nep-bec New Economics Papers
on Business Economics
Issue of 2020‒05‒04
twelve papers chosen by
Vasileios Bougioukos
Bangor University

  1. Not all firms are created equal: SMEs and vocational training in the UK, Italy, and Germany By Benassi, Chiara; Durazzi, Niccolo; Fortwengel, Johann
  2. Asset Level Heterogeneity, Competition and Export Incentives: The Role of Credit Rationing By Sugata Marjit; Moushakhi Ray
  3. Exporters Dynamics and the Role of Imports in Argentina By Arnoletto,Matias; Franco Bedoya,Sebastian; Reyes,Jose Daniel
  4. The determinants of corporate governance disclosure level in the integrated reporting context By Vitolla, Filippo; Raimo, Nicola; Rubino, Michele
  5. Workforce composition, productivity and pay: The role of firms in wage inequality By Chiara Criscuolo; Alexander Hijzen; Cyrille Schwellnus; Erling Barth; Wen-Hao Chen; Richard Fabling; Priscilla Fialho; Katarzyna Grabska; Ryo Kambayashi; Timo Leidecker; Oskar Nordström Skans; Capucine Riom; Duncan Roth; Balazs Stadler; Richard Upward; Wouter Zwysen
  6. Aggregate Productivity Growth and Firm Dynamics in Korean Manufacturing 2007-2017 By Kyoo il Kim; Jin Ho Park
  7. Strategic Inattention, Inflation Dynamics, and the Non-Neutrality of Money By Hassan Afrouzi
  8. Firm-Level Exposure to Epidemic Diseases: Covid-19, SARS, and H1N1 By Tarek A. Hassan; Laurence van Lent; Stephan Hollander; Ahmed Tahoun
  9. Innovative Growth Accounting By Peter J. Klenow; Huiyu Li
  10. Is Financial Globalization in Reverse After the 2008 Global Financial Crisis? Evidence from Corporate Valuations By Craig Doidge; G. Andrew Karolyi; René M. Stulz
  11. Had it with meetings? In aviation, more gets done with four Team Facilitations By Eckhardt, Ralph; Schulke, Arne
  12. Small business owners as gatekeepers of knowledge? Personality traits & modes of innovation By Runst, Petrik; Thomä, Jörg

  1. By: Benassi, Chiara; Durazzi, Niccolo; Fortwengel, Johann
    Abstract: Why do skill formation systems put SMEs at greater disadvantage in some countries than others vis-à-vis large employers? By comparing vocational education and training (VET) institutions and their differential effect on firms of different sizes across three countries (UK, Italy, and Germany), we show that the design of VET has profound implications for shaping the ability of SMEs to use institutions as resources. In particular, quasi-market institutions in the UK amplify SMEs' disadvantage, while non-market coordinating institutions in Italy and Germany narrow the gap between SMEs and large employers. By unpacking the comparative disadvantage of SMEs, we offer important nuances to the argument that institutions help firms coordinate their business activities in different varieties of capitalism.
    Keywords: comparative political economy,firm size,small and medium-sized enterprises (SMEs),varieties of capitalism,vocational education and training (VET),Berufsbildung,kleine und mittlere Unternehmen (KMU),Spielarten des Kapitalismus,UnternehmensgröØe,Vergleichende Politische Ökonomie
    Date: 2020
  2. By: Sugata Marjit; Moushakhi Ray
    Abstract: Firm heterogeneity is mostly discussed in the literature from the viewpoint of productivity differential. In contrast this paper recognizes wealth heterogeneity as an important factor that results in firm heterogeneity. The issue of wealth heterogeneity and export incentive through credit market imperfection over the life cycle of a firm remains largely unaddressed in the literature. This paper studies the dynamics of wealth heterogeneity and export incentive of credit rationed firms through asset building. The theoretical and empirical results indicate that an increase in the initial level of competition implies greater export incentive. However, over the life cycle of a firm, the role of competition is impacted by the intensity of capital accumulation and the initial level of wealth. Greater local competition before the entry of firms in the export market hurts export incentive by limiting cash flows and asset build up. Thus low profits due to competition allows firms to look for export opportunities but lower cash flows hurt such incentives.
    Keywords: export incentive, credit market imperfections, technology, competition, asset level heterogeneity
    JEL: F10 F14 G10 G20
    Date: 2020
  3. By: Arnoletto,Matias; Franco Bedoya,Sebastian; Reyes,Jose Daniel
    Abstract: This paper examines the performance of globally engaged firms in Argentina in the past decade. Using highly disaggregated firm-level customs transaction data for imports and exports, the paper documents the progressive retreat of Argentine firms from global markets. Between 2007 and 2017, the number of exporters decreased by 30 percent. Benchmarking the characteristics of these exporters with similar countries reveals that Argentine exporters are disproportionally fewer and individually larger, with export value extremely concentrated in a few firms. Firm churning rates are disproportionately low and survival rates of entrants are high. These findings reflect exceptionally high entry costs of export, which are the result of anti-export bias and import substitution policies that sought unsuccessfully to develop the local industry. The paper shows that exporters that import directly intermediate and capital goods have better export outcomes than other exporters.
