nep-bec New Economics Papers
on Business Economics
Issue of 2019‒09‒16
ten papers chosen by
Vasileios Bougioukos
Bangor University

  1. Production Substitution of Goods Within and Between Firms in a Multiproduct Duopoly By Tetsuya Shinkai; Ryoma Kitamura
  2. Helping SMEs internationalise through trade facilitation By Javier López González; Silvia Sorescu
  4. Board Characteristics and Corporate Social Disclosure: Evidence from an Emerging Economy By Ala' Rabi
  5. FDI and Duration of Intermediate Goods Imports: Empirical Evidence from Japanese affiliates in China By Chih-Hai Yang; Tadashi Ito; Toshiyuki Matsuura
  6. The influence of responsible downsizing strategy on employee organizational citizenship behavior By Yu-Fang Yen
  7. The Impact of Brexit on UK Firms By Nicholas Bloom; Philip Bunn; Scarlet Chen; Paul Mizen; Pawel Smietanka; Gregory Thwaites
  8. Mismatch Cycles By Isaac Baley; Ana Figueiredo; Robert Ulbricht
  9. French Households’ Portfolio: The Financial Almost Ideal Demand System Appraisal By Julia Schmidt; Walter Steingress
  10. Evaluating the Impact of Employment Protection on Firm-Provided Training in an RDD Framework By Thomas Bolli; Johanna Kemper

  1. By: Tetsuya Shinkai (School of Economics, Kwansei Gakuin University); Ryoma Kitamura (Faculty of Economics, Otemon Gakuin University)
    Abstract: We consider the product line strategies of duopolistic firms, each of which can supply two vertically-differentiated products under nonnegative output constraints and expectations of their rival's product line reaction. Considering a game of firms with heterogeneous (homogeneous) unit costs for high- (low-) quality products, we derive the equilibria for the game and conduct comparative statics of the equilibria outcomes on the relative superiority of the high-quality product and relative cost efficiency. In two of the equilibria, we find that where the cost-inefficient firm supplies a high-quality good, social welfare can worsen as its unit cost decreases. We also characterize the result using the production substitution of differentiated goods within a firm and the high-quality good between firms. Further, by comparing social welfare in the first-best equilibria with those in the Cournot duopoly equilibria, we find that the social welfare of the market worsens in the multiproduct Cournot duopoly equilibria as the relative superiority of the high-quality good increases.
    Keywords: Multiproduct firm; Duopoly; Production substitution; Vertical product differentiation
    JEL: D21 D43 L13 L15
    Date: 2019–09
  2. By: Javier López González (OECD); Silvia Sorescu (OECD)
    Abstract: Small and medium-sized enterprises (SMEs) play an important role in generating economic activity and employment in developing and developed countries. However, partly due to remaining at-the-border trade costs, SMEs continue to be less represented in international trade – as direct exporters or importers – than larger firms. Drawing on cross-country data from the World Bank Enterprise Survey (WBES), together with the OECD Trade by Enterprise Characteristics (TEC), this paper looks at the relationship between the trade facilitation environment – as measured through the OECD Trade Facilitation Indicators (TFIs) – and various measures of international engagement of SMEs. While there are differentiated impacts across firm size for different trade facilitation areas, the analysis shows that firms of all sizes across both developed and developing economies benefit from improvements in the overall trade facilitation environment, helping them export and import. However, on aggregate, smaller firms benefit more from improvements in the overall trade facilitation environment relative to large firms. The analysis also suggests that some trade facilitation measures matter more in addressing fixed versus variable costs for SMEs and provides some guidance as to what trade facilitation policy reforms might be prioritised.
