nep-bec New Economics Papers
on Business Economics
Issue of 2018‒01‒15
eleven papers chosen by
Vasileios Bougioukos
Bangor University

  1. Firm Size and the Intensive Margin of Import Demand By J. Blaum; c. Lelarge; M. Peters
  2. Business Dynamic Statistics of Innovative Firms By Nathan Goldschlagy; Elisabeth Perlmanz
  3. Older and Slower: The Startup Deficit's Lasting Effects on Aggregate Productivity Growth By Robert Dent; David Berger; Benjamin Pugsley; Titan Alon
  4. Reaching Up and Reaching Out: The Impact of Competition on Firms’ Productivity and Export Decisions By Kate Hynes; Eric Evans Osei Opoku; Isabel K. M. Yan
  5. How Does Firm Survival Differ between Business Takeovers and New Venture Start-ups? By Xi, Guoqian; Block, Jörn; Lasch, Frank; Robert, Frank; Thurik, Roy
  6. Coordination Costs, Market Size, and the Choice of Technology By Zhou, Haiwen
  7. Parenthood, Family Friendly Firms, and the Gender Gaps in Early Work Careers By V. Joseph Hotz; Per Johansson; Arizo Karimi
  8. Demand learning and firm dynamics: evidence from exporters By Berman, Nicolas; Rebeyrol, Vincent; Vicard, Vincent
  9. The Life-Cycle Dynamics of Exporters and Multinational Firms By Anna Gumpert; Andreas Moxnes; Natalia Ramondo; Felix Tintelnot
  10. Tax Havens, Accounting Experts, and Fee-Setting Rules By Thomas A. Gresik; Kai A. Konrad
  11. Labour mobility, skill-relatedness and plant survival over the industry life cycle: Evidence from new Dutch plants By Ron Boschma; Riccardo Cappelli; Anet Weterings

  1. By: J. Blaum; c. Lelarge; M. Peters
    Abstract: We use French microdata to test an ubiquitous property of firm-based models of importing. When firm efficiency is factor neutral and input prices and qualities are common across firms, firm size should have no effect on expenditure shares on the different products and varieties sourced, holding the extensive margin constant. We show that this property is not supported by the data. Holding the sourcing strategy fixed, we find that larger firms (i) have lower import shares, (ii) concentrate their import spending on their top varieties and (iii) pay higher prices for their imported inputs. Our findings imply that input trade, through the intensive margin, is less beneficial for larger firms. Our results are consistent with a complementarity between firm productivity and input quality.
    Keywords: Trade in Intermediate Inputs; Firm heterogeneity, Firm size, Non-homotheticities.
    JEL: F11 F12 F14 D21 D22 D24
    Date: 2017
  2. By: Nathan Goldschlagy; Elisabeth Perlmanz
    Abstract: A key driver of economic growth is the reallocation of resources from low to high productivity activities. Innovation plays an important role in this regard by introducing new products, services, and business methods that ultimately lead to increased productivity and rising living standards. Traditional measures of innovation, particularly those based on aggregate inputs, are increasingly unable to capture the breadth and depth of innovation in modern economies. In this paper, we describe an effort at the US Census Bureau, the Business Dynamics Statistics of Innovative Firms (BDS-IF) project, which aims to address these challenges by extending the Business Dynamics Statistics data to include new measures of innovative activity. The BDS-IF project will produce measures of firm, establishment, and employment flows by firm age, firm size, and industry for the subset of firms engaged in activities related to innovation. These activities include patenting and trademarking, the employment of STEM workers, and R&D expenditures. The exibility of the underlying data infrastructure allows this measurement agenda to be extended to include copyright activity, management practices, and high growth firms.
