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on Business Economics |
| By: | Titan Alon; David Berger; Robert Dent; Benjamin Pugsley |
| Abstract: | We investigate the link between declining firm entry, aging incumbent firms and sluggish U.S. productivity growth. We provide a dynamic decomposition framework to characterize the contributions to industry productivity growth across the firm age distribution and apply this framework to the newly developed Revenue-enhanced Longitudinal Business Database (ReLBD). Overall, several key findings emerge: (i) the relationship between firm age and productivity growth is downward sloping and convex; (ii) the magnitudes are substantial and significant but fade quickly, with nearly 2/3 of the effect disappearing after five years and nearly the entire effect disappearing after ten; (iii) the higher productivity growth of young firms is driven nearly exclusively by the forces of selection and reallocation. Our results suggest a cumulative drag on aggregate productivity of 3.1% since 1980. Using an instrumental variables strategy we find a consistent pattern across states/MSAs in the U.S. The patterns are broadly consistent with a standard model of firm dynamics with monopolistic competition. |
| Date: | 2018–06 |
| URL: | http://d.repec.org/n?u=RePEc:cen:wpaper:18-29&r=bec |
| By: | Garnero, Andrea (OECD); Rycx, Francois (Free University of Brussels); Terraz, Isabelle (Université de Strasbourg) |
| Abstract: | How do firm-level collective agreements affect firm performance in a multi-level bargaining system? Using detailed Belgian linked employer-employee panel data, our findings show that firm agreements increase both wage costs and productivity (with respect to sector-level agreements). Relying on a recent approach developed by Bartolucci (2014), they also indicate that firm agreements exert a stronger impact on wages than on productivity, so that profitability is hampered. However, this rent-sharing effect only holds in manufacturing. In private sector services, the raw wage premium associated to firm agreements is entirely driven by compositional effects. Furthermore, estimates show that firm agreements lead to significantly more rent-sharing among firms operating in less competitive environments. Firm agreements are thus mainly found to raise wages beyond productivity when the rents to be shared between workers and firms are relatively big. Overall, this suggests that firm-level agreements benefit to both employers and employees – through higher productivity and wages – without being very detrimental to firms' performance. |
| Keywords: | collective bargaining, productivity, labour costs, linked panel data |
| JEL: | C33 J24 J31 |
| Date: | 2018–05 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp11568&r=bec |
| By: | Go Shimada; Tetsushi Sonobe |
| Abstract: | In recent years, there has been renewed interest in the productivity movement, and in particular the diffusion of Kaizen management as an approach to industrial development in developing countries. While a number of previous studies have evaluated the impact of the introduction of Kaizen on management practices and business performance, few studies have assessed its impacts on working conditions, wages, and employment, especially in the long term. By collecting firm-level data, we were able to conduct a retrospective study on the impacts of the Kaizen project - a project implemented in eight countries in the Central America and the Caribbean Region by the Japan International Cooperation Agency. Ninety-four firms were selected to take part in the project based on their willingness to adopt Kaizen management practices. Using the same criteria, we selected 182 comparable firms in the same industries and countries to make up the comparison group. Employing propensity score matching methods, this study found that the introduction of Kaizen improved working conditions and strengthened the social capital of workers. The willingness of managers to pay for Kaizen training increased after the training was completed, which suggests that it had a positive effect´ on the firm’s performance. We also found that managers and workers perceive the usefulness of Kaizen differently, which may lead to suggestions on ways to improve the design of future training programs. |
| Keywords: | Management training, Impact evaluation, Willingness to pay, Small and medium enterprises, Central America and the Caribbean Region |
| Date: | 2018–06–06 |
| URL: | http://d.repec.org/n?u=RePEc:jic:wpaper:173&r=bec |
| By: | Sara Calligaris (OECD); Massimo Del Gatto (G.d'Annunzio" University); Fadi Hassanz (Trinity College Dublin); Gianmarco Ottaviano (London School of Economics); Fabiano Schivardi (Università LUISS "Guido Carli") |
| Abstract: | Productivity has recently slowed down in many economies around the world. A crucial challenge in understanding what lies behind this \productivity puzzle" is the still short time span for which data can be analysed. An exception is Italy, where productivity growth started to stagnate 25 years ago. The Italian case can therefore offer useful insights to understand the global productivity slowdown. We find that resource misallocation has played a sizeable role in slowing down Italian productivity growth. If misallocation had remained at its 1995 level, in 2013 Italy's aggregate productivity would have been 18% higher than its actual level. Misallocation has mainly risen within sectors than between them, increasing more in sectors where the world technological frontier has expanded faster. Relative specialization in those sectors explains the patterns of misallocation across geographical areas and firm size classes. The broader message is that an important part of the explanation of the productivity puzzle may lie in the rising difficulty of reallocating resources across firms within sectors where technology is changing faster rather than between sectors with different speeds of technological change. |