    Keywords: exporting, importing, inclusive trade, SMEs, trade costs, trade facilitation
    JEL: D22 F13 F14 L11 L25
    Date: 2019–09–11
  3. By: Alexey Bereznoy (National Research University Higher School of Economics)
    Abstract: The purpose of this paper is to explore corporate foresight as a new important instrument within strategic management system of multinational corporations (MNCs). The author directly connects the recent rise of corporate foresight with MNCs’ growing need to fill the gaps of traditional corporate strategic management, struggling with the challenges of today’s global turbulent business-environment (known as VUCA world characterized by unprecedented volatility, uncertainty, complexity and ambiguity). From this perspective corporate foresight is capable to provide a number of viable responses. They include significant expansion of the horizon of MNCs’ long-term future vision, enhanced capabilities of business-environment scanning (identifying not only clearly visible trends but the so-called weak signals as well) and strengthening intra-firm communications in the course of strategy development process, thus contributing to the implementation capacity of multinational corporate team. Within analysis of actual corporate foresight practices of major multinationals special attention is attached to the common features of foresight organization (standard process phases, typical set of methods used) and peculiarities related mainly to different MNCs’ sector-specific environment characteristics, including complexity and dynamics of change. The attempt is also made to disclose the actual impact of corporate foresight activities on the effectiveness of the key functions of MNCs’ strategic management. The author draws the conclusion that corporate foresight is becoming a core element of the strategic management architecture of multinational business, striving to protect and strengthen its global market positioning in increasingly turbulent and unpredictable environment. For MNCs’ top management, trying to find the right strategic course in radically changing competitive landscape, this powerful tool is increasingly playing the same role as GPS navigator for car drivers.
    Keywords: multinational corporations, corporate strategic management, corporate foresight, turbulent global environment, strategic positioning in global markets
    JEL: F23 M16 L21 O33
    Date: 2019
  4. By: Ala' Rabi (Jerash University)
    Abstract: For the past twenty years, researchers have extensively debated the determinants of relationship between corporate governance and firm performance. Nevertheless, relationship between corporate governance and corporate social responsibility has received minimal attention in the extant literature, Particularly in developing countries. This paper seeks to fill the gap in the literature by examining the relationship between board characteristics and CSD. Using a sample 91 of non-financial listed companies in Amman Stock Exchange (ASE) for year ended 2017. Multiple regressions were used to confirm the relationship between board characteristics and CSD. As well as, the content analysis method was used to extract the items of corporate social disclosure from the company?s annual reports. The empirical results reveal that the level of corporate social disclosure is still relatively low compared to developed countries. Regarding board characteristics, the result show that (board size, INED) are each positive and significant relationship with the level of corporate social disclosure.
    Keywords: Corporate social disclosure, Board characteristics, Jordan
    Date: 2019–07
  5. By: Chih-Hai Yang (National Central University); Tadashi Ito (Gakushuin University); Toshiyuki Matsuura (Keio University)
    Abstract: This paper examines the duration of intermediate goods imports and its determinants for Japanese affiliates in China. In addition to product characteristics, we consider also the influences of affiliate and parent firm characteristics, as well as regional agglomeration. Based on a unique parent?affiliate?transaction matched panel dataset over the 2000?2006 period, we adopt a discrete-time hazard model to conduct empirical estimations. Results show that products with a higher upstreamness index, differentiated goods, and process-trade goods are less likely to be substituted for local procurement. Firms located in agglomerated regions with more foreign affiliates tend to shorten the duration of imports from their home country. In terms of parent-firm characteristics, multinational enterprises that have many foreign affiliates or greater foreign production experience continue to import intermediate goods for a longer duration.
    Keywords: Trade duration, FDI, Intermediate goods, Agglomeration
    Date: 2019–07
  6. By: Yu-Fang Yen (National Quemoy University, Department of Business Administration)
    Abstract: To cope with changing environments, firms have commonly adopted a downsizing strategy to reduce costs and thereby increase competitive advantage. However, downsizing is not a necessary panacea to firm performance. Contrarily, downsizing might harm employees from economic, physical, and family aspects. Therefore, consequently cause negative influence to the quality of business operations. To ease negative effect, some downsizing researchers have proposed that downsizing strategies must allow employees a sense of responsibility toward those strategies. This will reduce distrustfulness and encourage favorable behaviors of employees toward organizations, and consequently increase post-downsizing performance. The research targeted employees in the high-tech industry to conduct the empirical study. The findings revealed that the higher the level of employees that perceive the downsizing strategy as responsible, the better it is to upgrade its organizational citizenship behavior in the post-downsizing era. The findings could offer insight for firms attempting to conduct downsizing strategies.
