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on Business Economics |
| By: | Damián Tojeiro-Rivero (AQR-IREA Research Group, University of Barcelona. Department of Econometrics, Statistics and Applied Economics. Av. Diagonal 690, 08034 Barcelona, Spain. Tel.(+34) 934 021 412.); Rosina Moreno (AQR-IREA Research Group, University of Barcelona. Av. Diagonal 690 - 08034 Barcelona (Spain). Tel. +34934021823 - Fax +34934021821.) |
| Abstract: | Much has been said about the role that technological networking activities play on the innovative performance of firms, but little is known about the relevance of the context where the firm is locate shaping the efficiency of such networking activities. In this article we hypothesize that the transformation of firms' networking activities into innovation may vary depending on the regional environment in which the firm is located. For Spanish manufactures in the period 2000-12 and through the use of a multilevel framework, we obtain that after controlling for the firm's characteristics, the regional context has not only a direct effect on firms' innovation performance, but it also conditions the returns to firms' networking activities, although differently in the case of cooperation and outsourcing. Cooperating in innovation activities is more beneficial for those firms located in a knowledge intensive region, whereas R&D outsourcing seems to be more profitable for firms in regions with a low knowledge pool. |
| Keywords: | Technological cooperation, R&D Outsourcing, Local Knowledge Spillovers; Multilevel; Panel data; Spanish Firms, Manufactures. JEL classification: D21, D22, O31, R10, R15 |
| Date: | 2019–02 |
| URL: | http://d.repec.org/n?u=RePEc:ira:wpaper:201904&r=all |
| By: | Giacomo Rodano (Bank of Italy); Enrico Sette (Bank of Italy) |
| Abstract: | This note shows the consequences of different methodological choices for the estimates of the incidence of zombie firms in Italy. We use as a benchmark the influential measure proposed by the OECD (Adalet McGowan et al. 2017a and 2017b) which identifies zombie firms based on a combination of firm age and values of the interest coverage ratio (operating profits to interest expenses). We show that a key decision is whether operating profits are taken before or after amortization and depreciation and we argue that using profits after amortization and depreciation has several undesirable characteristics: i) it overestimates the share of capital “trapped” into zombie firms, and, to a smaller extent, the share of zombie firms; ii) it is worse in predicting the future performance of firms; iii) it is more likely to classify as zombies in a given year firms which invested heavily in previous years and amortized that investment quickly (for example to enjoy tax breaks); iv) it is especially inappropriate for cross-country comparisons. |
| Keywords: | zombie firms, productivity, misallocation |
| JEL: | D24 L25 O47 |
| Date: | 2019–01 |
| URL: | http://d.repec.org/n?u=RePEc:bdi:opques:qef_483_19&r=all |
| By: | Cheng Chen; Claudia Steinwender |
| Abstract: | Empirical evidence on the relationship between import competition and firm productivity is mixed. We explore a new dimension of firm heterogeneity by focusing on different types of managers. Using Spanish firm-level data, we show that import competition leads to productivity increases for family-managed firms that are initially unproductive. Productivity changes are driven by family management as opposed to family ownership or non-managing family members. This evidence is consistent with a model in which family managers care more about the survival of their firm than professional managers, which triggers additional effort when the firm is faced with an increased bankruptcy risk. We show evidence consistent with this mechanism. |
| JEL: | F13 F14 O31 |
| Date: | 2019–02 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:25539&r=all |
| By: | Schubert, Torben (CIRCLE, Lund University); Tavassoli, Sam (RMIT University) |
| Abstract: | The effects of diversity in management teams on firm innovation have become an important topic in strategic management. With a few exceptions, however, the literature has focused on diversity in Top Management Teams (TMTs), while the role of lower management levels, particularly in Middle Management Teams (MMTs), has usually been neglected. In this paper, we intend to fill this gap by explicitly differentiating between the effects of diversity in TMTs and MMTs. By matching various firm-level and individual-level datasets, we compiled a linked employer-employee panel dataset for Sweden for the period 2004–2012. Focusing on measures of educational diversity, we find that the effects differ considerably between MMTs and TMTs. TMTs diversity determines whether firms engage in innovation activities at all (strategic decision), while MMTs diversity affects the actual outcome of innovation processes (successful product innovations and their degree of market novelty). |
| Keywords: | Product innovation; diversity; middle management; top management; firm performance |
| JEL: | M12 M14 O30 |
| Date: | 2019–02–12 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:lucirc:2019_003&r=all |
| By: | Patrick Plane (CERDI - Centre d'Études et de Recherches sur le Développement International - Clermont Auvergne - UCA - Université Clermont Auvergne - CNRS - Centre National de la Recherche Scientifique); Marie-Ange Veganzones-Varoudakis (CERDI - Centre d'Études et de Recherches sur le Développement International - Clermont Auvergne - UCA - Université Clermont Auvergne - CNRS - Centre National de la Recherche Scientifique) |
