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on Business Economics |
| By: | Andersson, Fredrik W.; Lodefalk, Magnus (The Ratio Institute) |
| Abstract: | Business angels dominate early stage investment in firms but research on the effects of their investment is scarce and limited by sample selection. We therefore propose an algorithm for identifying business angel investment in total population data. We apply the algorithm to study the effects of business angels on firm performance, using detailed and longitudinal total population data for individuals and firms in Sweden. Employing these data and a quasi-experimental estimator, we find that business angels engage in firms that already perform above par but that there also is a positive effect on subsequent growth, comparing with control firms. Firms with business angel investment perform better in terms of sales and employment growth and likelihood of becoming a high-growth firm. Contrary to previous research, we cannot find any impact on firm survival, however. Overall, our results underline the need to address sample selection issues both in identifying business angels and in evaluating their effects on firm performance. |
| Keywords: | Business angels; Firm performance; Sample selection; Population Data |
| JEL: | C23 G24 G32 L25 |
| Date: | 2020–12–21 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:ratioi:0342&r=all |
| By: | Antonio De Socio (Bank of Italy) |
| Abstract: | Based on a large sample of mostly unlisted non-financial companies, this paper studies the relationship between business cycles and firms’ leverage, disentangling the relative contributions of debt and equity and assessing the role of firm size in explaining cross-sectional heterogeneity. I find that aggregate leverage initially increases during busts, as debt growth remains steady, while the counterbalancing contribution of equity is smaller; after one year, as debt slows down, leverage decreases. Moreover, firm size matters, also after controlling for other proxies of financial frictions (age, risk, profitability, debt structure): leverage increases more at the beginning of busts for both very large and smaller firms; after one year, leverage decreases less for the latter, mainly due to persistently lower profits. |
| Keywords: | debt, equity, firm size, business cycles, crises |
| JEL: | E32 G01 G32 |
| Date: | 2020–12 |
| URL: | http://d.repec.org/n?u=RePEc:bdi:opques:qef_587_20&r=all |
| By: | Kilian Huber; Volker Lindenthal; Fabian Waldinger |
| Abstract: | Large-scale increases in discrimination can lead to dismissals of highly qualified managers. We investigate how expulsions of senior Jewish managers, due to rising discrimination in Nazi Germany, affected large corporations. Firms that lost Jewish managers experienced persistent reductions in stock prices, dividends, and returns on assets. Aggregate market value fell by roughly 1.8 percent of German GNP because of the expulsions. Managers who served as key connectors to other firms and managers who were highly educated were particularly important for firm performance. The findings imply that individual managers drive firm performance. Discrimination against qualified business leaders causes first-order economic losses. |
| Date: | 2020 |
| URL: | http://d.repec.org/n?u=RePEc:ces:ceswps:_8736&r=all |
| By: | Coad, Alex (Waseda Business School, Tokyo, Japan); Daunfeldt, Sven-Olov (Institute of Retail Economics (Handelns Forskningsinstitut)); Halvarsson, Daniel (The Ratio Institute, Stockholm) |
| Abstract: | In the race to the South Pole, Roald Amundsen’s expedition covered an equal distance each day, irrespective of weather conditions, while Scott’s pace was erratic. Amundsen won the race and returned without loss of life, while Scott and his men died. We investigate how firms’ sales growth deviate from the long-run average growth path. Our baseline results suggest that growth path volatility is associated with higher growth of sales and profits, but is also associated with higher exit rates. This is driven by firms with negative growth rates. For positive-growth firms, volatility is negatively associated with both sales growth and survival. |
| Keywords: | Firm dynamics; Sales growth; Firm exit; Growth paths; Scale-up; Postentry growth |
| JEL: | D22 L25 L26 |
| Date: | 2020–12–28 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:hfiwps:0016&r=all |
| By: | Kilian Huber |
