nep-bec New Economics Papers
on Business Economics
Issue of 2021‒01‒18
sixteen papers chosen by
Vasileios Bougioukos
Bangor University

  1. Distant but close in sight. Firm-level evidence on french-german productivity gaps in manufacturing By Thomas Grebel; Mauro Napoletano; Lionel Nesta
  2. Productivity Gaps and Job Flows: Evidence from Censal Microdata By Elías Albagli; Mario Canales; Chad Syverson; Matías Tapia; Juan Wlasiuk
  3. Amundsen versus Scott: Are growth paths related to firm performance? By Coad, Alex; Daunfeldt, Sven-Olov; Halvarsson, Daniel
  4. Managerial Performance of a Female-Owned and Home-Based Firm By Oladipo, Oluwasheyi S.; Platt, Katarzyna; Shim, Hyoung Suk
  5. In the Eye of the Storm Firms and Capital Destruction in India By Martino Pelli; Jeanne Tschopp; Natalia Bezmaternykh; Kodjovi M. Eklou
  6. Drivers of food safety adoption among food processing firms: A nationally representative survey in Ghana By Asante, Seth B.; Ragasa, Catherine; Andam, Kwaw S.
  7. Liability Design with Information Acquisition By Francisco Poggi; Bruno Strulovici
  8. Endogenous Product Scope: Market Interlacing and Aggregate Business Cycle Dynamics By Oscar Pavlov; Mark Weder
  9. Worker and firm responses to trade shocks: The UK-China case By Josh De Lyon; Joao Paulo Pessoa
  10. Labor Market Informality and the Business Cycle By Frederic Lambert; Andrea Pescatori; Frederik G Toscani
  11. Revealing Corruption: Firm and Worker Level Evidence from Brazil By Colonnelli, Emanuele; Lagaras, Spyridon; Ponticelli, Jacopo; Prem, Mounu; Tsoutsoura, Margarita
  12. A Note on Antitrust, Labor, and “No Cold Call” Agreements in Silicon Valley By Pittman, Russell
  13. Digital technology adoption, productivity gains in adopting firms and sectoral spill-overs: Firm-level evidence from Estonia By Natia Mosiashvili; Jon Pareliussen
  14. Consequences of a Massive Refugee Influx on Firm Performance and Market Structure By Akgündüz, Yusuf Emre; Bağır, Yusuf Kenan; Cilasun, Seyit Mümin; Kirdar, Murat G.
  15. Bank credit and market-based finance for corporations: the effects of minibond issuances By Ongena, Steven; Pinoli, Sara; Rossi, Paola; Scopelliti, Alessandro
  16. American Business Cycles 1889-1913: An Accounting Approach By Dou Jiang; Mark Weder

  1. By: Thomas Grebel (TU - Ilmenau University of Technology [Germany]); Mauro Napoletano (GREDEG - Groupe de Recherche en Droit, Economie et Gestion - UNS - Université Nice Sophia Antipolis (... - 2019) - COMUE UCA - COMUE Université Côte d'Azur (2015 - 2019) - CNRS - Centre National de la Recherche Scientifique - UCA - Université Côte d'Azur, OFCE - Observatoire français des conjonctures économiques - Sciences Po - Sciences Po, SKEMA Business School, SSSUP - Scuola Universitaria Superiore Sant'Anna [Pisa]); Lionel Nesta (GREDEG - Groupe de Recherche en Droit, Economie et Gestion - UNS - Université Nice Sophia Antipolis (... - 2019) - COMUE UCA - COMUE Université Côte d'Azur (2015 - 2019) - CNRS - Centre National de la Recherche Scientifique - UCA - Université Côte d'Azur, OFCE - Observatoire français des conjonctures économiques - Sciences Po - Sciences Po)
    Abstract: We study the productivity level distributions of manufacturing firms in France and Germany, and how these distributions evolved across the Great Recession. We show the presence of a systematic productivity advantage of German firms over French ones in the decade 2003-2013, but the gap has narrowed down after the Great Recession. Convergence is explained by the better growth performance of French firms in the post-recession period, especially of those located in the top percentiles of the productivity distribution. We also highlight the role of sectoral growth, firm size and export intensity in explaining the above convergence. In contrast, the contribution of allocative efficiency was small.
