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on Business Economics |
| By: | Materia, Valentina; Pascucci, Stefano; Dries, Liesbeth |
| Abstract: | The paper investigates the determinants of innovation strategies in the agri-food sector and the potential complementarity of these strategies. Innovation strategies are distinguished as in-house and outsourcing. The choice between strategies is motivated by transaction cost minimization, property rights appropriation and optimization of firms’ resources and competences. A bivariate probit model is implemented using cross-section data on 1,393 agri-food firms in seven EU countries. Results show that: decisions to innovate in-house or to outsource are not interlinked; high quality human resources and the use of ICT influence both the decision to innovate in-house and outsourcing, while organizational aspects, especially those related to decision-making within the firm, are relevant only for in-house innovation. Finally, we also find that large and internationalized firms are more likely to innovate in-house. |
| Keywords: | Consumer/Household Economics, Food Consumption/Nutrition/Food Safety, |
| Date: | 2015 |
| URL: | http://d.repec.org/n?u=RePEc:ags:iaae15:212449&r=bec |
| By: | Epstein, Gil S. (Bar-Ilan University); Lindner Pomerantz, Renana (Bar-Ilan University) |
| Abstract: | In this paper we identify two situations that can lead a firm to hire an executive who supports a corporate culture that differs from the firm's current culture. In the first case, there is similarity between the firm's culture and that of the candidate and in the second case, executives who support the firm's culture constitute a minority of available candidates. In both cases the firm prefers to hire an available candidate, rather than risk a prolonged vacancy. We show how these scenarios can lead to the eradication of unique cultures and to the perpetuation of more common cultures. |
| Keywords: | corporate culture, organizations, minority |
| JEL: | D21 D23 |
| Date: | 2016–04 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp9873&r=bec |
| By: | Stefan Bender; Nicholas Bloom; David Card; John Van Reenen; Stefanie Wolter |
| Abstract: | Recent research suggests that much of the cross-firm variation in measured productivity is due to differences in use of advanced management practices. Many of these practices – including monitoring, goal setting, and the use of incentives – are mediated through employee decision-making and effort. To the extent that these practices are complementary with workers’ skills, better-managed firms will tend to recruit higher-ability workers and adopt pay practices to retain these employees. We use a unique data set that combines detailed survey data on the management practices of German manufacturing firms with longitudinal earnings records for their employees to study the relationship between productivity, management, worker ability, and pay. As documented by Bloom and Van Reenen (2007) there is a strong partial correlation between management practice scores and firm-level productivity in Germany. In our preferred TFP estimates only a small fraction of this correlation is explained by the higher human capital of the average employee at better-managed firms. A larger share (about 13%) is attributable to the human capital of the highest-paid workers, a group we interpret as representing the managers of the firm. And a similar amount is mediated through the pay premiums offered by better-managed firms. Looking at employee inflows and outflows, we confirm that better-managed firms systematically recruit and retain workers with higher average human capital. Overall, we conclude that workforce selection and positive pay premiums explain just under 30% of the measured impact of management practices on productivity in German manufacturing. |
| Keywords: | management practices; productivity; wages |
| JEL: | J1 J50 |
| Date: | 2016–03 |
| URL: | http://d.repec.org/n?u=RePEc:ehl:lserod:66433&r=bec |
| By: | Holger Breinlich |
| Abstract: | I use an event study approach to present novel evidence on the impact of trade liberalization on firmlevel profits. Using the uncertainty surrounding the negotiation and ratification process of the Canada- United States Free Trade Agreement of 1989 (CUSFTA), I estimate the impact of different types of tariff reductions on the abnormal returns of Canadian manufacturing firms. I find that Canadian import tariff reductions lead to lower, and reductions in Canadian intermediate input tariffs to higher abnormal returns. The impact of U.S. tariff reductions is less clear and depends on the size of the affected firms. I also calculate the total profit increase implied by my estimates. Overall, CUSFTA increased per-period profits by around 1.2%. This was mainly driven by intermediate input tariff reductions which more than offset the negative effect of Canadian import tariff reductions. |
