nep-bec New Economics Papers
on Business Economics
Issue of 2020‒01‒20
ten papers chosen by
Vasileios Bougioukos
Bangor University

  1. Why Firms Offer Paid Parental Leave: An Exploratory Study By Claudia Goldin; Sari Pekkala Kerr; Claudia Olivetti
  2. In the Eye of the Storm: Firms and Capital Destruction in India By Martino Pelli; Jeanne Tschopp; Natalia Bezmaternykh; Kodjovi M Eklou
  3. Mission statements of Latin-American firms: content analysis, readability, and their effect on financial performance By Cortés-Sánchez, Julián David; Rivera, Liliana
  4. Defining and Measuring the Innovativeness of Firms By Giuliana Battisti; Paul Stoneman
  5. Does Remote Work Improve or Impair Firm Labour Productivity? Longitudinal Evidence from Portugal By Natália P. Monteiro; Odd Rune Straume; Marieta Valente
  6. Exporting Through Intermediaries: Impact on Export Dynamics and Welfare By Parisa Kamali
  7. Rising Concentration and Wage Inequality By Guido Matias Cortes; Jeanne Tschopp
  8. Networks, Start-up Capital and Women’s Entrepreneurial Performance in Africa: Evidence from Eswatini By Brixiová, Zuzana; Kangoye, Thierry
  9. Human Capitalists and the Global Division of Labor By Jan Schymik
  10. Tying in evolving industries, when future entry cannot be deterred By Chiara Fumagalli; Massimo Motta