| Keywords: | Misallocation, TFP, Productivity, Productivity Puzzle, Italy |
| JEL: | D22 D24 O11 O47 |
| Date: | 2018 |
| URL: | http://d.repec.org/n?u=RePEc:lui:lleewp:18142&r=bec |
| By: | Benjamin W. Pugsley; Peter Sedlacek; Vincent Sterk |
| Abstract: | Only half of all startups survive past the age of five and surviving businesses grow at vastly different speeds. Using micro data on employment in the population of U.S. Businesses, we estimate that the lion's share of these differences is driven by ex-ante heterogeneity across firms, rather than by ex-post shocks. We embed such heterogeneity in a firm dynamics model and study how ex-ante differences shape the distribution of firm size, "up-or-out" dynamics, and the associated gains in aggregate output. "Gazelles" - a small subset of startups with particularly high growth potential - emerge as key drivers of these outcomes. Analyzing changes in the distribution of ex-ante firm heterogeneity over time reveals that the birth rate and growth potential of gazelles has declined, creating substantial aggregate losses. |
| Keywords: | Firm Dynamics, Startups, Macroeconomics, Big Data |
| JEL: | D22 E23 E24 |
| Date: | 2018–06 |
| URL: | http://d.repec.org/n?u=RePEc:cen:wpaper:18-30&r=bec |
| By: | Milos Markovic (CES - Centre d'économie de la Sorbonne - UP1 - Université Panthéon-Sorbonne - CNRS - Centre National de la Recherche Scientifique); Michael Stemmer (CES - Centre d'économie de la Sorbonne - UP1 - Université Panthéon-Sorbonne - CNRS - Centre National de la Recherche Scientifique) |
| Abstract: | Using a unique dataset of unlisted Serbian firms during the period between 2005 and 2012, we analyze the impact of internal financial constraints on firm growth with respect to several firm-level characteristics. We also assess potential effects created by the 2008-2009 Global Financial Crisis. To do so, we rely on panel data models, which estimate via GMM cash flow sensitivities of firm growth, following the dynamic specification of Guariglia et al. (2011). Controlling for investment opportunities, our results show that Serbian firms face high financial constraints and exhibit generally a high reliance on retained earnings for firm growth. We do not find evidence for a crisis effect, potentially due to ex ante accumulated internal funds. Conventional firm characteristics such as age, size or overall performance largely determine the dependency on cash for firm growth. Moreover, foreign-owned companies seem to escape the financing gap by tapping other resources. A comparison with Belgian firms contrasts our results with an advanced country setting. |
| Keywords: | Financial constraints,firm growth,transition countries,dynamic panel data,GMM |
| Date: | 2017–02 |
| URL: | http://d.repec.org/n?u=RePEc:hal:journl:halshs-01489222&r=bec |
| By: | Sourav Bhattacharya; Pavel Chakraborty; Chirantan Chatterjee |
| Abstract: | We use The Patents (Amendment) Act, 2002 in India as a quasi-natural experiment to identify the causal e¤ect of higher incentives for innovation on firm organizational features. We find that stronger intellectual property (IP) protection has a sharper impact on technologically advanced firms, i.e., firms that were a-priori above the industry median in terms of technology adoption. While there is an overall increase in managers' share of compensation, this increase is about 1.6-1.7% more for high-tech firms. This difference can be attributed to a larger increase in performance pay for high-tech firms. The reform also leads to a significant increase in number of managerial layers and number of divisions for high-tech firms relative to low-tech firms, but only the latter effect is correlated with the differential change in managerial compensation. Broadly, we demonstrate that stronger IP protection leads to an increase in both within-firm and between-firm wage inequality, with more robust evidence for between-firm inequality. |
| Keywords: | Intellectual Property Regimes, High-tech and Low-tech firms, Managerial Com- pensation, Span of Control |
| JEL: | D21 D23 L23 O34 |
| Date: | 2018 |
| URL: | http://d.repec.org/n?u=RePEc:lan:wpaper:240829812&r=bec |
| By: | Elena Grinza; Francesco Quatraro |
| Abstract: | In this paper, we explore the impact of a firm's workers' replacements on innovation performance, by using rich matched employer-employee panel data for the Veneto region of Italy. We take the well-known resource-based theory of the firm as our departure point, and develop a set of hypotheses which we test empirically with negative binomial regressions. Coherently with our theoretical framework, we find that workers' replacements significantly dampen innovation performance, because they generate losses in the tacit knowledge base of the firm. We also nd that workers' replacements are especially detrimental to large and young rms, because large companies have more hierarchical rigidities and innovative capabilities in young rms are mostly dependent on specific human capital. Finally, our results show that firms' localization in industrial districts significantly mitigates the negative impact of workers' replacements, and that a similar picture emerges when firms are more exposed to knowledge spillovers, particularly of related knowledge. |
