nep-bec New Economics Papers
on Business Economics
Issue of 2018‒05‒14
nine papers chosen by
Vasileios Bougioukos
Bangor University

  1. Product market competition and gender discrimination By Dudley Cooke; Ana P. Fernandes; Priscila Ferreira
  2. Networks and Trade By Bernard, Andrew B.; Moxnes, Andreas
  3. Non-Additivity in Accounting Valuation: Theory and Applications By Paugam, Luc; Casta, Jean-François; Stolowy, Hervé
  4. Aggregation, Capital Heterogeneity, and the Investment CAPM By Goncalves, Andrei; Xue, Chen; Zhang, Lu
  5. Trade with Benefits: New Insights on Competition and Innovation By JaeBin Ahn; Hyoungmin Han; Yi Huang
  6. The role of local currency pricing in international transmission effects of monetary and productivity shocks in an economy with vertical production linkage and firm entry By Dohwa, Kohjiro
  7. Buying the Verdict By Lauren H. Cohen; Umit G. Gurun
  8. For a contingent approach of conflict resolution mechanisms: the case of innovation networks By Sébastien Brion; Elodie Gardet
  9. External search strategies: The role of innovation objectives and specialization By Iferd, Younes; Plötz, Patrick

  1. By: Dudley Cooke (University of Exeter); Ana P. Fernandes (University of Exeter); Priscila Ferreira (University of Minho, NIMA)
    Abstract: This paper presents novel empirical evidence for the prediction from Becker’s (1957) famous theory, that competition will drive discrimination out of the market. We use a comprehensive firm entry deregulation reform in Portugal as a quasi-natural experiment to study the effect of increased product market competition on gender discrimination. We use employer-employee data for the universe of private sector firms and workers, and exploit the staggered implementation of the reform across municipalities for identification. Increased competition following the deregulation reduces the gender pay gap for medium- and high-skill workers but not for the low-skilled. The gender pay gap is also reduced for workers in managerial positions, except for the CEO. We also find that the share of females in managerial positions increased in affected municipalities. Existing evidence has shown that gender discrimination reduces output; our findings suggest that deregulation can contribute to reduce inefficiencies arising from gender discrimination.
    Keywords: Deregulation, Discrimination, Entry, Gender Pay Gap, Product Market Competition, Wage Structure.
    JEL: J16 J31 J71
    Date: 2018–05
  2. By: Bernard, Andrew B.; Moxnes, Andreas
    Abstract: Trade occurs between firms both across borders and within countries, and the vast majority of trade transactions includes at least one large firm with many trading partners. This paper reviews the literature on firm-to-firm connections in trade. A growing body of evidence coming from domestic and international transaction data has established empirical regularities which have inspired the development of new theories emphasizing firm heterogeneity among both buyers and suppliers in production networks. Theoretical work has considered both static and dynamic matching environments in a framework of many-to-many matching. The literature on trade and production networks is at an early stage, and there are a large number of unanswered empirical and theoretical questions.
    Keywords: International Trade; offshoring; production networks; productivity
    JEL: F10 F12 F14 L11 L21
    Date: 2018–04
  3. By: Paugam, Luc; Casta, Jean-François; Stolowy, Hervé
    Abstract: This paper has three objectives: (1) To introduce a theoretical solution to the issue of non-additivity between assets in place, relying on an accounting-based valuation approach; (2) To explain how such an approach can be implemented empirically by measuring synergies between assets; (3) To present the properties of this non-additive valuation technique. We use Choquet capacities, i.e., non-additive aggregation operators, to measure the interactions between assets and apply our methodology to a sample of U.S. firms from the Capital Goods industry. To operationalize our approach we examine the relationships between synergies – captured by Choquet capacities – and the market-to-book ratio (proxying for growth options), and show how interactions between assets are consistently linked to a firm’s market-to-book ratio. We also measure firm-specific productive efficiency relative to the industry and firm size. For large firms, efficiency, as defined by our approach, is positively associated with higher future operating cash flows. For small firms, efficiency is positively associated with higher future sales growth. We document that the non-additive approach appears to be better to identify expected relationships between efficiency and future performance than a simpler approach based on the market-to-book ratio.
    Keywords: Goodwill; Non-additive accounting-based valuation; Synergies; Choquet capacities; Growth options; Productive efficiency
    JEL: G39 M40 M41
    Date: 2017–08–01
  4. By: Goncalves, Andrei (Ohio State University); Xue, Chen (University of Cincinnati); Zhang, Lu (Ohio State University)
    Abstract: This paper provides a careful treatment of aggregation, and to a lesser extent, capital heterogeneity in the investment CAPM. Firm-level investment returns are constructed from firm-level variables, and then aggregated to the portfolio level to match with portfolio-level stock returns. Current assets form a separate production input besides physical capital. The model fits well the value, momentum, investment, and profitability premiums simultaneously, and partially explains the positive stock-investment return correlations, the procyclical and short-term dynamics of the momentum and profitability premiums, as well as the countercyclical and long-term dynamics of the value and investment premiums. However, the model fails to explain momentum crashes.
    JEL: D21 D92 E22 E44 G12 G14 G31 G32 G34
    Date: 2017–12
  5. By: JaeBin Ahn (International Monetary Fund); Hyoungmin Han (The Graduate Institute of International and Development Studies, Geneva); Yi Huang (The Graduate Institute of International and Development Studies, Geneva)