| Keywords: | profitability; trade liberalization; stock market event studies; Canada-U.S. free trade agreement |
| JEL: | J1 |
| Date: | 2016–01 |
| URL: | http://d.repec.org/n?u=RePEc:ehl:lserod:66412&r=bec |
| By: | Ekaterina Turkina; Ari Van Assche; Raja Kali |
| Abstract: | We use a new firm level dataset to study the network of formal firm linkages within and across 52 aerospace clusters in North America and Europe over the period 2002-2014. Applying community structure detection techniques, we find that the structure of the overall network has changed over time. We organize sub-networks by linkage type and find two important trends in their evolution. First, new linkages in the vertical buyer-supplier sub-network are generally formed in a hierarchical hub-and-spoke fashion, whereas new links in the horizontal partnership sub-network are generated in a more decentralized and cohesive manner. Second, the geographical scope of new linkages is different, with vertical buyer-supplier and investment linkages moving increasingly trans-local and partnership linkages becoming more localized. Taken together, our findings suggest that the overall network is evolving from a geographically partitioned community structure to a hierarchical community structure that is stratified along value chain stages. |
| Keywords: | industrial clusters, local and trans-local linkages, community structure detection, small world analysis, |
| JEL: | L14 L62 F23 |
| Date: | 2016–04–08 |
| URL: | http://d.repec.org/n?u=RePEc:cir:cirwor:2016s-14&r=bec |
| By: | Andrew B. Bernard; J. Bradford Jensen; Stephen J. Redding; Peter K. Schott |
| Abstract: | Research in international trade has changed dramatically over the last twenty years, as attention has shifted from countries and industries towards the firms actually engaged in international trade. The now standard heterogeneous firm model posits a continuum of firms that compete under monopolistic competition (and hence are measure zero) and decide whether to export to foreign markets. However, much of international trade is dominated by a few “global firms,” which participate in the international economy along multiple margins and are large relative to the markets in which they operate. We outline a framework that allows firms to be of positive measure and to decide simultaneously on the set of production locations, export markets, input sources, products to export, and inputs to import. We use this framework to interpret features of U.S. firm and trade transactions data and highlight interdependencies across these margins of firm international participation. Global firms participate more intensively along each margin, magnifying the impact of underlying differences in firm characteristics, and explaining their dominance of aggregate international trade. |
| Keywords: | firm heterogeneity; international trade; multinationals; multi-product firms |
| JEL: | E21 E24 F53 O32 O47 |
| Date: | 2016–04 |
| URL: | http://d.repec.org/n?u=RePEc:ehl:lserod:66437&r=bec |
| By: | Johannes Boehm; Luca Fornaro; Swati Dhingra |
| Abstract: | Multiproduct firms dominate production, and their product turnover contributes substantially to aggregate growth. Firms continually adapt their product mix, but what determines which products firms expand into? Theories of the firm propose that mulitproduct firms choose to make products which need the same know-how or inputs that can't be bought ‘off the shelf’. We empirically examine this rationale by testing for firm-level capabilities that are shared across products and manifested through input-output (IO) linkages. We show that a firm's idiosyncratic horizontal and vertical similarity to a product's IO structure predicts product adoption. Using product-specific policy changes for a firm's inputs and outputs, we show that input linkages are the most important, suggesting that firms' product capabilities depend more on economies of scope rather than product market complementarities. |
| Keywords: | Multiproduct firms; product adoption; vertical linkages; horizontal linkages |
| JEL: | J1 N0 |
| Date: | 2016–02 |
| URL: | http://d.repec.org/n?u=RePEc:ehl:lserod:66418&r=bec |
| By: | Bertsch, Christoph (Research Department, Central Bank of Sweden); Calcagno, Claudio (Department of Economics, European University Institute); Le Quement, Mark (Department of Economics, University of Bonn) |