| Keywords: | Workers' replacements, excess worker turnover, innovation performance, tacit knowledge, knowledge spillovers, employer-employee matched longitudinal data. |
| JEL: | J63 O30 |
| Date: | 2018 |
| URL: | http://d.repec.org/n?u=RePEc:cca:wpaper:550&r=bec |
| By: | Petros Gkotsis (European Commission - JRC); Antonio Vezzani (European Commission - JRC) |
| Abstract: | In this work, we develop and apply a methodology to estimate technology-specific R&D investments at firm level and then use these to test some arguments that have become central in the innovation literature. In particular, we first combine R&D investments with patent data of the world top R&D investors worldwide and show that investment per patent varies greatly both across technologies and across firms developing the same technology. We then use the estimated firm-technology R&D investments to assess how these are related to the international and technological strategies of firms. The estimation strategy makes use of a multilevel framework that allows us to model heterogeneity both at the firm and industry level. In particular, we show that specific firms strategies requires different level of investments and that sector specificities matter in determining R&D per patent investments, economies of scale in knowledge production, and the cost of (further) specialization. Accounting for (un)observed heterogeneity may lead to better policy design and management decisions. |
| Keywords: | patents, R&D, technology, cost, heterogeneity, internationalization |
| Date: | 2018–06 |
| URL: | http://d.repec.org/n?u=RePEc:ipt:wpaper:201804&r=bec |
| By: | Acharya, Sushant (Federal Reserve Bank of New York); Wee, Shu Lin (Carnegie Mellon University) |
| Abstract: | A large and growing share of hires in the United States are replacement hires. This increase coincides with a growing productivity-wage gap. We connect these trends by building a model where firms post long-lived vacancies and engage in on-the-job search for more productive workers. These features improve a firm's bargaining position while raising workers' job insecurity and the wedge between hiring and meeting rates. All three channels lower wages while raising productivity. Quantitatively, increased replacement hiring explains half the increase in the productivity-wage gap. The socially efficient outcome features fewer low-productivity jobs and a 10 percent narrower productivity-wage gap. |
| Keywords: | replacement hiring; productivity-wage gap; unemployment; labor share; efficiency |
| JEL: | E32 J63 J64 |
| Date: | 2018–06–01 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fednsr:860&r=bec |
| By: | Álvaro Riascos; Juan David Martín; Natalia Serna |
| Abstract: | During 2014, the Comisión de Regulación de Comunicaciones in Colombia enacted a Resolution by which permanence clauses or fixed-length terms in mobile telecommunications contracts were prohibited for network operators offering bundled mobile terminals and voice plans. Prohibition was enacted under the argument permanence clauses create switching costs, reduce competition, and generate information asymmetries. In this study we measure the impact of the Resolution on consumer, firm, and social welfare by estimating the structural demand for mobile terminals and conducting two counterfactual scenarios. We show switching costs by means of permanence clauses reduce consumer utility and increase the variance of the utility distribution. We also show the Colombian market for mobile terminals has been better off without permanence clauses, with both consumers and firms experiencing gains from the prohibition. However, variation in firm surplus is explained mostly by the variation in profits of incumbent network operators than by the variation in profits of firms selling terminals at cash price. Our study contributes to the literature of bundled sales and switching costs and is crucial from the perspective of regulation and industrial policy in the telecommunications sector. |
| Keywords: | switching costs; permanence clauses; structural demand; telecommunications; fixed-length contracts |
| JEL: | L50 L13 L11 |
| Date: | 2017–07–03 |
| URL: | http://d.repec.org/n?u=RePEc:col:000508:016418&r=bec |
| By: | Durand, Rodolphe; Mani, Dalhia |
| Abstract: | In this paper, we investigate family firms’ position in the intercorporate ownership network. Rooting our predictions in the Behavioral Agency Model and a Network analytical framework, we predict and find that family involvement decreases the likelihood of business group affiliation and of cross-group ties leading to a lower embeddedness within the overall network. We predict and find the opposite effect for community involvement. We use the complete longitudinal dataset of publicly listed firms’ corporate ownership ties in India (2001, 2005, and 2009). Theoretical and substantive contributions are to research on family businesses and to research on interorganizational networks. |
| Keywords: | Family Firms; Community; Embeddedness; Network |
| JEL: | M10 |
| Date: | 2018–04–18 |
| URL: | http://d.repec.org/n?u=RePEc:ebg:heccah:1275&r=bec |