    Keywords: International productivity gaps,productivity distributions,firm level comparisons. JEL classification: L10,N10,D24
    Date: 2020–09–13
  2. By: Elías Albagli; Mario Canales; Chad Syverson; Matías Tapia; Juan Wlasiuk
    Abstract: A large body of work has highlighted the importance of employment reallocation as a driver of aggregate productivity growth, but there is little direct evidence on the extent and nature of this process. We use an administrative matched employer-employee census for Chile to provide novel insights on the relationship between productivity gaps between firms and job transitions. As expected, the fraction of worker flows reflecting movements from lower- to higher-productivity firms is greater than that of the opposite sign, but only marginally so. Almost half of all transitions occur "down the firm-productivity ladder." This process is also highly heterogeneous across several dimensions. Up-the-ladder flows are more likely for direct job-to-job transitions than those that pass through non-employment. They are also much more likely for young, highskilled workers, whose job transitions comprise in an accounting sense the lion’s share of aggregate productivity growth. Interestingly, workers with higher job turnover rates contribute proportionally the least to aggregate productivity growth. Put together, this evidence is suggests that the productivity benefit of job reallocation might have a net benefit, but this benefit reflects massive and heterogeneous gross flows underneath.
    Date: 2020–12
  3. By: Coad, Alex (Waseda Business School); Daunfeldt, Sven-Olov (Institute of Retail Economics); Halvarsson, Daniel (The Ratio Institute)
    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; Post-entry growth
    JEL: D22 L25 L26
    Date: 2020–12–25
  4. By: Oladipo, Oluwasheyi S. (State University of New York at Old Westbury); Platt, Katarzyna (State University of New York at Old Westbury); Shim, Hyoung Suk (CUNY - College of Staten Island)
    Abstract: Female entrepreneurship has been regarded as inferior to its male equivalent in terms of performance. Literature on gender differences in entrepreneurship focus mostly on showing the differences, but not much literature discusses where the differences come from, and how to mitigate them. This paper empirically examines the joint effect of female ownership and being home-based on owners' managerial performance. We estimate the average treatment effect of female-owned and homebased firms on return on assets (ROA) using the 2007 Survey of Business Owners (SBO) micro data. From the main estimation result, the marginal effects of female ownership and home-based business are both negative. The estimated ROA gains of female ownership and home-based business are about -37.20% and -67.17%, respectively. In contrast, we find that the joint effect of female ownership and home-based business is about 39.53% ROA gain. Our finding suggests that female-owned firms can outperform under the appropriate supporting conditions, such as if they are able to remove travel time and costs by establishing their businesses at home.
    Keywords: firm performance, female owners
    JEL: L25 L26 J16
    Date: 2020–12
  5. By: Martino Pelli; Jeanne Tschopp; Natalia Bezmaternykh; Kodjovi M. Eklou
    Abstract: This paper examines the response of firms to capital destruction, using a new measure of firm exposure to tropical storms as a negative exogenous shock on firms’ capital stock. Drawing on a panel of Indian manufacturing firms between 1995 and 2006, we establish that, depending on their strength, storms destroy up to 75.3% of the fixed assets of the median firm (in terms of its productivity and industry performance). We quantify the response of firm sales within and across industries and find effects akin to Schumpeterian creative destruction, where surviving firms build back better. Within an industry, the sales of less productive firms decrease disproportionately more, while across industries capital destruction leads to a shift in sales towards more performing industries. This build-back better effect is driven by firms active in multiple industries and, to a large extent, by shifts in the firm-level production mix within a firm’s active set of industries. Finally, while there is no evidence that firms adjust by investing in new industry lines, firms tend to abandon production in industries that exhibit lower comparative advantage.
    Keywords: Comparative advantage;Total factor productivity;Capital productivity;Natural disasters;Productivity;WP,ISIC firm,single-establishment firm,tropical storm
    Date: 2020–09–25
  6. By: Asante, Seth B.; Ragasa, Catherine; Andam, Kwaw S.
    Abstract: Globally, food system transformation is characterized by the increasing importance of food safety and quality standards for consumers. This trend is challenging for the food processing sector in Ghana, which is dominated by micro and small firms. This study investigates the factors influencing the adoption of food safety practices and the effect of such adoption on the profitability of nationally representative food processing firms in Ghana using instrumental variable approach and matching techniques. The study uses nationally representative data for 511 food processing firms. The data show few food processing firms (20 percent) have adopted food safety practices. Wide diversity of firms was observed, and firm size, firm age, registrations, trainings, processing activities, types of buyers, and number of distinct products explain the differing firm adoption of food safety practices. We also find that adopters of food safety practices earn more per month than do nonadopting firms, implying the presence of economic incentive to adopt food safety practices. Support in terms of food safety awareness and training to food processing firms can help improve adoption of food safety practices.