| Abstract: | Both the academic literature and the policy debate on systematic bailout guarantees and Government subsidies have ignored an important effect: in industries where firms may go out of business due to idiosyncratic shocks, Governments may increase the likelihood of (tacit) coordination if they set up schemes that rescue failing firms. In a repeated-game setting, we show that a systematic bailout regime increases the expected profits from coordination and simultaneously raises the probability that competitors will remain in business and will thus be able to ’punish’ firms that deviate from coordinated behaviour. These effects make tacit coordination easier to sustain and have a detrimental impact on welfare. While the key insight holds across any industry, we study this question with an application to the banking sector, in light of the recent financial crisis and the extensive use of bailout schemes. |
| Keywords: | competition policy; systematic bailout guarantees; collusion; banking; State aid 2 |
| JEL: | D43 G21 K21 L41 |
| Date: | 2014–07–01 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:rbnkwp:0289&r=bec |
| By: | HOSONO Kaoru; MIYAKAWA Daisuke; TAKIZAWA Miho; YAMANOUCHI Kenta |
| Abstract: | Using Japanese firm-level panel data spanning from 2000 to 2013, we estimate industry-level production functions that explicitly take into account the substitutability and complementarity between tangible and intangible capital. The estimation results show substantial heterogeneity among industries in terms of substitutability and complementarity between tangible and intangible capital. We further find that the relation between tangible and intangible capital in the production function accounts for their relation in investments. These findings show the necessity to take into account the relation between the dynamics of tangible and intangible capital for precisely understanding the mechanisms governing a firm's growth. |
| Date: | 2016–03 |
| URL: | http://d.repec.org/n?u=RePEc:eti:dpaper:16024&r=bec |
| By: | Gene M. Grossman; Elhanan Helpman; Ezra Oberfield; Thomas Sampson |
| Abstract: | I use an event study approach to present novel evidence on the impact of trade liberalization on firm level profits. Using the uncertainty surrounding the negotiation and ratification process of the Canada-United States Free Trade Agreement of 1989 (CUSFTA), I estimate the impact of different types of tariff reductions on the abnormal returns of Canadian manufacturing firms. I find that Canadian import tariff reductions lead to lower, and reductions in Canadian intermediate input tariffs to higher abnormal returns. The impact of U.S. tariff reductions is less clear and depends on the size of the affected firms. I also calculate the total profit increase implied by my estimates. Overall, CUSFTA increased per-period profits by around 1.2%. This was mainly driven by intermediate input tariff reductions which more than offset the negative effect of Canadian import tariff reductions. |
| Keywords: | Demand; neoclassical growth; balanced growth; technological progress; capital-skill; complementarity |
| JEL: | N0 F3 G3 |
| Date: | 2016–01 |
| URL: | http://d.repec.org/n?u=RePEc:ehl:lserod:66414&r=bec |
| By: | Alessandro Barattieri |
| Abstract: | In this paper, I show a strong positive correlation between the value-added share of manufacturing in 2000 and current account balances in 2007 for the Euro area countries. I propose asymmetries in the timing of trade liberalizations as a new mechanism affecting the dynamics of the current account. I build intuition using a simple model. Then, I use an international business cycle model to show how the asymmetric dynamics of trade costs in manufacturing and services in 2000-2007 can partially explain the rise in the German surplus. Lastly, I provide broad empirical support for the key predictions of the theory. |
| Keywords: | Current Account Dynamics, Relative Trade Liberalization Measures |
| JEL: | F1 F32 F40 |
| Date: | 2016 |
| URL: | http://d.repec.org/n?u=RePEc:cca:wpaper:447&r=bec |
| By: | Kapelko, Magdalena |
| Abstract: | This paper assesses the dynamic inefficiency of the Polish meat processing industry during the period between 2004 and 2012. This study employs also a comparison of dynamic with static inefficiency measures to address the importance of accounting for adjustment costs when measuring a firm's inefficiency. Dynamic and static cost inefficiencies and their decomposition into technical, allocative, and scale inefficiency are derived using Data Envelopment Analysis. Results showed that firms' low levels of dynmaic cost inefficiency were due to dynamic allocative inefficiency rather than technical and scale inefficiency. The 2008 financial crisis appears to have hampered firms' dynamic technical performance, but has also had a positive influence on the dynamic allocative and scale inefficiencies. WE further show that the average static measures tend to underestimate all inefficiency compenents compared to dynmaic counterparts. |
