nep-bec New Economics Papers
on Business Economics
Issue of 2020‒08‒31
twelve papers chosen by
Vasileios Bougioukos
Bangor University

  1. Conceptual Notes on the Internal Business Environment Analysis and the Stra.Tech.Man Synthesis By Vlados, Charis
  2. The COVID-19 shock and equity shortfall: Firm-level evidence from Italy By Carletti, Elena; Oliviero, Tommaso; Pagano, Marco; Pelizzon, Loriana; Subrahmanyam, Marti G.
  3. Partnership for inclusive growth: Can linkages with large firms spur the growth of SMEs in Tanzania? By Josaphat Kweka; Fadhili Sooi
  4. Does Innovation Affect the Demand for Employment and Skilled Labor? By Adriana Peluffo
  5. Bringing Connections Onboard: The Value of Political Influence By Green, Colin P.; HomRoy, Swarnodeep
  6. Listing Advantages Around the World By UEDA Kenichi; Somnath SHARMA
  7. Evolutionary Economics and the Stra.Tech.Man Approach of the Firm Into Globalization Dynamics By Chatzinikolaou, Dimos; Vlados, Charis
  8. Firm’s innovation strategies and employment: new evidence from Uruguay By Carlos Bianchi; Hugo Laguna
  9. Global Value Chains and Productivity: Micro Evidence from Estonia By Hang T. Banh; Philippe Wingender; Cheikh A. Gueye
  10. Bertrand-Edgeworth oligopoly: Characterization of mixed strategy equilibria when some firms are large and the others are small By Salvadori, Neri; De Francesco, Massimo A.
  11. Firm Heterogeneity and Trade Credit Behaviour By Stylianos Asimakopoulos; Filipa Da Silva Fernandes; Yiannis Karavias
  12. Business models for interoperable mobility services By Vincent A.C. van den Berg; Henk Meurs; Erik T. Verhoef

  1. By: Vlados, Charis (Democritus University of Thrace, Department of Economics)
    Abstract: This paper examines the theoretical contributions on the firm’s resources and the articulation of competitive advantages, the firm’s value chain analysis, and the comprehension of the “intangible nature” of the firm in the discipline of the internal organizational environment analysis. The aim is to synthesize these approaches from a critical perspective and attempt to enrich them conceptually based on the “biological perception” and “physiology” of the firm. To this end, the Stra.Tech.Man approach, which exploits interpretatively a synthesis of the evolutionary spheres of strategy, technology, and management for the “living” socioeconomic organization, seems capable of unifying the previous approaches analytically and enrich them.
    Keywords: Internal Business Environment; Evolutionary Internal Business Environment Analysis; Stra.Tech.Man Approach; Firm’s Physiology; Firm’s Biological Approach
    JEL: B52 M10 O39
    Date: 2019–12–05
  2. By: Carletti, Elena; Oliviero, Tommaso; Pagano, Marco; Pelizzon, Loriana; Subrahmanyam, Marti G.
    Abstract: We employ a representative sample of 80,972 Italian firms to forecast the drop in profits and the equity shortfall triggered by the COVID-19 lockdown. A 3-month lockdown generates an aggregate yearly drop in profits of about 10% of GDP, and 17% of sample firms, which employ 8.8% of the sample's employees, become financially distressed. Distress is more frequent for small and medium-sized enterprises, for firms with high pre-COVID-19 leverage, and for firms belonging to the Manufacturing and Wholesale Trading sectors. Listed companies are less likely to enter distress, whereas the correlation between distress rates and family firm ownership is unclear.
    Keywords: COVID-19,pandemics,losses,distress,equity,recapitalization
    JEL: G01 G32 G33
    Date: 2020
  3. By: Josaphat Kweka; Fadhili Sooi
    Abstract: A recent strand of literature on small and medium enterprise (SME) development identifies linkages with large firms as some of the enablers of development and competitiveness. However, there is a dearth of empirical studies on the topic. In this study, we assess the extent and determinants of linkages between SMEs and large firms in Tanzania and to what degree the linkage is an important driver of SME performance.
    Keywords: SMEs, firm linkages, firms, SME growth
    Date: 2020
  4. By: Adriana Peluffo (Universidad de la República (Uruguay). Facultad de Ciencias Económicas y de Administración. Instituto de Economía)
    Abstract: The objective of this work is to analyze the effect of innovation on labor demand, particularly, the level of employment and the skills composition of the labor force, in level and growth rates. Additionally, we analyze the ratio of skilled to unskilled labor and wages. The data for this study come from the Innovation Surveys for Uruguayan manufacturing and service firms over the 2000-2015 period matched with the Industrial Surveys of Economic Activity. We analyze the whole sample and each sector according to technological/knowledge intensity and firm size. Our results for ordinary least squares, instrumental variables, and generalized method of moments show positive effects of innovation in the level of total employment and skilled workers, its rate of growth, and wages. Product and Enhancing productivity innovation show positive impact on employment. Splitting by manufacturing firms we observe that product innovation affect growth in employment for high-tech firms while organizational innovation and productivity enhancing innovation affects growth in skilled labor with a greater effect for low-tech firms, while organizational innovation affects growth in skilled labor and in the share of skilled labor. Small manufacturing and service firms are less responsive to innovation. Growth in employment of service firms are affected mainly by organizational innovation and productivity enhancing innovation. Thus, enhancing productivity innovation and its component of organizational innovation seems to play an important role on employment growth.
