nep-bec New Economics Papers
on Business Economics
Issue of 2017‒11‒26
eleven papers chosen by
Vasileios Bougioukos
Bangor University

  1. Managing the family firm: evidence from CEOs at work By Bandiera, Oriana; Prat, Andrea; Lemos, Renata; Sadun, Raffaella
  2. The interactive effects of venture cognitive logic and performance of Russian SMEs in uncertain environment By Shirokova, Galina V.; Laskovaia, Anastasiia
  3. The Role of Strategic Entrepreneurship in Performance of Russian SMEs during the Economic Crisis By Shirokova, Galina V.; Ivvonen, Liudmila; Gafforova, Elena
  4. The Diffusion of Knowledge via Managers’ Mobility By Giordano Mion; Luca David Opromolla; Alessandro Sforza
  5. Foreign acquisition and internal organization By Paulo Bastos; Natália P. Monteiro; Odd Rune Straume
  6. Social capital, trust, and firm performance: the value of corporate social responsibility during the financial crisis By Lins, Karl V.; Servaes, Henri; Tamayo, Ane
  7. Does the Adoption of Complex Software Impact Employment Composition and the Skill Content of Occupations? Evidence from Chilean Firms By Rita K. Almeida; Ana M. Fernandes; Mariana Viollaz
  8. The Life-Cycle Dynamics of Exporters and Multinational Firms By Anna Gumpert; Andreas Moxnes; Natalia Ramondo; Felix Tintelnot
  9. The Aggregate Implications of Innovative Investment in the Garcia-Macia, Hsieh, and Klenow Model By Ariel Burstein
  10. Capitalists in the 21st Century By Owen Zidar; Eric Zwick; Danny Yagan; Matthew Smith
  11. The same, only different: estimating the magnitude of bribery in business surveys By Frédéric LESNÉ

