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on Business Economics |
| By: | YAMAMOTO Isamu; KURODA Sachiko |
| Abstract: | The Japanese labor market has exhibited less mobility compared with that of other countries. However, it is recently said that labor mobility should be enhanced to achieve more efficient labor allocation among firms or sectors. Previous studies, however, do not provide enough insights as to whether or not the higher labor turnover at firm level contributes to better firm performance. Therefore, this paper investigates this effect using panel data of Japanese firms. We find an inverse-U shaped relationship between the labor turnover rates and firms' profit rates, indicating the higher labor turnover rates improve firms' profit rates, but that much higher turnover rates beyond the optimal would damage the profit. This finding is consistent with the optimal turnover model by Abelson and Baysinger [1984]. We also find that the effect of higher labor turnover rates depends on the type of firm characteristics. Specifically, firms with conventional Japanese employment practice can earn profits by raising labor turnover, whereas those with higher separation rates and workers with poor mental health would suffer losses by further raising labor turnover. |
| Date: | 2016–12 |
| URL: | http://d.repec.org/n?u=RePEc:eti:rdpsjp:16062&r=bec |
| By: | Lili Yan Ing (Economic Research Institute for ASEAN and East Asia (ERIA), University of Indonesia); Miaojie Yu (Peking University); Rui Zhang (Peking University) |
| Abstract: | We define and measure “firm-product-destination-year-specific export quality” and investigate how quality competition from China affects Indonesian firm productivity in the domestic and export markets. Our results suggest that an increase in Chinese exported product quality by 10 percent will increase the productivity of Indonesian firms by 0.4 - 0.5 percent in Indonesia’s domestic market, and increase Indonesian exporters’ productivity by 2 percent in the export market. Where we limit our sample to exporters only, an increase in Chinese exported product quality will increase Indonesian firm productivity in the export market, but not in the domestic market. Our findings broaden the horizon through which firms could benefit from opening up to trade. |
| Keywords: | Quality, productivity, competition, firm-level study, China, Indonesia |
| JEL: | F1 F12 F13 F14 |
| Date: | 2016–12 |
| URL: | http://d.repec.org/n?u=RePEc:era:wpaper:dp-2016-29&r=bec |
| By: | Nathan Goldschlag*; Javier Miranda† |
| Abstract: | Modern market economies are characterized by the reallocation of resources from less productive, less valuable activities to more productive, more valuable ones. Businesses in the High Technology sector play a particularly important role in this reallocation by introducing new products and services that impact the entire economy. Tracking the performance of this sector is therefore of primary importance, especially in light of recent evidence that suggests a slowdown in business dynamism in High Tech industries. The Census Bureau produces the Business Dynamics Statistics (BDS), a suite of data products that track job creation, job destruction, startups, and exits by firm and establishment characteristics including sector, firm age, and firm size. In this paper we describe the methodologies used to produce a new extension to the BDS focused on businesses in High Technology industries. |
| Date: | 2016–01 |
| URL: | http://d.repec.org/n?u=RePEc:cen:wpaper:16-55&r=bec |
| By: | Mion, Giordano; Opromolla, Luca David; Sforza, Alessandro |
| Abstract: | Better managers and managerial practices lead to better firm performance. Yet, little is known about what happens when managers move across firms. Does a firm hiring a good manager improve its performance? If yes is there some valuable knowledge the manager has acquired and successfully diffused to the new firm? In order to answer these questions we use information related to specific activities the manager was involved in when working for previous firms. More specifically, we use information on whether the manager has worked in the past for firms exporting to a specific destination country or a specific product. Our data is rich enough to allow controlling for both manager and firm unobservables and wash out any time-invariant ability of the manager as well as overall firm performance. We find that the export experience gained by managers in previous firms leads their current firm towards higher export performance, and commands a sizable wage premium for the manager. We use several strategies to deal with endogeneity including an exogenous event study: the sudden end of the Angolan civil war in 2002. We further refine our analysis by looking at different types of managers (general, production, financial and sales) and show how specific export experience interacts with the degree of product differentiation and/or the financial vulnerability of a firm's products as well as with rising import competition from China. |
| Keywords: | export experience; firm performance; job mobility; knowledge diffusion; Managers |
| JEL: | F16 J31 L2 M2 |
| Date: | 2016–12 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:11706&r=bec |
| By: | Armstrong, Mark; Vickers, John |
