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on Business Economics |
| By: | Roger M. Gomis (Universitat Pompeu Fabra); Sameer Khatiwada (IHEID, Graduate Institute of International and Development Studies, Geneva and ILO Regional Office Bangkok) |
| Abstract: | This paper analyses the impact of recessions and booms on firm performance. We look at 70,000 firms in over 100 countries between 1986 and 2014 and document the trends in firm entry over the business cycle. Our paper confirms some standard facts about firm dynamics: employment growth is decreasing with size and age; entry rate is pro-cyclical while the exit rate is countercyclical. For example, in case of advanced economies, 97 per cent of employment creation is by firms between the ages of 0 and 5 years, while for developing and emerging economies, it is 86 per cent of all employment. Our main results are: first, we do see selection effects of recessions, particularly when we look at employment, sales and capital. Specifically, when a firm enters the market during good times, they tend to have lower employment and capital than firms that enter the market during bad times. Second, when we look at total factor productivity (TFP), we don’t see a clear “cleansing effect” of recessions – more productive firms entering the market while less productive leaving. Third, the effects of entering during a boom or a recession tend to persist for a long time, over 15 years. Fourth, we find notable differences between income groups – while recessions tend to create stronger firms in the advanced economies, booms tend to create stronger ones in case of the emerging economies. Lastly, the effects of recessions on firms tend to vary by sector. |
| Keywords: | business cycles, entry and exit, firm performance, total factor productivity |
| JEL: | D22 E32 L25 O4 |
| Date: | 2017–01 |
| URL: | http://d.repec.org/n?u=RePEc:gii:giihei:heidwp03-2017&r=bec |
| By: | He, Qing; Huang, Jiyuan; Li, Dongxu; Lu, Liping |
| Abstract: | This paper examines the governance role of banks in replacement of underperforming CEOs in firms listed on Chinese stock exchanges. Under most circumstances, the findings suggest that the presence of outstanding loans does not increase the probability that a poorly performing CEO will be forced out and replaced. However, there is a positive and significant effect if the under-performing firm relies heavily on secured and short-term bank lending. Bank loans increase the likelihood of a forced CEO turnover in private firms, especially where joint-equity banks serve as the main lenders to the firm. There is no similar increase in the probability of a CEO turnover for state-owned firms or firms that borrow mainly from state-owned banks. Thus, where state ownership of banks and listed firms implies inefficiency or reluctance on monitoring borrower performance, there is an opportunity to improve loan contract arrangements to improve the mon-itoring role of lending banks. |
| JEL: | G21 G30 G32 G38 K22 |
| Date: | 2016–12–19 |
| URL: | http://d.repec.org/n?u=RePEc:bof:bofitp:2016_019&r=bec |
| By: | Francesca Melillo; Timothy B. Folta; Frédéric Delmar |
| Abstract: | This paper develops and tests a model where the performance of an entrepreneur as employee explains why she/he decides to venture outside the industry of the parent firm and what are the implications of this type of entry choice on the initial size of the founded firm. Our findings (1) assist in building a more nuanced theoretical understanding of how individuals determine type of entry, and initial size; (2) have implications for how we interpret the relationship between employee performance and entrepreneurial entry process; and (3) suggest initial size as an important mechanism behind the performance advantage of spinouts. |
| Date: | 2017–01 |
| URL: | http://d.repec.org/n?u=RePEc:ete:msiper:567302&r=bec |
| By: | Sokolov, Vladimir; Solanko, Laura |
| Abstract: | We examine how regional-level political influence affects firm financial performance and survival. Combining representative survey data on mid-sized manufacturing firms in Russia with official registry data, we find that politically influential firms exhibit higher profitability and retain larger financial investments than non-influential firms. At the same time, we find no association between regional political influence and access to bank lending. Most importantly, our empirical analysis suggests that the benefits of influence may be transient. Influential firms experienced significantly lower growth during our 2004–2010 sample period than non-influential firms. Moreover, influential firms had a significantly higher probability of going bankrupt after the 2008 global financial crisis than non-influential firms. |
| JEL: | D22 D72 G38 |
| Date: | 2016–12–22 |
| URL: | http://d.repec.org/n?u=RePEc:bof:bofitp:2016_020&r=bec |
| By: | Pekkala Kerr, Sari; Kerr, William R. |
| Abstract: | We study the prevalence and traits of global collaborative patents for U.S. public companies, where the inventor team is located both within and outside of the United States. Collaborative patents are frequently observed when a corporation is entering into a new foreign region for innovative work, especially in settings where intellectual property protection is weak. We also connect collaborative patents to the ethnic composition of the firm s U.S. inventors and cross-border mobility of inventors within the firm. The inventor team composition has important consequences for how the new knowledge is exploited within and outside of the firm. |
| JEL: | O32 F02 F22 F23 F60 J15 O19 O3 O33 O34 |
| Date: | 2017–01–13 |
| URL: | http://d.repec.org/n?u=RePEc:bof:bofrdp:2017_003&r=bec |
| By: | Schminke, Annette; Van Biesebroeck, Johannes |
| Abstract: | For small open economies, it is essential that many firms find their way to the export market and most governments provide some form of export promotion assistance. We use detailed firm-level data for Flanders, the largest region in Belgium, to evaluate whether its program raises firms' propensity to start exporting outside the EU single market. We find robust evidence for such an effect by relying on the selection-on-observables assumption which we implement using various estimators. Results remain positive and statistically significant, but are smaller in size, when we use two strategies to mitigate self-selection concerns: (i) focus on sub-samples of firms where endogenous selection into treatment is less likely, and (ii) use firms that receive the weakest form of support as controls for firms receiving more extensive support. |