    Keywords: responsible downsizing strategy, downsizing strategy, organizational citizenship behavior
    Date: 2019–07
  7. By: Nicholas Bloom; Philip Bunn; Scarlet Chen; Paul Mizen; Pawel Smietanka; Gregory Thwaites
    Abstract: We use a major new survey of UK firms, the Decision Maker Panel, to assess the impact of the June 2016 Brexit referendum. We identify three key results. First, the UK’s decision to leave the EU has generated a large, broad and long-lasting increase in uncertainty. Second, anticipation of Brexit is estimated to have gradually reduced investment by about 11% over the three years following the June 2016 vote. This fall in investment took longer to occur than predicted at the time of the referendum, suggesting that the size and persistence of this uncertainty may have delayed firms’ response to the Brexit vote. Finally, the Brexit process is estimated to have reduced UK productivity by between 2% and 5% over the three years after the referendum. Much of this drop is from negative within-firm effects, in part because firms are committing several hours per week of top-management time to Brexit planning. We also find evidence for smaller negative between-firm effects as more productive, internationally exposed, firms have been more negatively impacted than less productive domestic firms.
    JEL: E0
    Date: 2019–09
  8. By: Isaac Baley (Universitat Pompeu Fabra); Ana Figueiredo (Erasmus School of Economics); Robert Ulbricht (Boston College)
    Abstract: This paper studies the dynamics of skill mismatch over the business cycle. We build a tractable directed search model, in which workers differ in skills along multiple dimensions and sort into jobs with heterogeneous skill requirements along those dimensions. Skill mismatch arises due to information and labor market frictions. Estimated to the U.S., the model replicates salient business cyclic properties of mismatch. We show that job transitions in and out of bottom job rungs, combined with career mobility of workers, are important to account for the empirical behavior of mismatch. The model suggests significant welfare costs associated with mismatch due to learning frictions.
    Keywords: Business cycles, cleansing, multidimensional sorting, search-and-matching, skill mismatch, sullying
    JEL: E24 E32 J24 J64
    Date: 2019–08–21
  9. By: Julia Schmidt; Walter Steingress
    Abstract: Product standards are omnipresent in industrialized societies. Though standardization can be beneficial for domestic producers, divergent product standards have been categorized as a major obstacle to international trade. This paper quantifies the effect of standard harmonization on trade flows and characterizes the extent to which it changes the cost and demand structure of exporting. Creating a novel and comprehensive database on crosscountry standard equivalences, we identify standard harmonization events at the document level. Our results show that the introduction of harmonized standards increases trade through a larger sales volume of existing exporters (intensive margin) and more entry (extensive margin). These findings are consistent with a multi-country heterogeneous firm model featuring endogenous standard adoption. Because of additional demand, standard harmonization raises firms’ incentives to produce varieties in accordance with the standard despite high sunk investment costs. Firms’ export sales expand and entry into foreign markets is encouraged.
    Keywords: : Non-tariff barriers, international trade, standardization, harmonization.
    JEL: F13 F14 F15 L15
    Date: 2019
  10. By: Thomas Bolli (KOF Swiss Economic Institute, ETH Zurich, Switzerland); Johanna Kemper (KOF Swiss Economic Institute, ETH Zurich, Switzerland)
    Abstract: This paper tests the hypothesis that employment protection legislation (EPL) increases the incentives of firms to train their employees. The identification strategy uses a regression discontinuity design (RDD) that exploits exemptions of small firms from EPL. Using firm-level data from Finland and Italy in 2005 and 2010, we do not find empirical evidence that EPL increases the propensity to train or the intensity of firm-provided training. The estimates remain insignificant throughout and mostly have a negative sign. This result is supported in a heterogeneous treatment setting that exploits variation in sector-specific employment volatility. Hence, though the upper bounds of the estimates include economically significant effects, we conclude that EPL has no effect on training of small firms in Finland and Italy.
    Keywords: Keywords: Employment Protection, Training, Regression Discontinuity, Difference-in-Discontinuity
    JEL: J24 K31
    Date: 2017–11

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