nep-bec New Economics Papers
on Business Economics
Issue of 2020‒04‒20
nine papers chosen by
Vasileios Bougioukos
Bangor University

  1. How Do Firms Form Expectations of Aggregate Growth? New Evidence from a Large-Scale Business Survey By Jonas Dovern; Lena Sophia Müller; Klaus Wohlrabe
  2. Immigration and Worker-Firm Matching By Gianluca Orefice; Giovanni Peri
  3. Where Has All the Data Gone? By Maryam Farboodi; Adrien Matray; Laura Veldkamp; Venky Venkateswaran
  4. Auctions vs. negotiations in vertically related markets By Emanuele Bacchiega; Olivier Bonroy; Emmanuel Petrakis
  5. Heterogeneous Relationships between Automation Technologies and Skilled Labor: Evidence from a Firm Survey By MORIKAWA Masayuki
  6. Corporate Governance and Financial Ratios Effect on Audit Report Lag By Friska Firnanti
  7. From closed to open: A comparative stakeholder approach for developing open innovation activities in SMEs By Sana Saidi; Anne Berthinier-Poncet; Allane Madanamoothoo; Wim Vanhaverbeke; Simona Grama-Vigouroux
  8. Productivity Dispersion and Persistence Among the World's Most Numerous Firms By Casey C. Maue; Marshall Burke; Kyle J. Emerick
  9. Spatial Gaps in Management Quality : Evidence from a Lagging Region in Croatia By Grover,Arti Goswami; Iacovone,Leonardo; Chakraborty,Pavel