  1. By: Bandiera, Oriana; Prat, Andrea; Lemos, Renata; Sadun, Raffaella
    Abstract: We present evidence on the labor supply of CEOs, and on whether family and professional CEOs di↵er on this dimension. We do so through a new survey instrument that allows us to codify CEOs’ diaries in a detailed and comparable fashion, and to build a bottom-up measure of CEO labor supply. The comparison of 1,114 family and professional CEOs reveals that family CEOs work 9% fewer hours relative to professional CEOs. Hours worked are positively correlated with firm performance, and di↵erences between family and non-family CEOs account for approximately 18% of the performance gap between family and non-family firms. We investigate the sources of the di↵erences in CEO labor supply across governance types by exploiting firm and industry heterogeneity, and quasi-exogenous meteorological and sport events. The evidence suggests that family CEOs value–or can pursue–leisure activities relatively more than professional CEOs.
    JEL: J1
    Date: 2017–06–14
  2. By: Shirokova, Galina V.; Laskovaia, Anastasiia
    Abstract: Nowadays firms exist in highly unstable environment. The most dramatic and substantial influence changes in external environment have on firm performance. Apart from context, managers and foundersÙ decision-making is also remain very significant root of venture success. We aim at exploring the relationship between top managersÙ venture cognitive logic and firm performance in emerging market context during economic crisis. Particular, we utilize the database of 608 Russian small and medium firms collected in 2015-2016. The results indicate that under higher levels of dynamism and heterogeneity Russian firms will benefit more from using causal logic rather than effectual.
    Keywords: effectuation, causation, firm performance, uncertainty, SMEs, Russia,
    Date: 2016
  3. By: Shirokova, Galina V.; Ivvonen, Liudmila; Gafforova, Elena
    Abstract: This study examines how components of strategic entrepreneurship relate to Russian small and medium-sized firms performance during the economic crisis and to what extent combinations of firm resources determine these relationships. In order to address these issues we surveyed 651 Russian private SMEs. Our results show that during the economic crisis exploitation is positively associated with firm performance. However, we found positive association of exploration with firm performance during the economic crisis instead of negative association. Our results also indicate that relationship between exploration as well as exploitation and firm performance is dependent on different combinations of firm resources.
    Keywords: strategic entrepreneurship, exploration, exploitation, SMEs, firm performance, economic crisis, human capital, financial capital, social capital, Russia,
    Date: 2016
  4. 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: 2017–06
  5. By: Paulo Bastos (Development Research Group, World Bank, MC3-303, 1818 H Street NW,Washington DC, 20433, United States); Natália P. Monteiro (Department of Economics/NIPE, University of Minho); Odd Rune Straume (Department of Economics/NIPE, School of Economics and Management, University of Minho and Department of Economics, University of Bergen)
    Abstract: We study the effect of foreign takeovers on firm organization. Using a comprehensive data set of Portuguese firms and workers spanning two decades, we find that foreign acquisitions lead to: (1) an expansion in the scale of operations; (2) a higher number of hierarchical layers; and (3) higher wage inequality between the top and bottom layers. These results accord with a theory of knowledge-based hierarchies in which foreign takeovers lead to improved productivity, higher demand, or reduced internal communication costs, and thereby induce the acquired firms to reorganize. Evidence from auxiliary survey data reveals that acquired firms are more likely to use information technologies that reduce internal communication costs.
    Keywords: Foreign direct investment, internal organization, wage inequality, information technologies
    JEL: D24 E23 F23 M10 M16 O30
    Date: 2017–11
  6. By: Lins, Karl V.; Servaes, Henri; Tamayo, Ane
    Abstract: During the 2008-2009 financial crisis, firms with high social capital, measured as corporate social responsibility (CSR) intensity, had stock returns that were four to seven percentage points higher than firms with low social capital. High-CSR firms also experienced higher profitability, growth, and sales per employee relative to low-CSR firms, and they raised more debt. This evidence suggests that the trust between the firm and both its stakeholders and investors, built through investments in social capital, pays off when the overall level of trust in corporations and markets suffers a negative shock.
    Keywords: trust; social capital; corporate social responsibility; financial crisis; stock returns
    JEL: D64 G30 M14
    Date: 2017–08–14
  7. By: Rita K. Almeida (World Bank & IZA); Ana M. Fernandes (World Bank); Mariana Viollaz (CEDLAS-FCE-UNLP)
    Abstract: A major concern with the rapid spread of technology is that it replaces some jobs, displacing workers. However, technology may raise firm productivity, generating more jobs. The paper contributes to this debate by exploiting a novel panel data set for Chilean firms in all sectors between 2007 and 2013. While previous studies examine the impacts of automation on the use of routine tasks by middle-educated workers. This study focuses on a measure of complex software that is typically used by more educated workers in cognitive and nonroutine tasks for client, production, and business management. The instrumental variables estimates show that in the medium run, firms’ adoption of complex software affects firms’ employment decisions and the skill content of occupations. The adoption of complex software reallocates employment from skilled workers to administrative and unskilled production workers. This reallocation leads to an increase in the use of routine and manual tasks and a reduction in the use of abstract tasks within firms. Interestingly, the impacts tend to be concentrated in sectors with a less educated workforce, suggesting that technology can constrain job creation for the more skilled workers there. The paper concludes that the type of technology matters for understanding the impacts of technology adoption on the labor market.
    JEL: J23 J24 O33
    Date: 2017–07
  8. By: Anna Gumpert; Andreas Moxnes; Natalia Ramondo; Felix Tintelnot
    Abstract: This paper studies the life-cycle dynamics of exporters and multinational enterprises (MNEs). We present a dynamic model of trade and MNE activity in which the mode of serving a market depends on the well-known proximity-concentration tradeoff. We show that the option of performing MNE activities in the model produces life-cycle patterns for exporters that differ from those in an export-only model. Calibrating our model to rich firm-level data from France and Norway, our main quantitative finding is that a reduction in trade costs triggers much larger responses in growth rates and exit rates, for young exporters, in the model with MNEs than in the model without MNEs. We also show that the model is largely consistent with a set of new facts on the joint life-cycle dynamic behavior of exporters and MNEs.
    JEL: F1 F23
    Date: 2017–11
  9. By: Ariel Burstein (UCLA)
    Abstract: We extend the model firm dynamics of Garcia-Macia, Hsieh, and Klenow (2016) to include a description of the costs of innovative investments as in the model of Klette and Kortum (2004). In this model, aggregate productivity (TFP) grows as a result of innovative investment by incumbent and entering firms in improving continuing products and acquiring new products to the firm. This model serves as a useful benchmark because it nests both Quality-Ladders based Neo-Shumpeterian models and Expanding Varieties models commonly used in the literature and, at the same time, it provides a rich model of firm dynamics as described in GHK. We show how data on firm dynamics and firm value can be used to infer the elasticities of aggregate productivity growth with respect to changes in incumbent firms' investments in improving their incumbent products, incumbent firms' investments in acquiring products new to the firm, and entering firms' investments in acquiring new products. As discussed in Atkeson and Burstein (2015), these elasticities are a crucial input in evaluating the extent to which it is possible to alter the medium term growth path of the macroeconomy through policies aimed at stimulating innovative investments by firms. We use these methods to provide quantitative estimates of these elasticities of aggregate TFP growth with respect to changes in each of the three categories of innovative investment in the model as well as of the rate of social depreciation of innovation expenditures.
    Date: 2017
  10. By: Owen Zidar (University of Chicago); Eric Zwick (University of Chicago); Danny Yagan (University of California, Berkeley); Matthew Smith (US Dept of Treasury)
    Abstract: We study rising business income among top income households using a large sample of U.S. firms linked to their owners and workers from 1999-2015. We establish four findings. First, business income growth accounts for nearly all of the rise in top income inequality in the 21st century. Second, business income growth is broad-based across sectors and not concentrated among a few top firms. Third, top-owned firms earn higher profit margins than other firms, which is primarily due to diverging firm performance rather than reallocation of top ownership, risk, or disguised labor payments for tax minimization. Fourth, profits have increased most in firms that rely on high-skilled human capital, especially when deployed at the top of the organization. Our findings suggest that market-based forces play a leading role in generating not only labor income inequality, but also capital income inequality. These findings have implications for central issues in economics: the measurement and determinants of income inequality and the labor share, the dispersion in firm productivity, the returns to schooling, and taxation of top labor and capital income.
    Date: 2017
  11. By: Frédéric LESNÉ (Transparency International - Initiative Madagascar)
    Abstract: As first shown in Clarke (2011), Word Bank’s Enterprise Surveys data suggest that the magnitude of bribery estimated by firm owners and managers in Africa is considerably higher when estimates are formulated as a percentage of turnover rather than in monetary value. This working paper confirms these findings with a randomized experiment carried out in Madagascar with 436 firm owners and managers and provides additional evidence that the observed gap in estimates between these two answer formats is caused by a measurement error on the part of survey respondents. Experience in running a business appears to mitigate error but without eliminating it completely.
    Date: 2017–09

This nep-bec issue is ©2017 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.