizable in magnitude and largely due to changes in skill requirements within firm-occupation cells. We argue that upskilling is driven primarily by firm restructuring of production towards more-skilled workers. We show that 1) skill demand remains elevated after local economies recover from the Great Recession, driven primarily by the same firms that upskilled early in the recovery; 2) among publicly traded firms in our data, those that upskill more also increase capital stock by more over the same time period; and 3) upskilling is concentrated within routine-task occupations -- those most vulnerable to RBTC. Our result is unlikely to be driven by firms opportunistically seeking to hire more-skilled workers in a slack labor market, and we rule out other cyclical explanations. We thus present the first direct evidence that the Great Recession precipitated new technological adoption.
    Keywords: Job polarization, job postings, RBTC, recessions, routine-biased technological change, upskilling, vacancies
    JEL: D22 E32 J23 J24 M51 O33
    Date: 2016–03
  5. By: Hattori, Masahiko; Tanaka, Yasuhito
    Abstract: Economic growth requires that firms adopt new technologies. However, it may be insufficient in less competitive industries from the social welfare point of view. In this case, a government subsidy is necessary. We present an analysis of firms' adoption of new technology and government subsidization policy in a Stackelberg duopoly with differentiated goods. The technology itself is free, but each firm must expend a fixed set-up cost, such as training employees. There are several cases related to optimal policies depending on the set-up costs and whether the goods are substitutes or complements. In particular, there are two cases. (1) Social welfare is maximized when only the Stackelberg leader adopts the new technology, but no firm adopts the new technology without a subsidy. Then, the government should subsidize only the leader, which is a discriminatory policy. (Case 5 of Theorem 1 and Case 3-(1)-ii of Theorem 2) (2) Social welfare is maximized when both firms adopt the new technology, but only the leader adopts the new technology without a subsidy. Then, the government should subsidize only the follower. This policy is not discriminatory because adoption is the dominant strategy for the leader. (Case 2 of Theorem 1)
    Keywords: Stackelberg duopoly \and adoption of new technology \and subsidization \and sub-game perfect equilibrium
    JEL: D43
    Date: 2016–05–02
  6. By: Vera Rocha (Copenhagen Business School, Denmark); Mirjam van Praag (Copenhagen Business School, Denmark); Timothy B. Folta (University of Connecticut, United States); Anabela Carneiro (University of Porto, Portugal)
    Abstract: The founder (team)’s human capital is a vital determinant of future firm performance. This is a stylized fact. Less is known about the effect of the human capital of the initial workforce hired by the founder(s). We study the performance consequences of a founder’s choice of the initial workforce’s human capital (quantity and quality), besides the human capital of the founder(s). The analysis is based on matched employer-employee data and covers about 5,300 startups in manufacturing industries founded by individuals coming from employment between 1992 and 2007. We acknowledge that initial hiring decisions are endogenous and correlated with the human capital of the founders and the ownership structure of startups (single founder versus team of founders). Given the stickiness of initial choices, human capital decisions at entry turn out to be a close to irreversible matter with significant implications for post-entry survival and growth of the firm.
    Keywords: Human capital; entrepreneurship; startups; firm performance
    JEL: J24 L26 M13
    Date: 2016–04–22
  7. By: Rebérioux, Antoine; Roudaut, Gwenael
    Abstract: This paper examines whether women's situation within French boards has improved following the adoption of a board-level gender quota in 2011. To do so, we focus on the individual role of female directors as proxied by their fees. Our sample includes the listed companies belonging to the SBF120 index over the 2006-2014 period. We first show that the quota has succeeded in opening the doors of boardrooms to new, unseasoned female directors (not present on the director labor market before the regulation). These unseasoned female directors have distinctive characteristics (in terms of independence, experience, age, nationality, etc.) as compared to other board members. More importantly, we show that women, whether unseasoned or seasoned, experience an inner glass ceiling, with "positional" gender segregation within French boards. In particular, companies have failed so far to open the access of the most important board committees (namely monitoring committees: audit, compensation and nomination) to women. It results in within-firm gender fees gap of 5%. Overall, the quota has rather amplified this segregation process, with an increase in the average within-firm gender fees gap.