    Date: 2020–04–22
  4. By: Vitolla, Filippo; Raimo, Nicola; Rubino, Michele
    Abstract: In recent years, the analysis of corporate governance aspects is becoming a central element for understanding corporate dynamics and represents a clear indicator of investor confidence in the decisions taken by the management and board of listed firms. For this reason, corporate governance disclosure is receiving more and more attention from both a professional and academic point of view. The advent of integrated reporting represents a new tool for disclosing information relating to corporate governance. The goal of this study is to investigate the factors that can influence the level of corporate governance disclosure within the integrated reports. The analysis, conducted on a sample of 73 international firms, shows a positive effect of the firm size, firm profitability and audit quality. To our knowledge, this is the first study that analyses corporate governance disclosure level in the integrated reporting context
    Keywords: corporate governance,disclosure,integrated reporting,information quality
    Date: 2020
  5. By: Chiara Criscuolo; Alexander Hijzen; Cyrille Schwellnus; Erling Barth; Wen-Hao Chen; Richard Fabling; Priscilla Fialho; Katarzyna Grabska; Ryo Kambayashi; Timo Leidecker; Oskar Nordström Skans; Capucine Riom; Duncan Roth; Balazs Stadler; Richard Upward; Wouter Zwysen
    Abstract: In many OECD countries, low productivity growth has coincided with rising inequality. Widening wage and productivity gaps between firms may have contributed to both developments. This paper uses a new harmonised cross-country linked employer-employee dataset for 14 OECD countries to analyse the role of firms in wage inequality. The main finding is that, on average across countries, changes in the dispersion of average wages between firms explain about half of the changes in overall wage inequality. Two thirds of these changes in between-firm wage inequality are accounted for by changes in productivity-related premia that firms pay their workers above common market wages. The remaining third can be attributed to changes in workforce composition, including the sorting of high-skilled workers into high-paying firms.
    Keywords: firm wage premium, productivity, wage inequality
    JEL: D2 J31 J38
    Date: 2020–05–01
  6. By: Kyoo il Kim (Department of Economics, Michigan State University); Jin Ho Park (Economic Research Institute, Bank of Korea)
    Abstract: We study aggregate productivity growth of the Korean manufacturing industry for the 2007-2017 period. We find that the nature of such growth was quite different for two measures of productivity. For labor productivity, most of growth comes from productivity changes among surviving firms. On the other hand, for TFP, most of the productivity growth comes from that of new entrants in recent years. Our work illustrates the different nature of two productivity measures in terms of their growth paths. We also show interesting industry dynamics for both productivity measures, as exiting firms contributed positively to aggregate productivity growth with increasing trends, which suggests that the market had gradually eliminated firms of lower productivity. Using the dynamic Olley and Pakes (1996) decomposition, we also find that for both productivity measures, a substantial productivity growth after the 2008 global financial crisis was due to market share reallocations between firms, but this between-firm contribution has somewhat slowed or been decreasing since then. Our industry sector level study also shows that there has been fundamentally different heterogeneous productivity growth patterns and components across manufacturing sectors. Finally, we find that the wage level also plays a role in moderating or as an accelerating factor for different productivity growth paths among surviving, entering, and exiting firms. We find that higher wage groups had disproportionately higher entry and exit rates, and that the contributions of these industry dynamics to aggregate productivity growth were largest for the highest wage group while the productivity growth from the between firm component was substantially higher for lower wage groups. Therefore, we find that not only a timely change in input and output, but also in the wage, is a necessary ingredient for the pace and magnitude of reallocation to be effective in aggregate productivity growth.
    Keywords: Aggregate Productivity Growth, Labor Productivity, Total Factor Productivity, Resource Reallocation, Entry and Exit, Wage
    JEL: C14 C18 D24
    Date: 2020–04–17
  7. By: Hassan Afrouzi
    Abstract: How does competition affect information acquisition of firms and thus the response of inflation and output to monetary policy shocks? This paper addresses these questions in a new dynamic general equilibrium model with both dynamic rational inattention and oligopolistic competition. In the model, rationally inattentive firms acquire information about the endogenous beliefs of their competitors. Moreover, firms with fewer competitors endogenously choose to acquire less information about aggregate shocks – a novel prediction of the model that is supported by empirical evidence from survey data. A quantitative exercise disciplined by firm-level survey data shows that firms’ strategic inattention to aggregate shocks associated with oligopolistic competition increases monetary non-neutrality by up to 77% and amplifies the half-life of output response to monetary shocks by up to 30%. Furthermore, the model matches the relationship between the number of firms’ competitors and their uncertainty about inflation as a non-targeted moment.