  1. By: Jonas Dovern; Lena Sophia Müller; Klaus Wohlrabe
    Abstract: Expectations are highly relevant for macroeconomic dynamics. Yet, the empirical evidence about properties of corporate macroeconomic expectations is scarce. Using new survey data on quantitative growth expectations of firms in Germany, we show that expectations are highly dispersed. The degree of dispersion depends on firm size and on how important the general economy is for the business of firms, supporting theories of rational inattention. Firms seem to extrapolate from local economic conditions and business experiences to aggregate growth expectations. Differences in growth expectations are associated with differences in firms’ investment and labor demand.
    Keywords: GDP expectations, expectation heterogeneity, firm, ifo business tendency survey
    JEL: D84 E32
    Date: 2020
  2. By: Gianluca Orefice; Giovanni Peri
    Abstract: The process of matching between firms and workers is an important mechanism in determining the distribution of wages. In a labor market characterised by large dispersion of workers’ productivity and worker-firm complementarity, high quality firms have strong incentives to screen for the quality of workers. This process will increase the positive quality association of firm-worker matches known as positive assortative matching (PAM). Immigration in a local labor market, by increasing the variance of workers abilities, may drive stronger PAM between firms and workers. Using French matched employer-employee (DADS) data over the period 1995-2005 we document that positive supply-driven changes of immigrant workers in a district increased the strength of PAM. We then show that this association is consistent with causality, is quantitatively significant, and is associated with higher average productivity and firm profits, but also with higher wage dispersion. We also show that the increased degree of positive assortative matching is mainly reached by high-productive firms “losing” lower quality workers and “attracting” higher quality workers.
    Keywords: matching, workers, firms, immigration, productivity
    JEL: F16 J20 J61
    Date: 2020
  3. By: Maryam Farboodi; Adrien Matray; Laura Veldkamp; Venky Venkateswaran
    Abstract: As financial technology improves and data becomes more abundant, do market prices reflect this data growth? While recent studies documented rises in the information content of prices, we show that, across asset types, there is data divergence. Large, growth stock prices increasingly reflect information about future firm earnings. This is the rise reflected in the previous studies. But over the same time period, the information content of small and value firm prices was flat or declining. Our structural estimation allows us to disentangle these informational trends from changing asset characteristics. These facts pose a new puzzle: Amidst the explosion of data processing, why has this data informed only the prices of a subset of firms, instead of benefiting the market as a whole? Our structural model offers a potential answer: Large growth firms' data grew in value, as big firms got bigger and growth magnified the effect of these changes in size.
    JEL: G14
    Date: 2020–04
  4. By: Emanuele Bacchiega; Olivier Bonroy; Emmanuel Petrakis
    Abstract: In a two-tier industry with bottleneck upstream and two downstream firms producing vertically differentiated goods, we identify conditions under which the upstream supplier chooses exclusive or non-exclusive negotiations, or an English auction to sell its essential input. Auctioning off a two-part tariff contract is optimal for the supplier when its bar- gaining power is low and the final goods are not too differentiated. Otherwise, the supplier enters into exclusive or non-exclusive negotiations with the downstream firm(s). Finally, in contrast to previous findings, an auction is never welfare superior to negotiations.
    JEL: D43 L13 L14
    Date: 2020–04
  5. By: MORIKAWA Masayuki
    Abstract: Based on an original survey of Japanese firms, this study presents evidence of the use of recent automation technologies—artificial intelligence (AI), big data analytics, and robotics—and discusses the relationship between these technologies and skilled employees at the firm-level. The result indicates that while the number of firms already using these technologies is small, the number of firms interested in using them is large. The use of AI and big data is positively associated with the share of highly educated employees, particularly those with a postgraduate degree; however, such a relationship is absent in the case of the use of industrial robots in the manufacturing industry. Studies have not distinguished between robotics and other automation technologies, such as AI, but the result suggests a heterogeneous complementarity with high-skilled employees for each type of automation technology.
    Date: 2020–01
  6. By: Friska Firnanti (Trisakti School of Management, 11440, Jakarta, Indonesia Author-2-Name: Arwina Karmudiandri Author-2-Workplace-Name: Trisakti School of Management, 11440, Jakarta, Indonesia Author-3-Name: Author-3-Workplace-Name: Author-4-Name: Author-4-Workplace-Name: Author-5-Name: Author-5-Workplace-Name: Author-6-Name: Author-6-Workplace-Name: Author-7-Name: Author-7-Workplace-Name: Author-8-Name: Author-8-Workplace-Name:)
    Abstract: Objective - the timeliness of financial statement submission becomes important in decision making. With the growing importance of timely financial statements for the relevance of decision making, an understanding of the determinants of audit report lag becomes necessary. This research intends to obtain empirical evidence that corporate governance through board and audit committee characteristics, specifically size, meetings, independence and expertise has an influence on audit report lag. Financial ratios through firm size, profitability and leverage are tested to determine their influence on audit report lag. Methodology/Technique - Hypothesis tests with multiple regression are used with non-financial firms listed on the Indonesian Stock Exchange between 2015 to 2017. This research uses purposive sampling with the result of 204 companies sampled and 612 data sets used in the model.Finding - The result of this research show that board size, board meetings, board independence, audit committee size, firm size and profitability all have an influence on audit report lag. Meanwhile, audit committee independence, audit committee expertise, and leverage have no influence on audit report lag.Type of Paper - Empirical.
    Keywords: Board Characteristics; Audit Committee; Financial Ratio; Audit Report Lag.
    JEL: M40 M41 M49
    Date: 2020–03–30
  7. By: Sana Saidi (ESC Troyes - École Supérieure de Commerce de Troyes - Groupe ESC Troyes en Champagne); Anne Berthinier-Poncet (LIRSA - Laboratoire interdisciplinaire de recherche en sciences de l'action - CNAM - Conservatoire National des Arts et Métiers [CNAM]); Allane Madanamoothoo (ESC Troyes - École Supérieure de Commerce de Troyes - Groupe ESC Troyes en Champagne); Wim Vanhaverbeke (UNIS - University of Surrey); Simona Grama-Vigouroux (ESC Troyes - École Supérieure de Commerce de Troyes - Groupe ESC Troyes en Champagne)
    Abstract: Recent literature on open innovation (OI) highlights the need for studies regarding the factors that influence firms to switch from a closed to an OI strategy. At the same time, stakeholder literature points out the scarcity of knowledge regarding antecedent factors fostering collaboration with the firm's stakeholders and their engagement for higher value creation. To fill these gaps, we propose an analytical framework for implementing a strategic OI process through the development of stakeholder engagement. Our framework comprises 17 factors grouped in five levers: knowledge, collaboration, organizational, strategic, and financial. We empirically applied this framework to two industrial SMEs. A qualitative study was conducted based on semi-structured interviews with internal and external stakeholders of both firms. The results show that one company successfully implemented the OI process, while the other struggled to evolve from a traditionally closed innovation model to a more open model. Analyzing the results, we identified several aspects that could explain this difference. These aspects concern the OI activities performed by both firms, the combination of the five levers into a coherent OI approach, stakeholder engagement, and the characteristics of the CEOs. The current study contributes insights for theory and practice, especially as it proposes an original framework for developing a strategic OI process that integrates a stakeholder approach.
    Date: 2020
  8. By: Casey C. Maue; Marshall Burke; Kyle J. Emerick
    Abstract: A vast firm productivity literature finds that otherwise similar firms differ widely in their productivity and that these differences persist through time, with important implications for the broader macroeconomy. These stylized facts derive largely from studies of manufacturing firms in wealthy countries, and thus have unknown relevance for the world's most common firm type, the smallholder farm. We use detailed micro data from over 12,000 smallholder farms and nearly 100,000 agricultural plots across four countries in Africa to study the size, source, and persistence of productivity dispersion among smallholder farmers. Applying standard regression-based approaches to measuring productivity residuals, we find much larger dispersion but less persistence than benchmark estimates from manufacturing. We then show, using a novel framework that combines physical output measurement, estimates from satellites, and machine learning, that about half of this discrepancy can be accounted for by measurement error in output. After correcting for measurement error, productivity differences across firms and over time in our smallholder agricultural setting closely match benchmark estimates for non-agricultural firms. These results question some common implications of observed dispersion, such as the importance of misallocation of factors of production.
    JEL: O12 Q12
    Date: 2020–04
  9. By: Grover,Arti Goswami; Iacovone,Leonardo; Chakraborty,Pavel
    Abstract: Embedding management and operational practices survey in a broader firm capabilities survey, this report finds that: (i) relative to the rest of Croatia, an average firm in the lagging region of the country (Eastern Croatia) is only slightly behind in the adoption of structured management practices. Nevertheless, overall, Croatia is farther from a frontier economy such as the United States. (ii) There is wide heterogeneity in adoption of management practices in the country, such that a large share of firms in the lagging region are badly managed relative to those in the rest of the country. (iii) Better managed firms in all regions, including Eastern Croatia, show superior firm performance. What drives better management? Global linkages matter for firms in other countries and in all regions of Croatia except the lagging region. Unlike other countries, firms in Croatia do not upgrade management quality as they age, perhaps due to lack of pro-competitive forces. This report recommends focusing on policies that improve allocative efficiency in the region and help firms establish global linkages, and more direct intervention for improving the management quality of firms.
    Date: 2020–04–13

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