| Abstract: | We study the interactions between firm-level innovation, productivity and exports in the case of the Indian manufacturing sector. To differentiate the incentives to innovate from the ability to innovate, we distinguish the inputs of innovation (R&D and training), from the outputs. Our findings highlight a virtuous circle between the three components of innovation, as well as between firm-level R&D, innovation and exports. The results suggest a positive effect of R&D on innovation (product innovation in particular), of innovation on exports (product and marketing innovation especially), and of exports on R&D. Furthermore, it seems that training and R&D reinforce each other in the Indian firm-level innovation process: doing R&D incites firms to train their workforce, and training stimulates R&D in return. Productivity of the Indian manufacturing firms seems to benefit from that dynamics, as exporting and innovating would improve firm-level TFP. As for the investment climate, our results suggest that the differences in the Indian firm-level environment participate in the firms' performance gaps. These results are all the more important in the context of the Make in India campaign and the business environment deficiencies. |
| Keywords: | Innovation,Productivity,Exports,Investment climate,Manufacturing,Firm-level data. |
| Date: | 2019–01–23 |
| URL: | http://d.repec.org/n?u=RePEc:hal:wpaper:halshs-01990327&r=all |
| By: | He, Qing; Li, Dongxu; Lu, Liping; Chong, Terence Tai Leung |
| Abstract: | This paper examines the impact of institutional ownership on the performance of private equity placements (PEPs) for listed firms in China. We find that the presence of institutional investors can alleviate the information asymmetries between listed firms and the market. The market reaction to PEP announcements is significantly smaller if there is a higher portion of institutional shareholdings. Long-term firm operational performance after PEPs is positively correlated with institutional shareholdings. Moreover, we find that the relationship between institutional shareholdings and PEP performance is mainly driven by non-listed corporate investors and mutual funds. Finally, the relationship between PEP performance and institutional shareholdings is stronger in smaller PEP issuers. |
| Keywords: | Institutional ownership; Private equity placements (PEPs); Information asymmetry; Strategic investor; Liquidity investor |
| JEL: | G23 G32 G38 K22 |
| Date: | 2017–12–14 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:92035&r=all |
| By: | Asturias, Jose (Georgetown University Qatar); Hur, Sewon (Federal Reserve Bank of Cleveland); Kehoe, Timothy J. (Federal Reserve Bank of Minneapolis); Ruhl, Kim J. (University of Wisconsin) |
| Abstract: | Applying the Foster, Haltiwanger, and Krizan (FHK) (2001) decomposition to plant-level manufacturing data from Chile and Korea, we find that the entry and exit of plants account for a larger fraction of aggregate productivity growth during periods of fast GDP growth. Studies of other countries confirm this empirical relationship. To analyze this relationship, we develop a simple model of firm entry and exit based on Hopenhayn (1992) in which there are analytical expressions for the FHK decomposition. When we introduce reforms that reduce entry costs or reduce barriers to technology adoption into a calibrated model, we find that the entry and exit terms in the FHK decomposition become more important as GDP grows rapidly, just as they do in the data from Chile and Korea. |
| Keywords: | Entry; Exit; Productivity; Entry costs; Barriers to technology adoption; |
| JEL: | E22 O10 O38 O47 |
| Date: | 2019–02–01 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fedcwq:190300&r=all |
| By: | Maryam Farboodi; Roxana Mihet; Thomas Philippon; Laura Veldkamp |
| Abstract: | We study a model where firms accumulate data as a valuable intangible asset. Data accumulation affects firms’ dynamics. It increases the skewness of the firm size distribution as large firms generate more data and invest more in active experimentation. On the other hand, small data- savvy firms can overtake more traditional incumbents, provided they can finance their initial money- losing growth. Our model can be used to estimate the market and social value of data. |
| JEL: | D21 E01 L1 |
| Date: | 2019–01 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:25515&r=all |
| By: | Levander, Mats (Financial Stability Department, Central Bank of Sweden) |
| Abstract: | In this paper, I investigate whether being part of a business group mitigated the effects of the global financial crisis for Swedish firms. The crisis is used as an exogenous shock to firms' external financing. The investments made by business group firms are compared to those made by standalone firms. I find that being part of a business group had a mitigating effect on the impact of the crisis on firm investments. Firms that were part of a business group reduced their investments by significantly less than standalone rms. These differences are driven by a diversification effect among business group firms due to the use of internal capital markets and easier access to external financing. I present evidence of increased internal capital market activity during the crisis. Finally, my results suggest that business group firms profitability increased relative to the profitability of standalone firms after the crisis. |
| Keywords: | Financial crisis; firm investment; business Group; internal capital markets; external financing constraints |
| JEL: | G01 G30 G32 |
| Date: | 2018–11–01 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:rbnkwp:0359&r=all |
| By: | Creane, Anthony; Manduchi, Agostino |
