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on Business Economics |
| By: | Michael Berlemann; Vera Jahn; Robert Lehmann |
| Abstract: | Germany’s comparatively good economic performance throughout the Great Recession of the years 2008/2009 is often attributed to the business model of the German Mittelstand firm. Somewhat surprisingly, this claim has never been backed by empirical evidence. In this paper we use micro panel data from the ifo Business Survey to study the comparative performance of Mittelstand enterprises, defined as owner-managed SMEs. We present supporting evidence for the hypothesis that Mittelstand firms performed more stable throughout the Great Recession than non-Mittelstand firms. We also show that owner-managed SMEs performed significantly better than SMEs and owner-managed large enterprises. Thus, it is rather the combination of firm-size and owner-management that leads to more crisis resistance. |
| Keywords: | Mittelstand firms, Great Recession, crisis resistance |
| JEL: | E31 G12 |
| Date: | 2020 |
| URL: | http://d.repec.org/n?u=RePEc:ces:ceswps:_8777&r=all |
| By: | Ginja, Rita (University of Bergen, Department of Economics); Karimi, Arizo (Department of Economics, Uppsala University); Xiao, Pengpeng (Department of Economics, Yale University) |
| Abstract: | Search frictions make worker turnover costly to firms. A three-month parental leave expansion in Sweden provides exogenous variation that we use to quantify firms’ adjustment costs upon worker absence and exit. The reform increased women’s leave duration and likelihood of separating from pre-birth employers. Firms with greater exposure to the reform hired additional workers and increased incumbent hours, incurring additional wage costs. These adjustment costs varied by firms’ availability of internal and external substitutes. Economy-wide analyses show that a higher reform exposure is correlated with fewer hires and lower starting wages of young women compared to men and older women. |
| Keywords: | Parental Leave; Firm-Specific Human Capital; Statistical Discrimination |
| JEL: | J13 J16 J21 J22 J31 |
| Date: | 2020–08–29 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:bergec:2020_006&r=all |
| By: | Flavio Calvino (OCDE - Organisation de Coopération et de Développement Economiques); Daniele Giachini (Institute of Economics of Sant'Anna [Pisa] - SSSUP - Scuola Universitaria Superiore Sant'Anna [Pisa]); Mattia Guerini (COMUE UCA - COMUE Université Côte d'Azur (2015 - 2019), 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, Institute of Economics of Sant'Anna [Pisa] - SSSUP - Scuola Universitaria Superiore Sant'Anna [Pisa]) |
| Abstract: | We investigate upon the shape and the determinants of the age distribution of business firms. By employing a novel dataset covering the population of French businesses, we highlight that a geometric law provides a reasonable approximation for the age distribution. However, relevant systematic deviations and sectoral heterogeneity appear. We develop a stochastic model of firm dynamics to explain the mechanisms behind this evidence and relate them to business dynamism. Results reveal a long-term decline in entry rates and lower survival probabilities of young firms. Our findings bear important implications for aggregate outcomes, notably employment growth. |
| Keywords: | Firm demographics,age distribution,business dynamism |
| Date: | 2020–12–04 |
| URL: | http://d.repec.org/n?u=RePEc:hal:wpaper:halshs-03040286&r=all |
| By: | Molnarova, Zuzana (Institute for Advanced Studies, Vienna, Austria); Reiter, Michael (Institute for Advanced Studies, Vienna, Austria) |
| Abstract: | In this paper, we study the relative importance of demand and technology shocks in generating business cycle fluctuations, both at the aggregate level and at the level of individual industries. We construct a New Keynesian DSGE model that is highly disaggregated at the industry level with an input-output network structure. Measured productivity in the model fluctuates in response to both technology and demand shocks due to endogenous factor utilization. We estimate the model by the simulated method of moments using U.S. industry data from 1960 to 2005. We find that the aggregate technology shock has zero variance. Exogenous shocks to technology are necessary for our model to fit the data, but these shocks are exclusively industry-specific, uncorrelated across industries. The bulk of the aggregate fluctuations, including those in aggregate measured productivity, are explained through shocks to aggregate demand. This shock structure is supported by a host of information from the disaggregate data. Our second finding is that about half of the decrease in the cyclicality of measured productivity in the U.S. after the mid-1980s can be explained by the reduction in the size of demand shocks, in line with the narrative of the great moderation. |
| Keywords: | Business cycles, productivity, industries, factor utilization, input-output linkages, networks |
| JEL: | E32 E24 E37 |
| Date: | 2021–01 |
| URL: | http://d.repec.org/n?u=RePEc:ihs:ihswps:29&r=all |
| By: | Mattia Guerini (COMUE UCA - COMUE Université Côte d'Azur (2015 - 2019), 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); Philipp Harting (Universität Bielefeld = Bielefeld University); Mauro Napoletano (OFCE - Observatoire français des conjonctures économiques - Sciences Po - Sciences Po, 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) |