    Keywords: rational inattention, oligopolistic competition, inflation dynamics, inflation expectations, monetary non-neutrality
    JEL: E31 E32
    Date: 2020
  8. By: Tarek A. Hassan (Boston University, NBER, and CEPR); Laurence van Lent (Tilburg University); Stephan Hollander (Frankfurt School of Finance and Management); Ahmed Tahoun (London Business School)
    Abstract: Using tools described in our earlier work (Hassan et al., 2019, 2020), we develop textbased measures of the costs, benefits, and risks listed firms in the US and over 80 other countries associate with the spread of Covid-19 and other epidemic diseases. We identify which firms expect to gain or lose from an epidemic disease and which are most affected by the associated uncertainty as a disease spreads in a region or around the world. As Covid-19 spreads globally in the first quarter of 2020, we find that firms’ primary concerns relate to the collapse of demand, increased uncertainty, and disruption in supply chains. Other important concerns relate to capacity reductions, closures, and employee welfare. By contrast, financing concerns are mentioned relatively rarely. We also identify some firms that foresee opportunities in new or disrupted markets due to the spread of the disease. Finally, we find some evidence that firms that have experience with SARS or H1N1 have more positive expectations about their ability to deal with the coronavirus outbreak.
    Keywords: Epidemic diseases, pandemic, exposure, virus, firms, uncertainty, sentiment, machine learning
    JEL: I15 I18 D22 G15
    Date: 2020–04
  9. By: Peter J. Klenow; Huiyu Li
    Abstract: Recent work highlights a falling entry rate of new firms and a rising market share of large firms in the United States. To understand how these changing firm demographics have affected growth, we decompose productivity growth into the firms doing the innovating. We trace how much each firm innovates by the rate at which it opens and closes plants, the market share of those plants, and how fast its surviving plants grow. Using data on all nonfarm businesses from 1982–2013, we find that new and young firms (ages 0 to 5 years) account for almost one-half of growth – three times their share of employment. Large established firms contribute only one-tenth of growth despite representing one-fourth of employment. Older firms do explain most of the speedup and slowdown during the middle of our sample. Finally, most growth takes the form of incumbents improving their own products, as opposed to creative destruction or new varieties.
    JEL: O3 O4 O5
    Date: 2020–04
  10. By: Craig Doidge; G. Andrew Karolyi; René M. Stulz
    Abstract: For the last two decades, non-US firms have lower valuations than similar US firms. We study the evolution of this valuation gap to assess whether financial markets are less integrated after the 2008 global financial crisis (GFC). The valuation gap for firms from developed markets increases by 31% after the GFC – a reversal in financial globalization – while the gap for firms from emerging markets (excluding China) stays stable. There is no evidence of greater segmentation for non-US firms cross-listed on major US exchanges and the typical valuation premium of such firms relative to domestic counterparts stays unchanged. However, the number of such firms shrinks sharply, so that the importance of US cross-listings as a mechanism for market integration diminishes.
    JEL: F21 F65 G10 G15 G34
    Date: 2020–04
  11. By: Eckhardt, Ralph; Schulke, Arne
    Abstract: The paper focuses on meetings as an over-utilized, but often under-structured tool for managerial effectiveness and efficiency. The authors present four different meeting types, more precisely termed team facilitations, as commonly used in aviation by flight crews: Brainstorming, Briefing, Decision Meeting and Debriefing. In addition, the role of a facilitator is discussed and the importance of a "Comm Cadence" (structural and communicative rules for each facilitation) is put forth. It is suggested that each facilitation be used with a specific purpose, structure, set of attendants, timing etc., and argued towards their general usefulness beyond aviation in any contemporary business setting.
    Keywords: Aviation,Aviation,Time Management,Project Management,Meetings,Leadership,Agility
    JEL: M10 M11 M31 N70
    Date: 2019
  12. By: Runst, Petrik; Thomä, Jörg
    Abstract: Previous research has established that certain personality traits represent predictors of start-up activity. We argue that similar cognitive processes that affect entrepreneurship also play a role in firm-level innovativeness. For example, open-ness to novelty can be regarded as a key component of entrepreneurial alertness in terms of both business creation and the generation of innovations within existing businesses. Based on a large survey of less R&D-intensive SMEs from Germany, we show that certain Big Five personality traits as well as certain personality prototypes of business owners are positively related to innovation activity. More importantly, this relationship depends on the mode of innovation, where companies operating under the DUI mode (Doing-Using-Interacting) seem to benefit in particular from certain owners' personality characteristics. In addition, we present evidence that complementarities between entrepreneurs' personality traits exist in terms of self-selection into the DUI mode. To explain our findings, we argue that the personali-ty characteristics of small business owners affect whether or not absorptive capacity can mediate between external knowledge and firm-level innovativeness.
    Keywords: Innovation,Modes of innovation,Absorptive capacity,Personality Traits,Big Five,SMEs
    JEL: L26 O31 O33
    Date: 2020

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