    Keywords: GHANA; WEST AFRICA; AFRICA SOUTH OF SAHARA; AFRICA; surveys; food safety; food processing; enterprises; food systems; firm performance
    Date: 2020
  7. By: Francisco Poggi; Bruno Strulovici
    Abstract: How to guarantee that firms perform due diligence before launching potentially dangerous products? We study the design of liability rules when (i) limited liability prevents firms from internalizing the full damage they may cause, (ii) penalties are paid only if damage occurs, regardless of the product's inherent riskiness, (iii) firms have private information about their products' riskiness before performing due diligence. We show that (i) any liability mechanism can be implemented by a tariff that depends only on the evidence acquired by the firm if a damage occurs, not on any initial report by the firm about its private information, (ii) firms that assign a higher prior to product riskiness always perform more due diligence but less than is socially optimal, and (iii) under a simple and intuitive condition, any type-specific launch thresholds can be implemented by a monotonic tariff.
    Date: 2020–12
  8. By: Oscar Pavlov (University of Tasmania and CAMA); Mark Weder (Department of Economics and Business Economics, Aarhus University and CAMA)
    Abstract: This paper examines a market interlacing industry configuration in general equilibrium with multi-product firms. In contrast to previous studies which utilize market segmentation, firms produce multiple products even in the complete absence of the love of variety. Product scopes are procyclical and entry and exit of firms generates an endogenous amplification mechanism. When simulated by shocks derived from the efficiency and labor wedges, the model replicates the changes in dynamics between the pre- and post 1983 periods, and explains the hours-productivity puzzle.
    Keywords: Multi-product firms, Business cycles
    JEL: E32
    Date: 2020–01–06
  9. By: Josh De Lyon; Joao Paulo Pessoa
    Abstract: We exploit the recent surge in Chinese export growth to study the effects of a trade shock on workers and firms in a foreign market, the UK, in the period 2000-2007. We find that individuals initially employed in sectors highly exposed to growth in imports from China experienced lower income growth and remained out of employment longer than workers in sectors that were less exposed to import competition. The effects are heterogeneous, with initially lower-paid workers suffering more in terms of employment and earnings than those initially better-paid, and female workers experiencing a greater relative fall in total earnings than males, mostly through reduced years of employment. Plants in industries more exposed to Chinese products displayed lower employment growth and higher probability of going out of business than plants in sectors more insulated from competition with China, with stronger effects for larger plants.
    Keywords: globalisation, employment, wages, UK economy.
    JEL: F14 F16 J3 J6
    Date: 2021–01
  10. By: Frederic Lambert; Andrea Pescatori; Frederik G Toscani
    Abstract: Labor market informality is a pervasive feature of most developing economies. Motivated by the empirical regularity that the labor informality rate falls with GDP per capita, both at business cycle frequency and in a cross-section of countries, and that the Okun's coefficient falls with the level of labor informality, we build a small open-economy dynamic stochastic general equilibrium model with two sectors, formal and informal, which can replicate these key stylized facts. The model is calibrated to Colombia. The results show that labor market and tax reforms play an important role in changing the informality rate but also caution against over-optimism - with low GDP per capita, informality will always be relatively high as there is insufficient demand for formal goods. Quantitatively we find that higher productivity in the formal sector is key in explaining the difference between Colombia and countries with significantly lower informality. We use the model to study how labor informality and labor market frictions mediate the cyclical response of the economy to shocks, including commodity price shocks which are particularly relevant in Latin America. Informality is shown to play an important role as a shock absorber with the informal-formal margin limiting movements in the employed-unemployed margin.
    Keywords: Total factor productivity;Labor;Labor markets;Business cycles;Unemployment;labor market,informality,business cycle,WP,commodity price shock,frictions affect labor market dynamics,GDP growth,sector TFP,labor market informality
    Date: 2020–11–20
  11. By: Colonnelli, Emanuele; Lagaras, Spyridon; Ponticelli, Jacopo; Prem, Mounu; Tsoutsoura, Margarita
    Abstract: We study how the disclosure of corrupt practices affects firms and their employees. We construct novel firm-level measures of involvement in corrupt practices using randomized audits and public procurement suspensions in Brazil. On average, exposed firms grow larger after the audits. However, this result masks large heterogeneity depending on the degree of firm involvement in the corruption scheme. Using contract-, loan-, and worker- level data, we show that highly corrupt firms suffer after anti-corruption initiatives, while other exposed firms grow by changing their investment strategy when shifting away from doing business with the government.