    Keywords: Firm dynamics, innovation, Longitudinal Business Database, Business Dynamics Statistics
    Date: 2017–01
  3. By: Robert Dent (University of Virginia); David Berger (Northwestern University); Benjamin Pugsley (Federal Reserve Bank of NY); Titan Alon
    Abstract: The more than thirty-year decline in the rate of new employer business creation, and with it the significant shift in the firm age distribution of U.S. employers have both slowed U.S. labor productivity growth. This gradually accumulating drag on productivity growth was obscured by the surge in TFP in the late 1990s and early 2000s (see Fernald 2014). Earlier work by Baily et al. (1992) and Foster et al. (2006) among others has shown the crucial role of reallocation among establishments, primarily from entry and exit, in explaining aggregate productivity growth within the manufacturing and retail trade sectors. In this paper, we use administrative Census data with near universal coverage of the non farm private sector to assess the effects on aggregate productivity from the direct effects of the decline in the business entry rate and its indirect effect on the age distribution. We follow the methodology of Haltiwanger et al. (2016) and merge the Census Longitudinal Business Database (LBD) with data on annual sales from IRS records in the Census Business Register to construct a revenue-enhanced LBD with annual firm level measures of real sales per worker. Using these measures as rough proxies for labor productivity within narrow NAICS industries, we quantify how the entire distribution of labor productivity evolves by firm age as well as other firm characteristics by extending the dynamic Olley-Pakes decomposition in Melitz and Polanec (2015). Looking across the entire private-sector economy, we have three main findings. First, we document that the age-profile of labor productivity growth of firms between the ages of 1 and 19 is downward sloping and convex. Productivity growth is highest among young firms and declines quickly with firm age. Since startups have higher productivity growth rates, a decline in the startup rate lowers aggregate productivity growth. Second, we document that this age profile of firms aged 1-19 and the pattern of selection is stable across our sample. This means that the slow down in aggregate productivity growth has not come from changes in the age profile of productivity growth for these age cohorts. Third, the contribution of mature firms (age 20+) to aggregate productivity growth has declined significantly since the mid-2000 and the source of this decline has been a slowdown in allocative efficiency (the most productivity mature firms have not gained market share relative to less productive firms). We use these cross sectional results to calibrate an equilibrium growth model with heterogeneous firms and to perform simple counterfactuals. The model allows us to estimate the aggregate consequences of the declines in entry for aggregate productivity in the time series. Using the model we quantify the total effect of the decades long startup deficit on aggregate productivity growth. Simple counterfactuals suggest that the decline in the startup rate can explain a significant fraction, though not all, of the aggregate productivity growth slowdown.
    Date: 2017
  4. By: Kate Hynes; Eric Evans Osei Opoku; Isabel K. M. Yan
    Abstract: This paper investigates the effect of competition in both the domestic and foreign markets on firm productivity and export decisions using firm level data from 139 countries. Using a Sample Selection Endogenous Treatment (SSET) Poisson model that tackles both the issue of endogenous sample selection and endogenous treatment at the same time, we document robust evidence that strong competition in the domestic market propels firms to be more productive, and rising domestic competition increases firms’ propensity to export. However, firms’ export intensity, i.e. how much they export, is not directly influenced by competition in the domestic market. Moreover, lower competition in the foreign market increases the propensity of domestic firms to export, enlarging the set of exporting firms to firms with relatively smaller export amount.
    Keywords: Productivity; Export propensity; Export intensity; Competition; SSET-Poisson model
    JEL: C21 J24 L25
    Date: 2017–09
  5. By: Xi, Guoqian (University of Trier); Block, Jörn (University of Trier); Lasch, Frank (Montpellier Business School); Robert, Frank (Montpellier Business School); Thurik, Roy (Erasmus University Rotterdam)
    Abstract: Focusing on entrepreneurship entry modes, we investigate two research questions regarding firm survival: how does the survival probability differ between business takeovers and new venture start-ups? And how do the determinants of survival differ between the two entry modes? Using a large French dataset, we find that business takeovers have a higher survival chance than new venture start-ups. Yet, the differences between two entry modes partially disappear when controlling for differences in founder and firm characteristics. Moreover, we identify differences in the determinants of survival between the two groups, highlighting the distinction between the two forms of entrepreneurship.
    Keywords: new venture start-up, business takeover, firm survival
    JEL: L26 M13
    Date: 2017–11
  6. By: Zhou, Haiwen
    Abstract: Impact of coordination costs and market size on a firm’s choice of technology is studied in a general equilibrium model in which firms engage in oligopolistic competition. A firm establishes an organizational hierarchy to coordinate its production. First, it is shown that an increase in market size leads a firm to choose a more specialized technology. Second, surprisingly, a robust result is that an increase in the level of coordination efficiency leads a firm to choose a less specialized technology.