    Keywords: board; gender quota; segregation; director fees
    Date: 2016–04
  8. By: Luke, Garrod; Matthew, Olczak
    Abstract: We explore the effects of asymmetries in capacity constraints on collusion where market demand is uncertain and where firms must monitor the agreement through their privately observed sales and prices. In this private monitoring setting, we show that all firms can infer when at least one firm’s sales are below some firm-specific “trigger level”. This public information ensures that firms can detect deviations perfectly if fluctuations in market demand are sufficiently small. Otherwise, there can be collusion under imperfect public monitoring where punishment phases occur on the equilibrium path. We find that symmetry faciliates collusion. Yet, we also show that if the fluctuations in market demand are sufficiently large, then the collusive prices of symmetric capacity distributions are actually lower than the competitive prices of asymmetric capacity distributions. We draw conclusions for merger policy.
    Keywords: capacity constraints, mergers, collusion, imperfect monitoring
    JEL: D43 D82 K21 L12 L41
    Date: 2016–03–17
  9. By: BERNIELL, Inés
    Abstract: This paper shows that the frequency at which workers are paid affects the within-month patterns of both household expenditure and aggregate economic activity. To identify causal effects, I exploit two novel sources of exogenous variation in pay frequency in the US. First, using a (as-good-as-random) variation in the pay frequency of retired couples, I show that those who are paid more frequently have smoother expenditure paths. Second, I take advantage of the cross-state variation in laws, and compare the patterns of economic activity in states with different legislation on pay frequency of wages. I document that low pay frequencies lead to within-month business cycles when many workers are paid on the same dates, which generates costly congestion in sectors with capacity constraints. These findings have important policy implications in a context where firms and workers do not internalize such congestion externalities, which generates market equilibria with suboptimally low pay frequencies.
    Keywords: Pay frequency, Within-month business cycles, Congestion
    JEL: J33 E21 E32
    Date: 2016
  10. By: Pohit, Sanjib; Jamal, Tabassum; Suman, Yogesh; Kumar Yadav, Nitesh; Kumar Saini, Mahesh
    Abstract: Though India has comparative advantage in labour intensive sector like textile, India’s performance in this sector is not too impressive on the export front. In this context, this paper argues that lack of innovation culture could be one of the principal reasons for India’s poor performance. This hypothesis is tested by conducing primary survey in one of the more dynamic textile cluster in Northern India namely, Surat and adjoining areas. Our findings do indicate lack of product as well as organisational innovation culture in this region, which may be a serious bottleneck in competitive export market. We do find that firms score well in respect of marketing innovation which probably suggests that competitive pressure has increased due to the globalization of the economy. Firms are also found to be keen in respect of process innovation to reduce cost in the aftermath of increased pace of competition in the sector.
    Keywords: Textile industry, Surat, Innovation, Survey
    JEL: L67
    Date: 2016–03–30
  11. By: Lee, Seung Jung; Stebunovs, Viktors
    Abstract: We exploit the cross-state, cross-time variation in bank tangible capital ratios-brought about by bank branch deregulation on a state-by-state basis-to identify the effects of bank capital pressures on employment and firm dynamics during two waves of changes in bank capital regulation. We show that stronger capital pressures temporarily slowed down growth in employment in industries that depend on external finance, retarding growth in the average size of firms rather than in the number of firms. Such effects were particularly strong for smaller firms that may not have had access to national capital and bank loan markets. Our findings indicate that a tightening of capital requirements may have significant real effects, in part because of the lack of substitutes for bank loans.