    Keywords: Employment, Skilled Labor, Product Innovation, Process Innovation
    JEL: D2 J23 L1 O31 O33
    Date: 2020–07
  5. By: Green, Colin P. (Norwegian University of Science and Technology (NTNU)); HomRoy, Swarnodeep (University of Groningen)
    Abstract: In 2002, an amendment to UK parliamentary regulations removed restrictions on the participation of members of parliament (MPs) in parliamentary proceedings related to their corporate interests. Using this amendment as a quasi-natural experiment, we demonstrate gains in firm value and profitability for firms with prior connections to MPs. These benefits are higher for firms with family ownership and lower accounting transparency. Both firms and politicians to change their behaviour. Post-amendment, firms are more likely to appoint MPs and also reduce political donations. Politicians with corporate connections were more likely to both become members of, and conditional on this, attend meetings of parliamentary select and joint committee. Our results highlight mechanisms of returns from political influence in well-developed institutional contexts.
    Keywords: political connections, board of directors, firm value
    JEL: G14 D72 G18 G30
    Date: 2020–06
  6. By: UEDA Kenichi; Somnath SHARMA
    Abstract: Using the firm-level data of 33 countries over 10 years (2008-2017), we find that the listed firms have lower returns on assets than the similar unlisted firms, in most countries. The result is associated with a higher capital-labor ratio of listed firms, implying that listed firms face fewer financial constraints. Moreover, we investigate the institutional factors that exacerbate or mitigate the listing advantages (i.e., ROA difference) across the countries. Compared to English origin law, countries with German and Scandinavian legal origins strongly narrow the listing advantages but the French legal origin shows mixed results. Overall, the listing advantages seem narrowed with stronger creditor's rights, but show unclear associations with the strength of corporate governance.
    Date: 2020–06
  7. By: Chatzinikolaou, Dimos (Democritus University of Thrace, Department of Economics); Vlados, Charis (Democritus University of Thrace, Department of Economics)
    Abstract: This article aims to examine whether the “Stra.Tech.Man” approach (Vlados, 2004), which explores the dialectical synthesis between strategy, technology, and management inside all socioeconomic organisms fulfills the requirements to be an analysis of evolutionary direction. It tries to answer this question, in particular, by examining the theoretical foundations of evolutionary economics and the subsequent evolutionary theorization of the firm that stems analytically from evolutionary economics. With this goal in mind, an overview of the relatively recent literature is attempted by presenting some of the significant contributions to evolutionary economics and the evolutionary theory of the firm. Next, it examines the specific way of building the Stra.Tech.Man approach on the production process of innovation and change management, by analyzing how this can lead to the structuration of an evolutionary direction of business planning for any socioeconomic organism.
    Keywords: Evolutionary economics; Evolutionary firm theory; Evolutionary approach; Stra.Tech.Man approach; Evolutionary business plan
    JEL: B15 B52
    Date: 2019–10–01
  8. By: Carlos Bianchi (Universidad de la República (Uruguay). Facultad de Ciencias Económicas y de Administración. Instituto de Economía); Hugo Laguna (Universidad de la República (Uruguay). Facultad de Ciencias Económicas y de Administración)
    Abstract: A large and rich body of literature has shown that the relationship between innovation and employment is complex and dynamic in nature. From a firm’s level analysis, recent researches have shown heterogeneous empirical patterns for developed and developing countries. This paper contributes by inquiry in the role of innovation strategies as determinants of the firm’s employment growth in a Latin American small middle-income country. Adapting econometric structural models currently in vogue, we discuss the effects of three innovation strategies (Make, Buy, Make&Buy) on the firm’s workforce growth. In line with the literature, we identify a significant positive relation between product innovation associated with Make and Make&Buy strategies, however, on the contrary to most recent research we find a positive and significant effects of process innovation associated to Buy strategies. Considering technological, sectoral and firm characteristics, our findings show a clear positive effect of any innovation strategy in the growth of the firm’s workforce. Meanwhile, no innovative strategies negatively affect workforce growth. Our findings contribute by deepening the understanding of the firm level determinants of employment in developing countries. We analyze our result in the light of a recent but extensive evidence on the relationship between innovation and employment at firm’s level in Uruguay. In particular, we discuss the traditional explanation on the firm’s technological behavior in Latin America, to discuss the effects on employment of integrative innovation strategies in Uruguay.