    Keywords: Division of labor, coordination efficiency, technology choice, hierarchy, market size
    JEL: D43 L13 O14
    Date: 2017–12–05
  7. By: V. Joseph Hotz; Per Johansson; Arizo Karimi
    Abstract: We consider the role that firm attributes play in accounting for the divergence in the careers of women and men, with the onset of parenthood. We exploit a matched employer-employee data set from Sweden that provides a rich set of firm and worker attributes. We index firms by their “family friendliness” and analyze the effect of firm family friendliness on the career gap between mothers and fathers. We find that women disproportionately sort into family friendly firms after first birth and that the wage penalty to motherhood is diminished by being assigned to a more family friendly firm or job. We also find that working in a more family friendly firm or job diminishes the parenthood penalty to labor earnings and makes it easier for mothers to work more hours. At the same time, the smaller wage and income penalties to parents from working in family friendly firms and jobs come at the expense of their occupational progression, especially among mothers, impeding their ability to climb career ladders. Finally, we find that family friendly jobs are more easily substitutable for one another. This latter finding suggests that family friendly firms are able to accommodate the family responsibilities of their workers while still managing to keep their costs low. Our findings also suggest that paid parental leave with job protection – which are features of the Swedish context – may not be sufficient to achieve the balancing of career and family responsibilities, but that the way firms and jobs are structured can play a crucial role in facilitating this balance.
    JEL: J13 J16 J24 J31 J62
    Date: 2017–12
  8. By: Berman, Nicolas; Rebeyrol, Vincent; Vicard, Vincent
    Abstract: This paper provides direct evidence that learning about demand is an important driver of firms' dynamics. We present a model of Bayesian learning in which firms are uncertain about their idiosyncratic demand in each of the markets they serve, and update their beliefs as noisy information arrives. Firms are predicted to update more their beliefs to a given demand shock, the younger they are. We test and empirically confirm this prediction, using the structure of the model together with exporter-level data to identify idiosyncratic demand shocks and the firms' beliefs about future demand. Consistent with the theory, we also find that the learning process is weaker in more uncertain environments.
    Keywords: firm growth; belief updating; demand; exports; uncertainty
    JEL: D83 F14 L11
    Date: 2017–12
  9. 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.
    Keywords: international trade, exporters, multinational firm, Markov process, sunk cost, proximity-concentration tradeoff, trade liberalization
    JEL: F10 F20
    Date: 2017
  10. By: Thomas A. Gresik; Kai A. Konrad
    Abstract: Tax havens differ in the specific tax planning arrangements multinational firms can use to reduce their tax liabilities. Given the complexity and cost associated with identifying the most effective tax haven to use, an accounting firm can act as an intermediary between tax havens and multinational corporations. We analyze a model with horizontally differentiated multinationals and tax havens to study the role accounting firm intermediation has on tax haven prices, multinational tax planning choices, accounting firm profits, and tax revenues. In equilibrium, uniform accounting firm fees generate higher accounting firm profit, less tax avoidance, and higher tax revenues than either full price discrimination or haven-specific fees.
    Keywords: tax haven, accounting firm, horizontal differentiation, double marginalization, fee-setting rules
    JEL: M41 H26 H73
    Date: 2017
  11. By: Ron Boschma; Riccardo Cappelli; Anet Weterings
    Abstract: Labour mobility is often considered a crucial factor for regional development. However, labour mobility is not good per se for local firms. There is increasing evidence that labour recruited from skill-related industries has a positive effect on plant performance, in contrast to intra-industry labour recruits. However, little is known about which types of labour are recruited in different stages of the evolution of an industry, and whether that matters for plant performance. This paper attempts to fill these gaps in the literature using plant-level data for manufacturing and services industries in the Netherlands for the period 2001-2009. Our study focuses on the effects of different types of labour recruits on the survival of new plants. We show that the effects of labour recruits from the same industry and from skill-related and unrelated industries on plant survival vary between the life cycle stages of industries. We also find that inter-regional labour flows do not impact on plant survival.
    Keywords: labour mobility, skill-relatedness, industry life cycle, industrial dynamics, firm survival
    JEL: R11 R12 O18
    Date: 2017–12

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