    Keywords: Bank capital ratios ; bank capital regulation ; loan substitutability ; employment ; firm dynamics
    JEL: G21 G28 G30 J20 L25
    Date: 2016–04
  12. By: Griffin, Terry; Ibendahl, Gregg; Stabel, Jayce
    Keywords: profitability, transition probabilities, Markov, Agricultural Finance,
    Date: 2016
  13. By: Chang, Andrew C.
    Abstract: This paper examines the effect of increased market concentration of the banking industry caused by the Riegle-Neal Interstate Banking and Branching Efficiency Act (IBBEA) on the availability of finance for small firms engaged in research and development (R&D). I measure the financing decisions of these small firms using a balanced panel of Small Business Innovation Research (SBIR) applications. Using difference-in-differences, I find IBBEA decreased the supply of finance for small R&D firms. This effect is larger for late adopters of IBBEA, which tended to be states with stronger small banking sectors pre-IBBEA.
    Keywords: Banking Deregulation ; IBBEA ; Interstate Bank Branching Deregulation ; Market Concentration ; Research and Development ; Riegle-Neal ; Small Business Innovation Research
    JEL: G21 G28 G39 O30
    Date: 2016–04–08
  14. By: Michelacakis, Nickolas
    Abstract: This paper compares the outcomes of two three-stage games of two firms competing for quantity with managerial delegation. In fact, we prove that simultaneous choice of managers by the proprietors of the firms followed by Stackelberg-type competition is equivalent to sequential choice of managers followed by Cournot-type competition. We prove equivalence in a general setting, namely, when the duopolistic model is characterised by a non-linear inverse demand function.
    Keywords: Strategic delegation; Cournot competition; Stackelberg competition
    JEL: D43 L13 L21
    Date: 2016–05–01
  15. By: Ferreira Filho, Joaquim Bento; Freitas Vian, Carlos
    Keywords: Farm Management,
    Date: 2015
  16. By: Klovland, Jan Tore (Dept. of Economics, Norwegian School of Economics and Business Administration)
    Abstract: New monthly freight rate indices for 13 coal trade routes from Britain 1919-1939 are presented. The new indices form the basis of a review of the interwar freight markets and their relationship to the timing and severity of general business cycles. New time series of laid-up tonnage provide the background for this discussion. The Great Depression starting in the autumn of 1929 created a shipping cycle of unusual length and severity. Real freight rate indices used as a cross-check on productivity gains in shipping raise some doubt on previous estimates of productivity growth in British shipping in the interwar years.
    Keywords: Freight markets; business cycles.
    JEL: D24 N14 N74
    Date: 2016–03–30
  17. By: Gabriele Galati (De Nederlandsche Bank DNB, the Netherlands); Irma Hindrayanto (De Nederlandsche Bank DNB, the Netherlands); Siem Jan Koopman (VU University Amsterdam, the Netherlands); Marente Vlekke (Centraal Planbureau CPB, The Hague, the Netherlands)
    Abstract: We adopt an unobserved components time series model to extract financial cycles for the United States and the five largest euro area countries over the period 1970 to 2014. We find that credit, the credit-to-GDP ratio and house prices have medium-term cycles which share a few common statistical properties. We show that financial cycles are longer and more ample than business cycles, and that their length and amplitude vary over time and across countries.
    Keywords: unobserved components time series model; Kalman filter; maximum likelihood estimation; band-pass filter; medium-term cycles
    JEL: C22 C32 E30 E50 E51 G01
    Date: 2016–04–22

This nep-bec issue is ©2016 by Vasileios Bougioukos. It is provided as is without any express or implied warranty. It may be freely redistributed in whole or in part for any purpose. If distributed in part, please include this notice.
General information on the NEP project can be found at For comments please write to the director of NEP, Marco Novarese at <>. Put “NEP” in the subject, otherwise your mail may be rejected.
NEP’s infrastructure is sponsored by the School of Economics and Finance of Massey University in New Zealand.