| Abstract: | We study multiproduct firms in the contexts of unregulated monopoly, regulated monopoly and Cournot oligopoly. Using the concept of consumer surplus as a function of quantities (rather than prices), we present simple formulas for optimal prices and show that Cournot equilibrium exists and corresponds to a Ramsey optimum. We then discuss a tractable class of preferences that involve a generalized form of homotheticity. Profit-maximizing quantities are proportional to efficient quantities. We discuss optimal monopoly regulation when the firm has private information about its cost vector, and find situations where optimal regulation leaves relative price decisions to the firm. |
| Keywords: | cost passthrough; Cournot oligopoly; homothetic preferences; monopoly regulation; multidimensional screening; Multiproduct pricing; Ramsey pricing |
| JEL: | D42 D43 D82 L12 L13 L51 |
| Date: | 2016–12 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:11692&r=bec |
| By: | Schröder, Helmut; Weiß, Thomas |
| Abstract: | Die Studie "Management practices, organizational behaviour and firm performance in Germany" ist die erste groß angelegte Befragung ihrer Art in Deutschland. Hintergrund der Studie ist die Annahme, dass der gezielte Einsatz von Managementpraktiken die Motivation von Mitarbeitern erhöht und somit zu Produktivitätssteigerungen sowie erhöhter Wettbewerbsfähigkeit beitragen kann. Dabei zielen die abgefragten Managementpraktiken auf die Bereiche Monitoring und Evaluierung, Personalmanagement, insbesondere Anreiz- und Motivationssysteme, sowie Work-Life-Balance ab. Die Erhebung richtet sich an Manager in Betrieben (z. B. den Geschäftsführer, CEO, Bereichs- oder Werksleiter). Vorbild und Basis für international vergleichende Aussagen bildet die Studie "Management and Organizational Practices Survey" (U.S. Department of Commerce & U.S. Census Bureau). Die deutsche Studie repliziert sowohl die Befragungsinhalte als auch die Erhebungsmethode. Die US-amerikanische Erhebung erfolgte mittels schriftlicher Erhebung (postalisch und alternativ online). Im Interesse größtmöglicher Vergleichbarkeit wurde auch die deutsche Erhebung mittels eines schriftlichen Selbstausfüllers durchgeführt. Die Zielgruppe bildet das gehobene Unternehmensmanagement. Die angeschriebenen Manager hatten die Möglichkeit, den Papierfragebogen oder einen entsprechenden Online- Fragebogen auszufüllen. |
| Date: | 2016–12–05 |
| URL: | http://d.repec.org/n?u=RePEc:iab:iabfme:201605_de&r=bec |
| By: | Nicholas Bloom (Stanford University); Fatih Guvenen (University of Minnesota); Sergio Salgado (University of Minnesota) |
| Abstract: | This paper studies how the distribution of the growth rate of firm-level variables (sales, profit, inventories, and employment) changes over the business cycle. Using a panel of Compustat firms from 1964 to 2013 we find that, in addition to the well-documented counter cyclicality in dispersion, the third moment---skewness---is strongly pro cyclical. This happens because the distribution of negative growth rates expands during recessions while the distribution of positive growth rates changes little. In fact, this pattern---of lower tail greatly expanding during recessions---is also the main driver behind the counter cyclicality of dispersion. These results are robust to different selection criteria, across firm size categories, and across industries. We also analyze the distribution of macroeconomic outcomes such as GDP growth and stock returns using a panel of developed and developing countries. Here we also find evidence of declining skewness during periods of low economic activity. |
| Date: | 2016 |
| URL: | http://d.repec.org/n?u=RePEc:red:sed016:1621&r=bec |
| By: | Ammari, Aymen; Bouteska, Ahmed; Regaieg, Boutheina |
| Abstract: | This study revisits the link between CEO Entrenchment and performance from a sample of 1.040 annual observations concerning 138 CEOs of French-listed firms for the 2000-2013 period. The effect of entrenchment, which seems to represent an illustration of the effectiveness of control mechanisms that CEOs are supposed to undergo within firms, reveals ambiguous findings. The financial woes, suffered by some firms such as France Telecom, Vivendi Universal and Eurotunnel testify to the magnitude of this inefficiency and usefulness to discuss corporate governance principles. The VIENOT reports 1 and 2 and the Bouton report have come forward presenting recommendations aimed at implement a system of corporate governance where moral ethics of different actors, confidence, transparency and respect for the interests of stakeholders are consistent. The purpose of this paper is thus to understand the impact of entrenchment on French firm performance. A key aspect of our study is the use of Nonlinear Principal Component Analysis (NLPCA), which is preferred to standard principal component analysis as a more effective method to distill the complex dimensions of CEO Entrenchment into reliable summary scores. Using fixed/random effect models which control of different source of heterogeneity, we find that CEO Entrenchment has a modest association with operating measures of performance (i.e. ratio of earnings to total assets, ROA) and with market-based measures of performance (i.e. Tobin’s Q). The empirical findings also indicate that the magnitude of the economic significance of the entrenchment proxies in the performance models depends on the method utilized to measure CEO Entrenchment. |
| Keywords: | Entrenchment; Performance; Nonlinear Principal Component Analysis. |
| JEL: | G02 G3 G32 |
| Date: | 2016–07–16 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:75529&r=bec |