    Abstract: This paper examines how Korea’s import and export linkages with China affect the innovation outcomes of Korean manufacturing firms. Using our automated algorithm, we match Korean patent data to KIS-Value firm data from 1996 to 2015. We find that rising import and export with China lead to more patent applications by Korean manufacturing firms, with the positive impact particularly driven by large or public firms compared to SMEs or private firms. Most importantly, all of these results hold only in those sectors with higher quality products than Chinese products, shedding lights on reconciling recent empirical studies that found conflicting evidence on ’Schumpeterian force’ and ’escaping competition.’
    Keywords: Competition, Innovation, China Shock, Schumpeterian Force, Escaping Competition
    JEL: F14 F16 O34
    Date: 2018–05
  6. By: Dohwa, Kohjiro
    Abstract: In this paper, we construct a two-country model with the three factors of asymmetry in price-setting behavior between home and foreign intermediate goods firms, vertical production and trade, and endogenous entry of home and foreign final goods firms. We mainly examine the effect of asymmetric price-setting behavior on the welfare effects of monetary and productivity shocks, taking into account firm entry and exit. We show that when the ratio of home and/or foreign intermediate goods firms that set their export prices in the local currency rises, a home monetary shock has a beggar-thy-neighbor effect. In scenarios other than one where the ratios of both countries' intermediate goods firms that set their export prices in the local currency are unity, we show that the two types of home productivity shocks cause foreign welfare to deteriorate. When the ratios of both countries' intermediate goods firms that set their export prices in the local currency are unity, we show that the two types of home productivity shocks have a different effect on foreign welfare.
    Keywords: Local currency pricing, Vertical production and trade, Firm entry, Monetary shock, Productivity shocks
    JEL: F41 F42
    Date: 2018–04–24
  7. By: Lauren H. Cohen; Umit G. Gurun
    Abstract: We document evidence that firms systematically increase specialized, locally targeted advertising following the firm being taken to trial in that given location - precisely following initiation of the suit. In particular, we use legal actions brought against publicly traded firms over the 20 year sample period that progress to trial from 1995-2014. In terms of magnitude, the increase is sizable: targeted local advertising increases by 23% (t=4.39) following the suit. Moreover, firms concentrate these strategic increases in locations where the return on their advertising dollars are largest: in smaller, more concentrated advertising markets where fewer competitor firms are advertising. They focus their advertisement spikes specifically toward jury trials, and in fact specifically toward the most likely jury pool. Lastly, we document that these advertising spikes are associated with verdicts, increasing the probability of a favorable outcome.
    JEL: D22 G30 K41 K42 L14 M21 M37
    Date: 2018–04
  8. By: Sébastien Brion (CRET-LOG - Centre de Recherche sur le Transport et la Logistique - AMU - Aix Marseille Université); Elodie Gardet (IREGE - Institut de Recherche en Gestion et en Economie - USMB [Université de Savoie] [Université de Chambéry] - Université Savoie Mont Blanc)
    Abstract: Previous researches on interorganizational relations show contradictory findings on the link between conflict and members satisfaction. While recent literature sketches some insight to refine the influence of different type of conflicts, resolution mechanisms that overcome these conflicts remains less studied. Our research proposes that conflict resolution mechanisms moderate hub firm satisfaction, depending on the type of conflict. Study of 173 innovation networks hub's firms demonstrate contingent relationships between type of conflict and resolution mechanisms on hub firm satisfaction. The expected negative effect of task conflict on hub firm satisfaction is positively moderate by soft resolution mechanisms (discussion and soft pressure), and the degradation caused by the relational conflicts on the hub firm satisfaction is compensate by the hard conflict resolution mechanism (mediation and court). These results shed new light on how to mitigate conflicts in the context of innovation, prone to discordances. Theoretically, this research paves the way for a joint consideration of literature on conflict types and literature on resolution mechanisms that are typically treated separately.
    Keywords: innovation networks,interorganizational conflicts,resolution mechanisms
    Date: 2018–06–06
  9. By: Iferd, Younes; Plötz, Patrick
    Abstract: Firms are increasingly competing in an open innovation environment. Search strategies for external knowledge therefore become decisive for firms' success. Existing research distinguishes between breadth (diversity) and depth (intensity) with which firms deal with external knowledge sources. However, relatively little is known about how mangers can selectively strengthen one of these dimensions. We argue conceptually that the effect of breadth and depth of a research strategy on the innovation performance depends on (1) the type of innovation objectives (explorative vs. exploitative innovation objectives) and (2) the nature of the firm's orientation in drawing on external knowledge (science-based or market-based orientation). We test these hypotheses empirically for a sample of 1,434 manufacturing firms in Germany. Our results show that explorative innovation objectives strengthen the effect of breadth on innovation performance while exploitive objectives increase the depth. Moreover, we find that market-driven strategy favours breadth while science-driven strategy is more prevalent for depth search strategy.
    Keywords: open innovation,exploitative/explorative search strategies,market/science-driven strategies
    Date: 2018

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