  1. By: Claudia Goldin; Sari Pekkala Kerr; Claudia Olivetti
    Abstract: Why do competitive firms in the US provide paid parental leave (PPL)? Which firms do and to what extent? We use several firm- and individual-level data sets to answer these questions. These include the BLS-Employee Benefit Survey (EBS) for 2010 to 2018 and an extensive firm-level data collection that we compiled. Our work is undergirded by a two-period model with competitive firms whose workers vary by their optimal firm-specific training and the probability that each will remain on the job after PPL is taken. We find that firm-provided PPL has greatly increased in the last two decades and generally covers new fathers. The levels of provision differ greatly by the industry, firm size, and the degree of firm-specific training. But even the top-of-the-line firm in the US provides fewer fully paid parental weeks than does the median OECD nation.
    JEL: J13 J2 J32
    Date: 2020–01
  2. By: Martino Pelli; Jeanne Tschopp; Natalia Bezmaternykh; Kodjovi M Eklou
    Abstract: This paper examines the response of firms to capital destruction. Using Indian firm data we establish that tropical storms destroy up to 43% of firms' capital. We use this exogenous shock to capital and find that within industry less productive firms suffer disproportionately more, both along the intensive (firm sales) and extensive (firm exit) margins. The effect found across industries is 33% larger, and indicates that capital destruction leads to a shift in sales towards comparative advantage industries. This build-back better effect is driven by firms active in multiple industries and, to a large extent, by shifts in the firm-level production mix within a firm's active set of industries. Finally, while there is no evidence that firms adjust by investing in new industry lines, firms tend to abandon production in industries that exhibit lower comparative advantage. Our baseline estimates imply that for the top 25% of storms, the median firm's industry sales decrease by at least 2.5% and the exit rate of the median firm increases by at least 2%.
    Keywords: Firms, Capital Destruction, Creative Destruction, Hurricanes, India
    JEL: F14 O10 Q54
    Date: 2019–10
  3. By: Cortés-Sánchez, Julián David (Universidad del Rosario); Rivera, Liliana
    Abstract: Mission statements (MSs) are one of the most widespread managerial practices. However, a deeper understanding of the relationship between MS characteristics and a firm’s financial performance is needed. This study proposes a qualitative and quantitative analysis of MS characteristics (i.e., key words and readability) for Latin-American firms and their relationship to financial performance. MS content is evaluated using content analysis software, and the relationship between MS readability and financial performance is examined using regression analysis. The results of the content analysis suggest differences among industries and an international trend toward isomorphism regarding key terms. The results of the quantitative analysis revealed a positive relationship between MS readability and return on assets and return on equity. These results suggest a positive impact of the MS on a company’s long-term financial performance, highlighting the importance of having a readable MS.
    Date: 2018–11–10
  4. By: Giuliana Battisti; Paul Stoneman
    Abstract: In this paper an encompassing, output orientated, indicator of the innovativeness of firms which defines innovation as the successful exploitation of new ideas, is formalised as the contribution of innovative activity to firm profit growth and measured as the difference between growth in the (endogenously determined) nominal profits of the firm and an appropriately weighted sum of exogenously determined (i) growth in wage rates and (ii) inflation/demand shifts in the market for the firm’s output. The measure can be calculated for any firm using publicly available accounting data. For an unbalanced sample of 16,457 quoted firms over the period 1988-2012, operating in 39 sectors, and in 38 countries, the mean value of the innovativeness measure over the whole panel data set is estimated as 5.15% p.a. Statistically significant differences in innovative performance within and across countries, sectors and time are identified.
    Keywords: Firms, innovativeness, international, measurement
    JEL: O32
    Date: 2019–11
  5. By: Natália P. Monteiro; Odd Rune Straume; Marieta Valente
    Abstract: Whether or not the use of remote work increases firm labour productivity is theoretically ambiguous. We use a rich and representative sample of Portuguese firms, and within-firm variation in the policy on remote work, over the period 2011-2016, to empirically assess the causal productivity effect of remote work. Our findings from estimations of models with firm-fixed effects suggest that the average productivity effect of allowing remote work is significantly negative, though relatively small in magnitude. However, we also find a substantial degree of heterogeneity across different categories of firms. In particular, we find evidence of opposite effects of remote work for firms that do not undertake R&D activities and for firms that do, where remote work has a significantly negative (positive) effect on labour productivity for the former (latter) type of firms. Negative effects of remote work are also more likely for small firms that do not export and employ a workforce with a below-average skill level.
    Keywords: remote work, firm labour productivity, panel data
    JEL: D24 L23 M54
    Date: 2019
  6. By: Parisa Kamali
    Abstract: In many countries, a sizable share of international trade is carried out by intermediaries. While large firms tend to export to foreign markets directly, smaller firms typically export via intermediaries (indirect exporting). I document a set of facts that characterize the dynamic nature of indirect exporting using firm-level data from Vietnam and develop a dynamic trade model with both direct and indirect exporting modes and customer accumulation. The model is calibrated to match the dynamic moments of the data. The calibration yields fixed costs of indirect exporting that are less than a third of those of direct exporting, the variable costs of indirect exporting are twice higher, and demand for the indirectly exported products grows more slowly. Decomposing the gains from indirect and direct exporting, I find that 18 percent of the gains from trade in Vietnam are generated by indirect exporters. Finally, I demonstrate that a dynamic model that excludes the indirect exporting channel will overstate the welfare gains associated with trade liberalization by a factor of two.
    Date: 2019–12–27
  7. By: Guido Matias Cortes; Jeanne Tschopp
    Abstract: Wage inequality has risen in many countries over recent decades. At the same time, production has become increasingly concentrated in “superstar” firms. In this paper, we show that these two phenomena are linked. Theoretically, we show that shocks that increase concentration, such as an increase in consumers’ price sensitivity, will also lead to an increase in wage dispersion between firms. Empirically, we use industry-level data from 14 European countries over the period 1999–2016 and show robust evidence of a positive and statistically significant correlation between concentration and the dispersion of firm-level wages.
    Date: 2019–11
  8. By: Brixiová, Zuzana; Kangoye, Thierry
    Abstract: This paper analyzes the role of networks in the access of female entrepreneurs to start-up capital and firm performance in Eswatini, a country with one of the highest female unemployment rates in Africa. The paper first shows that higher initial capital is associated with better sales performance for both men and women entrepreneurs. Women entrepreneurs start their firms with smaller start-up capital than men and are more likely to fund it from their own sources, which reduces the size of their firm and sales level. However, women with higher education start their firms with more capital than their less educated counterparts. Moreover, women who receive support from professional networks have higher initial capital, while those trained in financial literacy more often access external funding sources, including through their networks.
    Keywords: networks,start-up capital,women’s entrepreneurship,multivariate analysis,Africa
    JEL: L53 O12
    Date: 2019
  9. By: Jan Schymik
    Abstract: Many corporate top earners are compensated with equity claims on firms’ profits. This paper investigates the consequences of trade-induced economic reallocation on the compensation structure of top earners. I introduce managerial equity ownership into a model of heterogeneous firms to show that reallocation of economic activity towards large, import intensive firms raises the prevalence of equity ownership within these firms. Calibrating the model suggests that equity ownership responds more elastically to globalization than labor incomes such that focusing on the income skill premium fundamentally underestimates the returns to globalization for top earners. I then combine data on equity ownership and income streams for British and U.S. top managers with international I-O tables and firm level data to study this relation empirically. Using a shift-share instrumentation strategy, I find that improved access to global input markets raises the value of equity ownership for managers of large and importing firms altering the compensation structure towards lower labor income shares. This suggests that intra-industry reallocation can raise top inequality and the prevalence of capital incomes for top earners.
    Keywords: Top Inequality, Offshoring, Equity Ownership
    JEL: F14 F16 J33 L22
    Date: 2020–01
  10. By: Chiara Fumagalli; Massimo Motta
    Abstract: We show that the incentive to engage in exclusionary tying (of two complementary products) may arise even when tying cannot be used as a defensive strategy to protect the incumbent's dominant position in the primary market. By engaging in tying, an incumbent firm sacrifices current profits but can exclude a more efficient rival from a complementary market by depriving it of the critical scale it needs to be successful. In turn, exclusion in the complementary market allows the incumbent to be in a favorable position when a more efficient rival will enter the primary market, and to appropriate some of the rival's efficiency rents. The paper also shows that tying is a more profitable exclusionary strategy than pure bundling, and that exclusion is the less likely the higher the proportion of consumers who multi-home. Keywords:Inefficient foreclosure, Tying, Scale economies, Network Externalities. JEL Codes: K21, L41
    Date: 2019

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