nep-bec New Economics Papers
on Business Economics
Issue of 2020‒11‒30
nine papers chosen by
Vasileios Bougioukos
Bangor University

  1. Middle Managers, Personnel Turnover and Performance: A Long-Term Field Experiment in a Retail Chain By Guido Friebel; Matthias Heinz; Nikolay Zubanov
  2. Foreign shocks as granular fluctuations By Julian di Giovanni; Andrei A. Levchenko; Isabelle Mejean
  3. NETWORKS AND FAMILY FIRM PERFORMANCE: SOME EVIDENCE FROM ITALY By Francesco Aiello; Paola Cardamone; Lidia Mannarino; Valeria Pupo
  4. What Are the Labor and Product Market Effects of Automation?: New Evidence from France By Philippe Aghion; Céline Antonin; Simon Bunel; Xavier Jaravel
  5. Corporate Governance and Firm Performance in Pakistan: Dynamic Panel Estimation By Muhammad, Akbar; Shahzad, Hussain; Tanveer, Ahmad; Shoib, Hassan
  6. Are firms withdrawing from basic research? An analysis of firm-level publication behaviour in Germany By Krieger, Bastian; Pellens, Maikel; Blind, Knut; Schubert, Torben
  7. Exploring The Impact of Job Satisfaction Domains on Firm Performance: Evidence from Great Britain By Eberegbe, Georgina; Giovanis, Eleftherios
  8. Technical Barriers to Trade and Firms' Export Decisions By Shuyao Yang
  9. Firm Heterogeneity in Skill Returns By Michael J. Böhm; Khalil Esmkhani; Giovanni Gallipoli

