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on Business Economics |
| By: | Marco Cucculelli (Universita' Politecnica delle Marche, Dipartimento di Scienze economiche e sociali) |
| Abstract: | This paper examines the influence that the age of a firm has on the probability of product innovation by taking into account two factors: the role of the CEO's tenure and the lifecycle of the last product introduced. In a sample of Italian manufacturing firms (n = 2,163), analysis reveals that the new entrants’ high innovative activity is mainly driven by the new CEO's innovation propensity, which is strictly dependent on his tenure. Likewise, the lower innovation activity observed in mature firms is mostly explained by the dynamics of the product’s lifecycle and the CEO's tenure. More generally, the existence of a negative relationship between innovation and firm age is questioned, as controlling for time-related variables that overlap during the company's lifecycle - product age and CEO's tenure — turns the relationship positive. Finally, the innovative behaviour of incumbent companies turns out to be dependent on the renewal abilities of newly appointed external CEOs, whereas, CEOs from within the family play a minor role. |
| Keywords: | Product innovation, firm age, CEO tenure, product tenure, product lifecycle, industry lifecycle |
| JEL: | D22 G34 L25 O32 |
| Date: | 2017–09 |
| URL: | http://d.repec.org/n?u=RePEc:anc:wmofir:140&r=bec |
| By: | Savagar, Anthony (University of Kent); Dixon, Huw David (Cardiff Business School) |
| Abstract: | Slow firm entry over the business cycle causes measured TFP to vary endogenously because incumbent firms bear shocks. Our main theorem states that imperfect competition and dynamic firm entry are necessary and sufficient conditions for these endogenous productivity fluctuations. The result focuses on the short-run absence of entry and incumbents' output response given this quasi-fixity. Quantitatively we show the endogenous productivity effect is as large as a traditional capital utilization effect. |
| Keywords: | dynamic entry, endogenous productivity, endogenous sunk costs, business stealing, business cycle, continuous time |
| JEL: | E32 D21 D43 L13 C62 |
| Date: | 2017–08 |
| URL: | http://d.repec.org/n?u=RePEc:cdf:wpaper:2017/8&r=bec |
| By: | Faber, Benjamin; Fally, Thibault |
| Abstract: | A growing literature has documented the role of firm heterogeneity within sectors in accounting for nominal income inequality. This paper explores the implications for household price indices across the income distribution. Using detailed matched US home and store scanner microdata, we present evidence that rich and poor households source their consumption from different parts of the firm size distribution within disaggregated product groups. We use the microdata to examine alternative explanations, propose a tractable quantitative model with two-sided heterogeneity that rationalizes the observed moments, and calibrate it to explore general equilibrium counterfactuals. We find that larger, more productive firms endogenously sort into catering to the taste of wealthier households, and that this gives rise to asymmetric effects on household price indices. These effects matter for real income inequality. We find that they amplify observed changes in nominal inequality over time, lead to a more regressive distribution of the gains from international trade, and give rise to new distributional implications of business regulations. |
| Keywords: | Firm Heterogeneity; household price indices; real income inequality; scanner data |
| JEL: | E31 F15 |
| Date: | 2017–08 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:12209&r=bec |
| By: | Brutscher, Philipp-Bastian; Heipertz, Jonas; Hols, Christopher |
| Abstract: | This paper uses a unique experiment conducted as part of the Investment Survey of the European Investment Bank (EIB) to provide novel evidence on firms' preferences over loan characteristics and the relation between terms of credit and investment decisions. The design of the experiment allows revealing firm's financing preferences and willingness-to-pay in a clean and straightforward manner. The results show that firms are especially sensitive to the loan amount, the collateral requirement and the interest rate. Results are heterogeneous between sectors, size classes and types of projects. |
| Keywords: | firm preferences,investment decision,corporate finance |
| JEL: | D22 D24 G11 G21 G30 |
| Date: | 2017 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:eibwps:201703&r=bec |
| By: | Timothy E Dore; Rebecca Zarutskie |
| Abstract: | We provide new estimates of the wage costs of firms' debt. Our empirical approach exploits within-firm geographical variation in workers' expected unemployment costs due to variation in local labor market size and uses a large representative sample of public firms. We find that, following an increase in firm leverage, workers with higher unemployment costs experience higher wage growth relative to workers at the same firm with lower unemployment costs. Overall, our estimates suggest that a 10 percentage point increase in leverage increases wage compensation for the median worker by 1.9% and total firm wage costs by 17 basis points of firm value. |
| Keywords: | Capital structure ; Costs of financial distress ; Wages and compensation |
| JEL: | G32 J31 |
| Date: | 2017–08–08 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fedgfe:2017-78&r=bec |
| By: | Cheng, Dong; Hu, Zhongzhong; Tan, Yong |