| Keywords: | dynamic inefficiency, static inefficiency, Data Envelopment Analysis, meat processing industry, Food Consumption/Nutrition/Food Safety, Production Economics, C61, D24, D61, D92, L66, |
| Date: | 2015 |
| URL: | http://d.repec.org/n?u=RePEc:ags:iaae15:211830&r=bec |
| By: | Nadarajah Sivathaasan; Searat Ali; Benjamin Liu; Allen Huang |
| Keywords: | Stock liquidity, corporate governance, leverage, high and low liquidity firms |
| JEL: | G32 G34 G12 |
| Date: | 2016–03 |
| URL: | http://d.repec.org/n?u=RePEc:gri:fpaper:finance:201603&r=bec |
| By: | Kyle Handley (University of Michigan); Nuno Limao (University of Marylan and NBER) |
| Abstract: | We examine the impact of policy uncertainty on trade, prices and real income through firm entry investments in general equilibrium. We estimate and quantify the impact of trade policy on China's export boom to the U.S. following its 2001 WTO accession. We find the accession reduced the U.S. threat of a trade war, which can account for over 1/3 of that export growth in 2000-2005. Reduced policy uncertainty lowered U.S. prices and increased its consumers' income by the equivalent of a 13 percentage point permanent tariff decrease. These findings provide evidence of large effects of policy uncertainty on economic activity and the importance of agreements for reducing it. |
| Keywords: | China, World Trade Organization, Policy Uncertainty, Welfare |
| JEL: | F12 F13 F14 G31 D8 |
| Date: | 2016–03 |
| URL: | http://d.repec.org/n?u=RePEc:mie:wpaper:650&r=bec |
| By: | Francesco Nava; Pasquale Schiraldi |
| Abstract: | Sales are a widespread and well-known phenomenon documented in several product markets. This paper presents a novel rationale for sales that does not rely on consumer heterogeneity, or on any form of randomness to explain such periodic price fluctuations. The analysis is carried out in the context of a simple repeated price competition model, and establishes that firms must periodically reduce prices in order to sustain collusion when goods are storable and the market is large. The largest equilibrium profits are characterized at any market size. A trade-off between the size of the industry and its profits arises. Sales foster collusion, by magnifying the inter-temporal links in consumers' decisions. |
| Keywords: | storage; sales; collusion; cartel size; repeated games |
| JEL: | L11 L12 L13 L41 |
| Date: | 2014–06 |
| URL: | http://d.repec.org/n?u=RePEc:ehl:lserod:55936&r=bec |
| By: | Parinduri, Rasyad; Lee, Yoong Hon; Tiong, Kung Ming |
| Abstract: | We examine the effects of the three-point rule in individual sports. We consider chess in which most tournaments use the standard rule while some tournaments use the Bilbao rule, which is identical to the three-point rule in soccer: We observe the same pairs of chess players playing under both rules, a research design that fits fixed-effect models. We find the Bilbao rule makes games 33 percent more decisive, mostly to white players’ advantage who win 50 percent more games. We identify two mechanisms why the Bilbao rule works: It encourages players to play longer and discourages them from using drawish openings. These results suggest incentive schemes like the three-point rule work in individual sports in which efforts and financial rewards are directly linked and game dynamics and strategic interactions among teammates and with opponents are less complex. |
| Keywords: | scoring systems, three-point rule, individual sports, chess, fixed effects model |
| JEL: | C23 D01 L83 |
| Date: | 2016–05 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:71060&r=bec |
| By: | Ahmed, Riaz |
| Abstract: | Does investment in social infrastructure affect the productivity of manufacturing firms in developing countries? To test this question, I empirically investigate the impact of social infrastructure indicators at district level on firm productivity using firm level data from Pakistan. I split my sample into rural and urban regions to capture the effect of regional disparities in investment in social goods while controlling for a potential selection bias from firms' decision to locate in regions with better infrastructure equipment. My findings reveal that indicators of health and education are positively and significantly related to firm level productivity in manufacturing industries in Pakistan. However, these results hold for urban districts only. For rural regions, both health and education show a negative impact on firm productivity. |
| Keywords: | Firm Productivity,Social Infrastructure,Health and Education,Pakistan |
| JEL: | D24 H51 H52 I15 I25 |
| Date: | 2016 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:zewdip:16038&r=bec |