| Keywords: | export market entry; International Trade; trade policy |
| JEL: | F13 F14 |
| Date: | 2017–01 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:11776&r=bec |
| By: | L. Chauvet; L. Jacolin |
| Abstract: | This study focuses on the impact of financial inclusion and bank concentration on the performance of firms in developing and emerging countries. Using firm-level data for a sample of 55,596 firms in 79 countries, we find that financial inclusion, i.e. the distribution of financial services across firms, has a positive impact on firm growth. This positive impact is magnified when bank markets are less concentrated, a proxy for more competition among banks. We also find that more competitive banks favor firm growth only at high levels of financial inclusion, while bank concentration is particularly favorable to foreign and state-owned firms, and increases firm growth for low levels of financial inclusion. In countries with limited financial deepening, the quality of the banking system (financial inclusion and bank competition) may be as important to promote firm performance as its overall size. |
| Keywords: | Financial inclusion, Bank concentration, Firm performance |
| JEL: | G10 O16 O50 |
| Date: | 2016 |
| URL: | http://d.repec.org/n?u=RePEc:bfr:banfra:615&r=bec |
| By: | Helmut Dietl (Department of Business Administration, University of Zurich); Carlos Gomez-Gonzalez (Facultad Derecho y CC. Soziales, University of Castilla-La Mancha); Cornel Nesseler (Department of Business Administration, University of Zurich) |
| Abstract: | We empirically compare the performance of female and male team managers. We find that female team managers never perform worse than male team managers and that females work under significantly worse conditions than males. Additionally, we find that specialized experience has no influence. Special- 1 ized experience means having worked previously as an employee in the same industry. Our dataset consists of female and male managers in women soccer leagues acroos countries, viz., France, Germany, and Norway. Managers in team sports usually have exactly the same tasks (selection, coordination, and motivation of team members) as team managers in other industries. The limited number of women in top management positions in some of these industries and the lack of available data do not often allow comparisons. Our study, which includes a fair number of female team managers and a clear measurement of performance, can help understanding stereotypical behaviors. Therefore, our results have important implications for industries, companies, and clubs who oppose employing female team managers. |
| Keywords: | Performance, Female managers, discrimination, Working conditions |
| JEL: | J16 J7 L83 |
| Date: | 2017–01 |
| URL: | http://d.repec.org/n?u=RePEc:zrh:wpaper:364&r=bec |
| By: | Gideon Markman; Peter Gianiodis; Andreas Panagopoulos (Department of Economics, University of Crete, Greece) |
| Abstract: | Competitive dynamics research tends to study engagements by focusing on firms that share a certain level of commonality—often related to product offerings, technological domains, and, thus, competitive contexts. Following industrial-organizational (IO) economic frameworks (cf. Chen and Miller, 2012; Porter, 1980), researchers have predominantly taken a product-market view, focusing on fairly homogenous firms from the same industry (Chen, 1996). Thus, prevailing competitive dynamics research classifies firms as rivals when they proffer substitutable offerings to similar buyers in comparable markets—e.g., Coke vs. Pepsi, Ford vs. Toyota, P&G vs. Unilever, etc. (cf. Chen and Miller, 2012; Ketchen, Snow, and Hoover, 2004). Such scholarly effort has contributed greatly to our understanding of rivalry. However, if rivalrous behavior is not limited to similar firms – i.e. that compete over customers in the same or related product markets – but in fact, entails competitors from different industries, then what are the implications for competitive dynamics research and theory? We anticipate several implications because—at least under the current view of competition—it is not trivial to anticipate and explain why firms from different industries and strategic groups can still contest each other (Markman, Gianiodis, and Buchholtz, 2009; Ndofor, Sirmon, and He, 2011). Thus, continuing to rely on a restricted definition of rivalrous behavior hinders the theoretical advancement in the literature (Chen and Miller, 2012). By addressing this question, we seek to make two main contributions. First, we extend theory by clarifying why and how even very different firms—in terms of size, strategic groups, and customer base—can still act as rivals (e.g., a small, biotech startup competing with a multinational, telecommunication firm) (Markman et al., 2009). Hence, we employ a factor market rivalry perspective, which broadens the scope of competitive dynamics to explicitly include engagements between dissimilar, and thus unexpected combatants (Chen and Miller, 2015). By relaxing industry designations as a boundary condition to study competitive interactions, we can examine friction points that are often overlooked. This helps to reduce firms’ “blind spots”, which can be the source of intensifying rivalry (Zajac and Bazerman, 1991). Second, we add nuance to the factor market rivalry perspective by highlighting how two important firm-level factors – resource portfolio composition and inter-firm partnerships – affect a firm’s vulnerability to attacks and its proclivity to attack competitors in factor markets (Markman et al., 2009). This is an important distinction; by emphasizing adversarial engagements that research often overlooks, scholars can apply a more complete model of competitive dynamics (Chen and Miller, 2015). For example, while the link between resource acquisition and competitive advantage is not new (cf. Peteraf, 1993), to date competitive dynamics research has neither sufficiently theorized nor empirically tested how rivalry represents a means to secure resource positions (Carmeli and Markman, 2011). In the next section we briefly describe the factor market rivalry perspective of competitive dynamics, which includes definitions, constructs and assumptions related to factor market interactions. |
| Keywords: | Competitive dynamics, factor market rivalry, patent litigation, value chain |
| JEL: | M10 M20 L23 |
| Date: | 2016–09–24 |
| URL: | http://d.repec.org/n?u=RePEc:crt:wpaper:1611&r=bec |