| Abstract: | The effects of large banks on the real economy are theoretically ambiguous and politically controversial. I identify quasi-exogenous increases in bank size in postwar Germany. I show that firms did not grow faster after their relationship banks became bigger. In fact, opaque borrowers grew more slowly. The enlarged banks did not increase profits or efficiency, but worked with riskier borrowers. Bank managers benefited through higher salaries and media attention. The paper presents newly digitized microdata on German firms and their banks. Overall, the findings reveal that bigger banks do not always raise real growth and can actually harm some borrowers. |
| JEL: | E24 E44 G21 G28 |
| Date: | 2020 |
| URL: | http://d.repec.org/n?u=RePEc:ces:ceswps:_8746&r=all |
| By: | Ana Martins (Research Office of the Portuguese Ministry of the Economy and Digital Transition); Guida Nogueira (Research Office of the Portuguese Ministry of the Economy and Digital Transition); Eva Pereira (Research Office of the Portuguese Ministry of the Economy and Digital Transition) |
| Abstract: | Outsourcing is one of the main drivers behind economic globalization, especially international outsourcing. In general terms it refers to the process of moving stages of production to external providers, either domestic (usually labelled as domestic outsourcing) or international (commonly labelled as offshoring or simply outsourcing). Over time, technological advances in transportation and ICT developments, led to a substantial rise in this phenomenon, growing in extent and nature, from simple to more complex tasks related to both manufactures and services supply. International outsourcing is usually expected to reduce production costs and to increase efficiency, however it has received substantial attention from policy makers for its potential negative consequences on the labour market. This paper combines Portuguese firm-level data from the International Sourcing surveys and longitudinal administrative business record data, to explore the impacts of the sourcing status on a variety of firms’ performance measures specially focusing on employment, competitiveness and productivity. The results suggest that international sourcing has an ambiguous effect on firm level total employment, but a positive effect on both the subset of workers that receive a salary (a proxy to employees) and on R&D jobs, coupled with an increasing effect on firm level total labour costs. Alongside these results, our findings also show that offshoring has a positive causal effect on both firm-level export intensity and trade balance, however the efficiency gains hypothesis was not confirmed. In fact, the results show that newly offshoring firms experienced lower labour productivity growth with a negative effect on both capital stock and capital per person employed. |
| Keywords: | Outsourcing, international sourcing, offshoring, internationalization, productivity, employment and firm productivity, Propensity score matching |
| JEL: | F23 L24 F61 D24 J24 F16 |
| Date: | 2020–12 |
| URL: | http://d.repec.org/n?u=RePEc:mde:wpaper:0157&r=all |
| By: | He, Chuan; Mau, Karsten (RS: GSBE other - not theme-related research, Macro, International & Labour Economics); Xu, Mingzhi |
| Abstract: | This paper studies the hiring behavior of firms exposed to the recent China-US trade war. Our analysis leverages information from a Chinese online job board and a firm-level measure of tariff exposure obtained from customs transactions data. Firms that are more exposed to US tariffs on Chinese goods responded by posting fewer job vacancies and offering lower wages. The latter is partly balanced out by increased non-wage compensation. We also find a negative relationship between US-tariff exposure and the educational background required in firms’ job ads. China’s retaliatory tariffs against the US does not appear to have a statistically significant systematic impact on hiring. The paper also reports heterogeneous adjustment patterns across firms of different size, ownership and product mix. Overall, the trade war reveals to have negative impact on firms and job-seekers in China. |
| JEL: | D22 F13 F14 J23 |
| Date: | 2021–01–05 |
| URL: | http://d.repec.org/n?u=RePEc:unm:umagsb:2021001&r=all |
| By: | Catarina, Nyoman Ayu Shandy |