  1. By: Guido Friebel (Department of Management and Microeconomics, Goethe-University Frankfurt, 60323 Frankfurt/Main, Germany); Matthias Heinz (Department of Management, University of Cologne, 50923 Cologne, Germany); Nikolay Zubanov (Department of Economics, University of Konstanz, 78464 Konstanz, Germany)
    Abstract: In an RCT, a large retail chain’s CEO sets new goals for the managers of the treated stores by asking them “to do what they can” to reduce the employee quit rate. The treatment decreases the quit rate by a fifth to a quarter, lasting nine months before petering out, but reappearing after a reminder. There is no treatment effect on sales. Further analysis reveals that treated store managers spend more time on HR and less on customer service. Our findings show that middle managers are instrumental in reducing personnel turnover, but they face a tradeoff between investing in different activities in a multitasking environment with limited resources. The treatment does produce efficiency gains. However, these occur only at the firm level.
    Keywords: organizations, randomized controlled trial (RCT), insider econometrics, goal-setting, communication, HR, personnel turnover and firm performance
    JEL: L2 M1 M12 M5
    Date: 2020–11
  2. By: Julian di Giovanni; Andrei A. Levchenko; Isabelle Mejean
    Abstract: This paper uses a dataset covering the universe of French firm-level sales, imports, and exports over the period 1993-2007 and a quantitative multi-country model to study the international transmission of business cycle shocks at both the micro and the macro levels. The largest firms are both important enough to generate aggregate fluctuations (Gabaix, 2011), and most likely to be internationally connected. This implies that foreign shocks are transmitted to the domestic economy primarily through the largest firms. We first document a novel stylized fact: larger French firms are significantly more sensitive to foreign GDP growth. We then implement a quantitative framework calibrated to the full extent of observed heterogeneity in firm size, exporting, and importing. We simulate the propagation of foreign shocks to the French economy and report one micro and one macro finding. At the micro level heterogeneity across firms predominates: 40 to 85% of the impact of foreign fluctuations on French GDP is accounted for by the "foreign granular residual" - the term capturing the fact that larger firms are more affected by the foreign shocks. At the macro level, firm heterogeneity dampens the impact of foreign shocks, with the GDP responses 10 to 20% larger in a representative firm model compared to the baseline model.
    Keywords: Granularity, shock transmission, aggregate fluctuations, input linkages, international trade
    JEL: E32 F15 F23 F44 F62 L14
    Date: 2020–11
  3. By: Francesco Aiello (Dipartimento di Economia, Statistica e Finanza "Giovanni Anania" - DESF, Università della Calabria); Paola Cardamone (Dipartimento di Economia, Statistica e Finanza "Giovanni Anania" - DESF, Università della Calabria); Lidia Mannarino (Dipartimento di Economia, Statistica e Finanza "Giovanni Anania" - DESF, Università della Calabria); Valeria Pupo (Dipartimento di Economia, Statistica e Finanza "Giovanni Anania" - DESF, Università della Calabria)
    Abstract: Using a large sample of Italian small–medium-sized firms, this note analyses the effects of formal inter-firm cooperation on the performance of family firms (FFs). The study is based on the network contract (“Contratto di rete”) implemented in Italy in 2009. The results show that networks have a positive effect on FFs, while no conclusive evidence is found for non-family firms. Additionally, the advantages for southern FFs and for small firms are considerable.
    Keywords: family firms, formal business networks, performance
    JEL: G34 L24 L25
    Date: 2020–11
  4. By: Philippe Aghion (Harvard University); Céline Antonin (Observatoire français des conjonctures économiques); Simon Bunel; Xavier Jaravel
    Abstract: We use comprehensive micro data in the French manufacturing sector between 1994 and 2015 to document the effects of automation technologies on employment, wages, prices and profits. Causal effects are estimated with event studies and a shift-share IV design leveraging pre-determined supply linkages and productivity shocks across foreign suppliers of industrial equipment. At all levels of analysis —plant, firm, and industry —the estimated impact of automation on employment is positive, even for unskilled industrial workers. We also find that automation leads to higher profits, lower consumer prices, and higher sales. The estimated elasticity of employment to automation is 0.28, compared with elasticities of 0.78 for profits, -0.05 for prices, and 0.37 for sales. Consistent with the importance of business-stealing across countries, the industry-level employment response to automation is positive and significant only in industries that face international competition. These estimates can be accounted for in a simple monopolistic competition model: firms that automate more increase their profits but pass through some of the productivity gains to consumers, inducing higher scale and higher employment. The results indicate that automation can increase labor demand and can generate productivity gains that are broadly shared across workers, consumers and firm owners. In a globalized world, attempts to curb domestic automation in order to protect domestic employment may be self-defeating due to foreign competition.
    Keywords: Automation; Employment; Plant-level; Firm-level; Labor market; Product market; Manufacturing
    JEL: J23 J24 L11 O3
    Date: 2020
  5. By: Muhammad, Akbar; Shahzad, Hussain; Tanveer, Ahmad; Shoib, Hassan
    Abstract: The purpose of this research is to analyze the association between corporate governance and firm performance. Specifically, it examines the impact of CEO duality on board characteristics and its relationship with firm performance through dynamic penal estimation. Findings of this research are based on a sample of 230 listed non-financial firms over the period 2004-2014. We document that the corporate governance plays a pivotal role in determining the financial performance of firms operating in Pakistan. Consistent with past studies, findings of this research also show some statistical variations among the sampled firms (large and small size). The CEO duality compromises the efficiency of board independence. Further, the non-linear relationship of managerial ownership with performance is also depicted through the results of this study.
    Date: 2020–11–19
  6. By: Krieger, Bastian (ZEW - Leibniz Centre for European Economic Research); Pellens, Maikel (Ghent University); Blind, Knut (Fraunhofer Institute for System and Innovation Research ISI); Schubert, Torben (CIRCLE - Centre for Innovation Research)
    Abstract: Previous research has expressed concerns about firms engaging less in basic research. We contribute to this debate by studying trends in the scientific publishing activities of firms located in Germany. Our results do not confirm a declining trend in raw numbers with numbers indicating that firms’ aggregate volume of scientific publications stayed constant between 2008 and 2016. However, the number of publishing firms declined, in particular in high-tech and knowledge-intensive industries. Beyond that, we observe positive trends in publishing in basic research journals compared to journals focused on applied research, and publishing in collaboration with academic partners compared to publishing alone. Thus, our results paint an ambiguous picture. While they do not confirm a decrease in firms’ basic research engagement in the aggregate, the figures document a concentration of publishing activities on fewer firms. We argue that this concentration of basic research activities in firms may pose a threat to the longer term innovativeness of the German economy.
    Keywords: Corporate publishing; Basic research; R&D strategy
    JEL: O32 O33 O34 O36
    Date: 2020–11–19
  7. By: Eberegbe, Georgina; Giovanis, Eleftherios
    Abstract: Firm productivity and performance and their determinants are a well addressed topic in the field of management and industrial organization. However, how different job satisfaction domains affect the firm performance remains relatively rare. The aim of this study is to explore the impact of seven job satisfaction domains on firm performance. The analysis relies on firm-level data derived from the Workforce Employment Relations Survey (WERS) in 2004 and 2011 in Great Britain. To reduce the endogeneity issue coming from possible reverse causality between the job satisfaction and firm performance we apply the Two Stage Least Squares (2SLS) method. The findings show that satisfaction with job security and the work itself have the strongest positive impact followed by training, income and sense of achievement. The findings provide valuable insights to firms and managers about the identification of the most important job satisfaction domains affecting firm performance, varying by the industry, firm type and workplace management. This is especially the case in the post-crisis period of 2007, where working conditions have experienced major changes, and will experience further changes and new challenges due to the COVID-19 pandemic.
    Keywords: Employment relationships; Instrumental Variables; Job Satisfaction; Job Security; Organizational Performance; Workforce Employment Relations Survey
    JEL: D23 J24 J28 L25 M54 O15
    Date: 2020–06
  8. By: Shuyao Yang
    Abstract: This paper investigates the impact of restrictive TBTs on firms’ extensive margins (export participation and exit probability), intensive margins (export value) and pricing strategy (export price). To this end, product-level restrictive TBTs and firm-level export are combined and an instrumental-variable approach is utilized. The results show that the imposition of restrictive TBTs adversely affect firms’ intensive and extensive margins, but not significantly affect firms’ price on average. More importantly, firms of different types, in the sense of firm sizes, number of destination markets and ownership types, are affected differently. Given the same restrictive TBTs, firms with higher productivity suffer less, while firms with lower productivity are more vulnerable to the trade barriers.
    Keywords: TBTs, firm heterogeneity, extensive margins, intensive margins, pricing strategy
    JEL: F13 F14
    Date: 2020
  9. By: Michael J. Böhm (University of Bonn); Khalil Esmkhani (University of British Columbia); Giovanni Gallipoli (Vancouver School of Economics, UBC)
    Abstract: This paper presents new evidence on worker-firm complementarities. We combine matched employer-employee data with direct measures of workers' cognitive and noncognitive skills, and propose an empirical approach that separately identifies the firm-level return for each attribute. We find that similar skills command different returns across employers and that workers' sorting into firms depends on returns to both attributes. We derive theoretical restrictions that characterize many-to-one matching in employer-employee data, linking within-firm skill dispersion to between-firm differences in average skills. Estimates support these restrictions. Firm heterogeneity in skill returns raises both the average level and dispersion of earnings.
    Keywords: firm heterogeneity, skill returns, sorting, wages, Inequality
    JEL: D30 J23 J24 J31
    Date: 2020–11

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