    Date: 2020–12–30
  12. By: Pittman, Russell
    Abstract: Firms that provide training to their labor force may risk ex post opportunistic behavior on the part of their workers or of competing firms. Some arguably restrictive firm practices that have been justified by this concern include employment contracts restricting the freedom of workers to seek employment from the firm’s competitors and agreements among competing firms not to solicit or hire certain of each other’s workers – sometimes termed “non-compete” and “no poach” agreements, respectively. This Note considers these two categories of practices in the context of recent public discussions and enforcement actions by the US competition law enforcement agencies.
    Keywords: antitrust, competition, labor markets, non-compete agreements, no-poach agreements
    JEL: J2 J24 L4 L41 L86
    Date: 2020–11–24
  13. By: Natia Mosiashvili; Jon Pareliussen
    Abstract: With a newly constructed firm-level dataset combining various survey- and registry data from Statistics Estonia, this paper sheds new light on the labour productivity premium from adopting digital technologies and boosting digital skill use. The productivity premium is decomposed into a direct effect benefitting the firms actually increasing their digital intensity, and an indirect effect of belonging to a sector with high digital intensity. The firm-level productivity premium of being an adopting firm is consistently positive and sizeable across different digital technologies and measures of skill intensity. The evidence also suggests positive spill-over effects in manufacturing sectors and sectors with a high routine task content and thus a high automation potential.
    Keywords: Digitalisation, productivity, skills, training
    JEL: D24 E22 J24 M53 O33
    Date: 2020–12–16
  14. By: Akgündüz, Yusuf Emre (Sabanci University); Bağır, Yusuf Kenan (Central Bank of the Republic of Turkey); Cilasun, Seyit Mümin (Central Bank of the Republic of Turkey); Kirdar, Murat G. (Bogazici University)
    Abstract: This study combines an administrative dataset of the full population of Turkish firms and the setting of the sudden mass migration of Syrian refugees to Turkey to identify the effect of migrants on firm performance and market structure. As a result of the migrant shock, existing firms expand and new firms are established. Quantitatively, a 10 percentage-point rise in migrant-to-native ratio increases average firm sales by 4% and the number of registered firms by 5%. While the number of firms rises, new firms are more likely to be small. The resulting market structure shows less concentration and firms reduce the share of workers formally employed. We further document an increased propensity to export and an increase in the variety of exported products. The impact on exports is driven by a rise in competitiveness of firms in regions hosting Syrians as a decline in export prices is observed. We also uncover evidence for an effect of migrants' skills and networks on exports, as the export value and variety of products to the Middle East and North Africa (MENA) region increase more than those to the EU region among exporters while the prices of products exported to the two regions show similar changes.
    Keywords: refugees, firm performance, market structure, sales, informality, exports, migrant business networks
    JEL: J15 J61 F16 L11
    Date: 2020–12
  15. By: Ongena, Steven; Pinoli, Sara; Rossi, Paola; Scopelliti, Alessandro
    Abstract: We study the effects of the diversification of funding sources on the financing conditions for firms. We exploit a regulatory reform which took place in Italy in 2012, i.e., the introduction of “minibonds”, which opened a new market-based funding opportunity for unlisted firms. Using the Italian Credit Register, we investigate the impact of minibond issuance on bank credit conditions for issuer firms, both at the firm-bank and firm level. We compare new loans granted to issuer firms with new loans concurrently granted to similar non-issuer firms. We find that issuer firms obtain lower interest rates on bank loans of the same maturity than non-issuer firms, suggesting an improvement in their bargaining power with banks. In addition, issuer firms reduce the amount of used bank credit but increase the overall amount of available external funds, pointing to a substitution with bank credit and to a diversification of corporate funding sources. Studying their ex-post performance, we find that issuer firms expand their total assets and fixed assets, and also raise their leverage. JEL Classification: G21, G23, G32, G38
    Keywords: bank credit, capital markets, loan pricing, minibonds, SME finance
    Date: 2020–12
  16. By: Dou Jiang (Nanjing University of Finance and Economics); Mark Weder (Department of Economics and Business Economics, Aarhus University and CAMA)
    Abstract: This paper quantitatively investigates the Depression of the 1890s and the 1907 recession in the United States. Business Cycle Accounting decomposes economic fluctuations into their contributing factors. The results suggest that both the 1890s and the 1907 recessions were primarily caused by factors that affect the efficiency wedge, i.e. slumps in the economy’s factor productivity. Distortions to the labor wedge played a less important role. Models with financial market frictions that translate into the efficiency wedge are the most promising candidates for explaining the recessionary episodes.
    Keywords: Business cycles, Depression of the 1890s, Recession of 1907
    JEL: E32 E44 N11
    Date: 2020–01–06

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