| Abstract: | Tulisan ini membahas tentang Contingency theory yang merupakan sebuah teori tentang bagaimana sebuah perusahaan dipengaruhi oleh faktor eksternal dan bagaiman suatu perusahaan bisa bertahan dengan cara menjadi fleksibel dan adaptif terhadap perubahan lingkungan eksternal. Teori ini memandang bahwa lingkungan eksternal merupakan determinan utama firm performance. Juga membahas tentang Mediating effect yang merupakan efek mediasi yang relatif untuk bisa mengidentifikasi kondisi batas untuk setiap mediator misalnya kemampuan adaptif dengan pengurangan oportunisme dan juga dalam kaitannya dengan hubungan fungsional antara ikatan sosial dan kinerja perusahaan. |
| Date: | 2020–12–15 |
| URL: | http://d.repec.org/n?u=RePEc:osf:osfxxx:zxfyt&r=all |
| By: | Leila Agha; Keith Marzilli Ericson; Xiaoxi Zhao |
| Abstract: | Patients often receive healthcare from providers spread across different firms. Transaction costs, imperfect information, and other frictions can make it difficult to coordinate production across firm boundaries, but we do not know how these challenges affect healthcare. We define and measure organizational concentration: the distribution across organizations of a patient's healthcare. Medicare claims show that organizational concentration varies substantially across physicians and regions, and that patients who move to more concentrated regions have lower healthcare utilization. Further, we show that when primary care physicians (PCPs) with higher organizational concentration exit the local market, their patients switch to more typical PCPs with lower organizational concentration and then have higher healthcare utilization. Patients who switch to a PCP with 1 SD higher organizational concentration have 10% lower healthcare utilization. This finding is robust to controlling for the spread of patient care across providers. Increases in organizational concentration have no detectable effect on emergency department utilization or hospitalization rates, but do predict improvements in diabetes care. |
| JEL: | D23 I11 L14 |
| Date: | 2020–12 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:28179&r=all |
| By: | Bloom, Nicholas (Stanford University); Bunn, Philip (Bank of England); Mizen, Paul (University of Nottingham); Smietanka, Pawel (Bank of England); Thwaites, Gregory (University of Nottingham) |
| Abstract: | We analyse the impact of Covid-19 on productivity in the United Kingdom using data derived from a large monthly firm panel survey. Our estimates suggest that Covid-19 will reduce TFP in the private sector by up to 5% in 2020 Q4, falling back to a 1% reduction in the medium term. Firms anticipate a large reduction in ‘within-firm’ productivity, primarily because measures to contain Covid-19 are expected to increase intermediate costs. The negative ‘within-firm’ effect is partially offset by a positive ‘between-firm’ effect as low productivity sectors, and the least productive firms among them, are disproportionately affected by Covid-19 and consequently make a smaller contribution to the economy. In the longer run, productivity growth is likely to be reduced by diminished R&D expenditure and diverted CEOs’ time spent on dealing with the pandemic. |
| Keywords: | Productivity; reallocation; Covid-19; growth |
| JEL: | O32 O33 |
| Date: | 2020–12–21 |
| URL: | http://d.repec.org/n?u=RePEc:boe:boeewp:0900&r=all |
| By: | Deasy D.P. Pane; Arianto A. Patunru |
| Abstract: | The rise of economic protectionism worldwide has come with re-emergence of mercantilist policies whereby governments push for exports while restricting imports. Against this populist approach, we show that importing inputs can raise productivity and export. Using firm-level data matched with very detailed customs data of Indonesia’s exports and imports during 2008–12, we apply instrumental variable strategy with import tariffs and import weighted real exchange rates as instruments for import of intermediate inputs. We find causality from imported inputs to productivity increase and export growth. Higher access to input varieties has a larger impact than an increase in import volume on export, implying that the main benefits of importing may come from access to broader alternatives of inputs. Furthermore, the impact is also larger when imports originate from developed countries, suggestive of a positive effect of technology and product quality. |
| Keywords: | imported intermediate inputs, export performance, total factor productivity |
| JEL: | D22 D24 F13 F14 F31 |
| Date: | 2020 |
| URL: | http://d.repec.org/n?u=RePEc:pas:papers:2020-08&r=all |