| Abstract: | In their seminal paper Grossman and Shapiro (1984) find that informative advertising is socially excessive in an oligopoly (entry is also socially excessive). However, the analysis assumed that all consumers receive at least one advertisement. Christou and Vettas (2008), among others, present counter-examples in alternative settings, showing when the assumption does not hold, the equilibrium advertising may, instead, be inefficiently low. Christou and Vettas (2008) also show there may be non-existence due to discontinuities from undercutting, that quasiconcavity may not hold, and present examples in which the equilibrium does not exist as firms would deviate to a higher price. We revisit the question by modeling firms (like consumers) as a continuum, which mitigates the discontinuity that exists in both papers and allows the general analysis to include the cases when some consumers receive no advertisements. As a result, we are able to derive explicit and intuitive conditions for an equilibrium. More importantly, we find, instead, that advertising is socially insufficient regardless of the fraction of the consumers who receive an ad, including when all consumers receive at least one ad. We also find that there is insufficient entry instead of excess entry. We provide intuition for the difference between our and previous results. |
| Keywords: | Informative advertising, product differentiation, monopolistic competition, welfare. |
| JEL: | D83 L13 L15 |
| Date: | 2019–02–11 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:92126&r=all |
| By: | Charlie Joyez (Université Côte d'Azur, France; GREDEG CNRS) |
| Abstract: | The multiple location choices of firms respond to a complex design of simultaneous and related goals. This paper reveals how the geographic coverage of French multinational firms is increasingly determined by Global Value Chains (GVCs) since the mid-1990s. I study the network structure of French multinationals using firm-level data, and of the Global Value Chains using the bilateral value added (VA) content of exports (from international Input-Output tables). The comparison of the two networks reveals an alignment of firms' plants along global value chains, supported by several econometric estimations including a multiple regression Quadratic Assignment Procedure and a panel OLS defined at the country-pair level. Multinationals have modified their foreign affiliates' locations to settle in countries engaged in sequential production, and this result holds when controlling for gravity-like location's determinants and raw international trade flows. Specifically, I report how MNEs are moving up the value chain, as their new locations turned to be more driven by an upstream alignment on GVCs (toward the VA source) rather than a downstream one (toward VA destination). Eventually, the GVCs' attraction increased after the 2008 crisis, even though GVCs were experiencing a slowdown. Therefore, firm's vulnerability to the dismantling of GVCs similarly increased. |
| Keywords: | Global Value Chains, Multinational Firms, Location Choices, Weighted Directed Networks |
| JEL: | F02 F23 C45 |
| Date: | 2019–02 |
| URL: | http://d.repec.org/n?u=RePEc:gre:wpaper:2019-05&r=all |
| By: | Damián Tojeiro-Rivero (AQR-IREA, University of Barcelona); Rosina Moreno (AQR-IREA, University of Barcelona) |
| Abstract: | Much has been said about the role that technological networking activities play on the innovative performance of rms, but little is known about the relevance of the context where the rm is locate shaping the eciency of such networking activities. In this article we hypothesize that the transformation of rms' networking activities into innovation may vary depending on the regional environment in which the rm is located. For Spanish manufactures in the period 2000-12 and through the use of a multilevel framework, we obtain that after controlling for the rm's characteristics, the regional context has not only a direct eect on rms' innovation performance, but it also conditions the returns to rms' networking activities, although dierently in the case of cooperation and outsourcing. Cooperating in innovation activities is more benecial for those rms located in a knowledge intensive region, whereas R&D outsourcing seems to be more protable for rms in regions with a low knowledge pool. |
| Keywords: | Technological cooperation, R&D Outsourcing, Local Knowledge Spillovers; Multilevel; Panel data; Spanish Firms, Manufactures JEL classification: D21, D22, O31, R10, R15 |
| Date: | 2019–01 |
| URL: | http://d.repec.org/n?u=RePEc:aqr:wpaper:201903&r=all |
| By: | Fatih Yilmaz; Ýsmail Baydur |
| Abstract: | Financial institutions are exempt from the Value-Added Tax in most countries. We develop a general equilibrium model with endogenous firm entry and a banking sector to accommodate three key distortions related to exempt treatment: (i) self-supply bias in the banking sector, (ii) under-taxation of payment services, and (iii) input distortions in the business sector and tax cascading. We calibrate our model to the average of Germany, France and the U.K data. Our results show that repealing exempt treatment always increases tax revenues. However, welfare gains occur only at low VAT rates due to the hump-shaped VAT Laffer curve. |
| Keywords: | VAT, Financial services, Exempt treatment, Laffer curve, Heterogeneous firms |
| JEL: | G20 H21 H24 H25 H30 |
| Date: | 2018 |
| URL: | http://d.repec.org/n?u=RePEc:tcb:wpaper:1815&r=all |
| By: | ARIKAWA Yasuhiro; INOUE Kotaro; SAITO Takuji |
| Abstract: | This study examines whether the sustained lower profitability and market valuation of Japanese firms compared to global peer firms can be explained by the structure of insider dominate board of directors and the employment system which hinders flexible employment adjustments by using cross-country data. Firstly we show that level of outside director ratio and flexibility of employment adjustment both differ consistently across 27 countries in the analyzed period. We show that these two factors significantly explain observed variation of financial performance across countries significantly. In addition, we show that not only do these two factors have significant explanation power over the relatively poor performance of Japanese firms, but also over the better financial performance and growth rate of US firms. |
| Date: | 2018–12 |
| URL: | http://d.repec.org/n?u=RePEc:eti:dpaper:18084&r=all |