| Abstract: | This paper investigates the heterogeneous and time-varying effects of financial credits on firm-level export performance. Using a data set covering comprehensive Chinese manufacturing firms and employing a difference-in-differences approach, we find that financial credits improve firm-level exports and productivity more for firms switching from indirect to direct export than continuing indirect exporting firms. Further, we employ a difference-in-difference-in-differences approach and find that improvements in firm-level finance have larger positive impacts on firm export values in the post-WTO accession period, conditioning on the firm switching from indirect to direct exporting. The time-varying impact may suggest an export distortion in China before its WTO accession. |
| Keywords: | Financial Credits, WTO Accession, Indirect export, Direct Export, Difference-in-Differences |
| JEL: | F13 F14 G28 |
| Date: | 2017–08–07 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:80657&r=bec |
| By: | Maximo Camacho (University of Murcia); Danilo Leiva-Leon (Banco de España) |
| Abstract: | This paper examines the evolution of the distribution of industry-specificc business cycle linkages, which are modelled through a multivariate Markov-switching model and estimated by Gibbs sampling. Using non parametric density estimation approaches, we find that the number and location of modes in the distribution of industrial dissimilarities change over the business cycle. There is a relatively stable trimodal pattern during expansionary and recessionary phases characterized by highly, moderately and lowly synchronized industries. However, during phase changes, the density mass spreads from moderately synchronized industries to lowly synchronized industries. This agrees with a sequential transmission of the industrial business cycle dynamics. |
| Keywords: | business bycles, output growth, time series. |
| JEL: | E32 C22 E27 |
| Date: | 2017–08 |
| URL: | http://d.repec.org/n?u=RePEc:bde:wpaper:1728&r=bec |
| By: | Capriati, Michele; Divella, Marialuisa |
| Abstract: | By using firm-level data provided by the fourth round of the (Italian) Community Innovation Survey (CIS 2012), this paper explores whether the implementation of specific changes in work organisation within a firm influences its innovation performance, not only directly, but also via reinforcing the link between human capital resources and innovation. The authors also analyse the overall effect of human capital and work organisation, which enables them to identify which combination of these variables leads to the highest level of firms’ technological capabilities. Main findings confirm that not only the acquisition of new skills through the hiring of qualified personnel, but also how personnel management affects individual employees on the work floor should be considered to the development of firms’ innovation capacity: indeed, work organisation as well as strong positive complementarities or synergy effects between human capital and work organisation have been found to give firms a clear competitive advantage vis à vis both noninnovating firms and firms unable to internally generate new products and processes (i.e. entirely or at least partly by themselves). These positive effects are present and relevant in both manufacturing and service firms, whilst a more differentiated impact has emerged between firms in high-tech and low-tech sectors of the economy. On the whole, the contribution raises some relevant issues about the Italian lack of innovation in work organisation, which requires particular attention by the human resources management of firms and the industrial policy of governments. |
| Keywords: | work organisation,human capital,technological capabilities,innovation generation,firms,industries |
| JEL: | O30 O31 O32 |
| Date: | 2017 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:glodps:97&r=bec |
| By: | Fons-Rosen, Christian; Kalemli-Ozcan, Sebnem; Sørensen, Bent E; Villegas-Sanchez, Carolina; Volosovych, Vadym |
| Abstract: | We study the impact of foreign direct investment (FDI) on total factor productivity (TFP) of domestic firms using a new, representative firm-level data set spanning six countries. A novel finding is that firm-level spillovers from foreign firms to domestic companies can be significantly positive, non-existent, or even negative, depending on which sectors receive FDI. When foreign firms produce in the same narrow sector as domestic firms, the latter are negatively affected by increasing competition and positively affected by knowledge spillovers. We find that the positive spillovers dominate if foreign firms enter sectors where firms are "technologically close,'' controlling for the endogeneity of their entry decision into such sectors. Positive technology spillovers also affect firms in other sectors, if those sectors are technologically close to the sectors receiving FDI. Increasing FDI in sectors that are technologically close to other sectors boosts TFP of domestic firms by twice as much as increasing FDI by the same amount across all sectors. |
| Keywords: | competition; FDI; multinationals; selection; technology; TFP |
| JEL: | E32 F15 F36 O16 |
| Date: | 2017–08 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:12205&r=bec |
| By: | Francis, Bill B.; Hasan, Iftekhar; Hunter, Delroy M.; Zhu, Yun |
| Abstract: | There is scant evidence on how risk-taking incentives impact specific firm risks. This has implications for board oversight of managerial risk taking, firms’ development of comparative advantage in taking particular risks, and compensation design. We examine this question for exchange rate risk. Using multiple identification strategies, we find that vega increases exchange rate exposure for purely domestic and globally engaged firms. Vega’s impact increases with international operations, declines post-SOX, and is robust to firm-level governance. Our results suggest that evidence that exposure reduces firm value can be viewed, in part, as a wealth transfer from shareholders and debt-holders to managers. |
| JEL: | G32 |
| Date: | 2017–08–05 |
| URL: | http://d.repec.org/n?u=RePEc:bof:bofrdp:2017_016&r=bec |