| By: | Brixy, Udo; Murmann, Martin |
| Abstract: | Recent research suggests that employment in young firms is more negatively impacted during economic downturns than employment in incumbent firms. This questions the effectiveness of policies that promote entrepreneurship to fight crises. We complement prior research that is mostly based on aggregate data by analyzing cyclical effects at the firm level. Using new linked employer-employee data on German start-ups we show that under constant human capital of the firms' founders, employment growth in less than 11=2-year-old start-ups reacts countercyclically and employment growth in older start-ups reacts procyclically. The young start-ups realize their countercyclical growth by hiring qualified labor market entrants who might be unable to find employment in incumbent firms during crises. This mechanism is highly important in economic and management terms and has not been revealed by prior research. |
| Keywords: | Firm growth,Entrepreneurship,Business cycle,Crisis |
| JEL: | E32 J23 L26 M13 L25 L11 D22 |
| Date: | 2016 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:zewdip:16079&r=bec |
| By: | Giordano Mion; Luca David Opromolla; Alessandro Sforza |
| Abstract: | Better managers and managerial practices lead to better firm performance. Yet, little is known about what happens when managers move across firms. Does a firm hiring a good manager improve its performance? If yes is there some valuable knowledge the manager has acquired and successfully diffused to the new firm? In order to answer these questions we use information related to specific activities the manager was involved in when working for previous firms. More specifically, we use information on whether the manager has worked in the past for firms exporting to a specific destination country or a specific product. Our data is rich enough to allow controlling for both manager and firm unobservables and wash out any time-invariant ability of the manager as well as overall firm performance. We find that the export experience gained by managers in previous firms leads their current firm towards higher export performance, and commands a sizable wage premium for the manager. We use several strategies to deal with endogeneity including an exogenous event study: the sudden end of the Angolan civil war in 2002. We further refine our analysis by looking at different types of managers (general, production, financial and sales) and show how specific export experience interacts with the degree of product differentiation and/or the financial vulnerability of a firm's products as well as with rising import competition from China. |
| Keywords: | managers, knowledge diffusion, firm performance, job mobility export experience |
| JEL: | M2 L2 F16 J31 |
| Date: | 2016–12 |
| URL: | http://d.repec.org/n?u=RePEc:cep:cepdps:dp1458&r=bec |
| By: | Edward P. Lazear; Kristin McCue |
| Abstract: | Hiring occurs primarily to fill vacant slots that occur when workers separate. Equivalently, separation occurs to move workers to better alternatives. A model of efficient separations yields several specific predictions. Labor market churn is most likely when mean wages are low and the variance in wages is high. Additionally, over the business cycle, churn decreases during recessions, with hires falling at the beginning of recessions and separations declining later to match hiring. Furthermore, the young disproportionately bear the brunt of employment declines. More generally, hires and separations are positively correlated over time as well as across industry and firm. These predictions are borne out in the LEHD microdata at the economy and firm level. |
| Date: | 2016–01 |
| URL: | http://d.repec.org/n?u=RePEc:cen:wpaper:16-57&r=bec |
| By: | Mindy X. Zhang (University of Texas at Austin); Hanno Lustig (Stanford GSB); Barney Hartman-Glaser (University of California at Los Angeles) |
| Abstract: | We analyze national income accounting in an equilibrium model of industry dynamics with long-term contracts between risk-averse workers and heterogeneous firms. In our model, firms insure workers against firm-specific productivity shocks. We use this model as a laboratory for analyzing the impact of firm-level risk on the stationary distribution of rents. An increase in firm-level risk always increases the aggregate capital share in the economy, but may lower the average firm's capital share. Because of selection, the aggregate capital share reported in national income accounts produces a biased estimate of ex ante profitability of firms which determines compensation. Workers effectively pay a larger insurance premium to the owners of capital. |
| Date: | 2016 |
| URL: | http://d.repec.org/n?u=RePEc:red:sed016:1625&r=bec |
| By: | Florian Mayneris (UNIVERSITE CATHOLIQUE DE LOUVAIN, Institut de Recherches Economiques et Sociales (IRES) and Center for Operations Research and Econometrics (CORE)); Sandra Poncet (Paris School of Economics (University of Paris 1), CEPII and FERDI); Tao Zhang (Shanghai University of International Business and Economics) |