    Keywords: innovation strategies, employment, Latin America, Uruguay
    JEL: O33 D22 J23
    Date: 2020–05
  9. By: Hang T. Banh; Philippe Wingender; Cheikh A. Gueye
    Abstract: The COVID-19 pandemic has led to an unprecedented collapse in global economic activity and trade. The crisis has also highlighted the role played by global value chains (GVC), with countries facing shortages of components vital to everything from health systems to everyday household goods. Despite the vulnerabilities associated with increased interconnectedness, GVCs have also contributed to increasing productivity and long-term growth. We explore empirically the impact of GVC participation on productivity in Estonia using firm-level data from 2000 to 2016. We find that higher GVC participation at the industry level significantly boosts productivity at both the industry and the firm level. Frontier firms, large firms, and exporting firms also benefit more from GVC participation than non-frontier firms, small firms, and non-exporting firms. We also find that GVC participation of downstream industries has a negative correlation with productivity. Frontier firms and large firms benefit more from GVC participation of upstream industries, while non-frontier firms and small firms benefit more from GVC participation of downstream industries. Our results suggest that policies designed to promote participation in GVCs are important to raise aggregate productivity and potential growth in Estonia.
    Date: 2020–07–03
  10. By: Salvadori, Neri; De Francesco, Massimo A.
    Abstract: This paper studies Bertrand-Edgeworth competition among firms producing a homogeneous commodity under efficient rationing and constant (andidentical across firms) marginal cost until full capacity utilization is reached. Our focus is on a subset of the no pure-strategy equilibrium region of the capacity space in which, in a well-defined sense, some firms are large and the others are small. We characterize equilibria for such subset. For each firm, the payoffs are the same at any equilibrium and, for each type of firm, they are proportional to capacity. While there is a single profile of equilibrium distributions for the large firms, there is a continuum of equilibrium distributions for the small firms: what is uniquely determined, for the latter, is the capacity-weighted sum of their equilibrium distributions and hence the union of the supports of their equilibrium strategies.
    Keywords: Bertrand-Edgeworth oligopoly; mixed strategy equilibrium; large and small firms
    JEL: C72 D43 L13
    Date: 2020–08–05
  11. By: Stylianos Asimakopoulos (University of Bath); Filipa Da Silva Fernandes (University of Aberdeen); Yiannis Karavias (University of Birmingham)
    Abstract: Why do some firms become primarily suppliers of trade credit and other firms become primarily buyers of trade credit? A theoretical model is proposed and suggests that the determining factors of the net trade credit position are size and liquidity. The model predicts a nonmonotonic net trade credit - firm performance nexus with a net trade credit threshold splitting firms to sufficiently "small and illiquid" that benefit more from receiving trade credit, even when operating at a negative net trade credit, and "large and more liquid" firms that benefit more from extending trade credit. The results of the model are confirmed empirically using a large sample of European SMEs, and the net trade credit threshold is estimated while dealing carefully with endogeneity and nonmonotonicity, simultaneously.
    Keywords: net trade credit, threshold, nonmonotonic relationship, size and liquidity.
    JEL: C23 G01 G30 L25
    Date: 2020–08
  12. By: Vincent A.C. van den Berg (Vrije Universiteit Amsterdam); Henk Meurs (Radboud University); Erik T. Verhoef (Vrije Universiteit Amsterdam)
    Abstract: Travelers often combine transport services from different firms to form trip chains: e.g. first train and then a bus. Integration of different forms of public and private transport into a single service is gaining attention with the concept of Mobility as a Service (MaaS). Usually, the focus is on such things as ease of use, and shifting demand away from the car. We solely focus on the effects on behaviour and welfare via the market structure of transport. In particular, we analyse three archetype ways in which MaaS could be operationalized: Integrator, Platform, and Intermediary. We find that these models differ strongly in how consumers and firms are affected. The Integrator seems best for consumers and social welfare. It always leads to lower prices than Free Competition without Maas and therefore benefits consumers; transport firm profits can be lower or higher. The Platform tends to lead to an outcome that is relatively close to Free Competition without Maas: prices can be higher or lower, while transport firm profits are lower. Finally, the Intermediary tends to lead to much higher prices. Regulation of the price that the MaaS firm has to pay may further lower prices, but compared to the Integrator the difference is often small. So, even without price regulation, MaaS supply can already benefit consumers by increasing competition and removing serial marginalization, even before we consider other benefits of MaaS such as information provision, ease of use and a demand shift towards public transport.
    Keywords: MaaS, market structure, platform, intermediary, integrator, regulation
    JEL: R40 D21 D43
    Date: 2020–08–20

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