| Abstract: | We here consider how Chinese firms react to higher minimum wages, exploiting the 2004 minimum-wage Reform in China. After this reform, we find that the wage costs for surviving firms that were more exposed to minimum wage hikes rose, but their employment and profitability were not affected. This came about due to significant productivity gains among surviving exposed firms. Our results are robust to pre-trend analysis and an IV strategy. However, the survival probability of firms most exposed to minimum-wage hikes fell after the Reform. Firm-level productivity gains partly came from better inventory management and greater investment in capital, at the cost of a reduction in firm-level cash flow. We show that competing explanations are unlikely. In particular, there is no evidence of lower fringe benefits compensating for higher wages, the substitution of less-paid/less-protected migrants for incumbent workers, or firm-level adjustment through higher prices instead of higher productivity. This firm-level productivity adjustment to the minimum wage might be particularly relevant for developing countries where inefficiencies are still pervasive. |
| Keywords: | minimum wages, firm-level performance, productivity, China |
| JEL: | J38 O12 O14 |
| Date: | 2016–11–30 |
| URL: | http://d.repec.org/n?u=RePEc:ctl:louvir:2016027&r=bec |
| By: | Uwe Cantner (School of Economics and Business Administration, Friedrich-Schiller-University Jena); Tina Wolf (University of Southern Denmark, Department of Marketing and Management) |
| Abstract: | Earlier studies have shown that entrepreneurs play a key role in shaping regional development. Innovator networks where these entrepreneurs are members of have been identified as one among many critical factors for their firms' success. This paper intents to go one step further and analyses in how far differing characteristics of these networks lead to different firm performances along the early stages of the organizational life cycle (nascent stage, emergent stage, early growth stage). A sample of 149 patenting (innovative) firms in Thuringia is analysed, using data from the commercial register and the German patent office. The results show that there is an inverted u-shaped relationship between the chances of a firm to survive and the connectivity of the network the firms are connected to but only in the later stage of the early organizational life cycle; while the structure of the ego-network never plays a role. A quite central position in the network shows-up to be unfavourable. |
| Keywords: | Innovation, Entrepreneurship, Networks, Inventor, Patents, Survival |
| JEL: | L25 L26 O30 L14 |
| Date: | 2016–12–07 |
| URL: | http://d.repec.org/n?u=RePEc:jrp:jrpwrp:2016-021&r=bec |
| By: | Aleksandar Vasilev (Department of Economics, American University in Bulgaria) |
| Abstract: | This paper focuses on explaining the economic uctuations in Bulgaria after the introduction of the currency board arrangement in 1997, the period of macroeconomic stability that ensued, the EU accession, and the episode of the recent global financial crisis. This paper follows Chari et al. (2002) and performs business cycle accounting (BCA) for Bulgaria during the period 1999-2014. As in Cavalcanti (2007), who studies the Portuguese business cycles, most of the volatility in output per capita in Bulgaria over the period is due to variations in the eciency and labor wedges. |
| Keywords: | Business Cycle accounting; Bulgarian economy; eciency and labor wedges |
| JEL: | E32 E37 O47 |
| Date: | 2016–11 |
| URL: | http://d.repec.org/n?u=RePEc:sko:wpaper:bep-2016-11&r=bec |
| By: | Todorova, Tamara |
| Abstract: | We stress some efficiency aspects of monopolistic competition justifying it on account of its tendency to innovate and the questionable excess capacity paradigm. Some further efficiency aspects revealed are product variety and transaction cost savings. We view the monopolistically competitive firm as an essential source of technological innovation, product variety and cost economies. While perfect competition is universally considered a benchmark and a social optimum, we consider it a strongly unrealistic theoretical setup where the monopolistically, rather than the perfectly, competitive firm turns out to be the true type of competition and social optimum in the real world of positive transaction costs. The monopolistically competitive firm not only offers product variety and innovation but is the optimal institutional arrangement under positive transaction costs. |
| Keywords: | monopolistic competition,variety |
| JEL: | D23 D24 |
| Date: | 2016 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:esprep:148367&r=bec |
| By: | Calá, Carla Daniela; Manjón-Antolín, Miguel; Arauzo-Carod, Josep-Maria |
| Abstract: | We analyse the determinants of exit in a developing country using Argentina as an illustrative case. We focus on regional determinants but estimate panel count data models for firms of different size, thus indirectly controlling for a major firm-level determinant. We find that most of the determinants used in previous studies analysing developed countries are also relevant here. The fit of the model improves, however, when variables that proxy for the specificities of developing economies are considered. We also find that while the exit of micro-small firms seem to be mostly driven by factors that are commonly found in developed countries, large firms are more influenced by factors that are typically not considered in developed countries' studies. These results raise doubts about the usefulness of public policies based on evidence from developed countries and show the importance of a differentiated analysis across firm size. |
| Keywords: | Dinámica Empresarial; Cese de Actividad; Tamaño de la Empresa; Modelo de Panel; Argentina; |
| Date: | 2016 |
| URL: | http://d.repec.org/n?u=RePEc:nmp:nuland:2548&r=bec |