| Abstract: | We develop a model to study the impact of corporate governance on firm investment decisions and industry competition. In the model, governance structure affects the distribution of shares among short-and long-term oriented investors, the robustness of the management regarding possible stockholder interference, and the managerial remuneration scheme. A bargaining process between firm's stakeholders determines the optimal allocation of financial resources between real investments in R&D and financial investments in shares buybacks. We characterize the relation between corporate governance and firm's optimal investment strategy and we study how different governance structures shape technical progress and the degree of competition over the industrial life cycle. Numerical simulations of a calibrated setup of the model show that pooling together industries characterized by heterogeneous governance structures generate the well-documented inverted-U shaped relation between competition and innovation. |
| Keywords: | governance structure,industry dynamics,competition,technical change |
| Date: | 2020–12–04 |
| URL: | http://d.repec.org/n?u=RePEc:hal:wpaper:halshs-03040281&r=all |
| By: | Paul, Cocioc |
| Abstract: | The article present a brief analyze of theoretical virtues of free competition in relation with some visible limits and negative consequences observed in real economic life. Social intervention to correct (at least in part) those social failures and the new responses of the firms are discussed too. Possible motivations of these new actions are presented in connection with technocratic model of firm management. It seems that the model of professionalization of firm leadership created not only a new structure within the category of the intermediaries (one with extremely high powers), but later generated new interests typical for a social category. The intermediary develops his own agenda and seeks to control not only the market but also the business owners (which is possible in the conditions of the fragmentation of the large property). They have the power to distort and undermine normal competition (or at least to try it) and that conduct to some practices at legal and ethical borderline. |
| Keywords: | competition; technocracy; market failure; exclusion; inequality |
| JEL: | D40 D42 K21 L11 L12 L41 |
| Date: | 2020–08–30 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:104754&r=all |
| By: | Oscar Pavlov; Mark Weder |
| 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: | 2021–01 |
| URL: | http://d.repec.org/n?u=RePEc:een:camaaa:2021-03&r=all |
| By: | Christine Blandhol; Magne Mogstad; Peter Nilsson; Ola L. Vestad |
| Abstract: | Do employees benefit from worker representation on corporate boards? Economists and policymakers are keenly interested in this question – especially lately, as worker representation is widely promoted as an important way to ensure the interests and views of the workers. To investigate this question, we apply a variety of research designs to administrative data from Norway. We find that a worker is paid more and faces less earnings risk if she gets a job in a firm with worker representation on the corporate board. However, these gains in wages and declines in earnings risk are not caused by worker representation per se. Instead, the wage premium and reduced earnings risk reflect that firms with worker representation are likely to be larger and unionized, and that larger and unionized firms tend to both pay a premium and provide better insurance to workers against fluctuations in firm performance. Conditional on the firm’s size and unionization rate, worker representation has little if any effect. Taken together, these findings suggest that while workers may indeed benefit from being employed in firms with worker representation, they would not benefit from legislation mandating worker representation on corporate boards. |
| JEL: | G34 G38 J31 J54 J58 |
| Date: | 2020–12 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:28269&r=all |
| By: | Krieger, Bastian; Pellens, Maikel; Blind, Knut; Schubert, Torben |
| 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 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:zewdip:20083&r=all |
| 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. |
| Keywords: | Global value chains;Productivity;Exports;Industrial productivity;Labor productivity;WP,GVC participation,production function,export firm |
| Date: | 2020–07–03 |
| URL: | http://d.repec.org/n?u=RePEc:imf:imfwpa:2020/117&r=all |
| By: | Rickne, Johanna (Swedish Institute for Social Research) |
| Abstract: | Many European countries have implemented policies to revive their domestic service sectors. A common goal of these reforms has been to create employment for disadvantaged groups on the labor market. I study Sweden, where a 50% tax deduction on labor costs for domestic services was introduced in 2007. I use detailed administrative data to report the shares of three disadvantaged groups among small business owners and employees in tax-subsidized firms. I then compare these shares to all private firms and to firms in two industrial subsectors with a predominance of elementary occupations. I find that the shares of refugees and long-term unemployed are of similar sizes in the subsidized firms as in the private sector as a whole. For the third group—people with a low level of education—I find a larger share in the subsidized firms compared to the average private firm, but a smaller share compared to the other industries with elementary occupations. An extended analysis suggests that labor immigration to the subsidized sector from other EU countries may have crowded out the disadvantaged groups. EU immigrants operate half of all subsidized firms in Sweden's largest cities and employ mainly other EU immigrants in their businesses. |
| Keywords: | domestic services, tax deduction, employment, refugee immigrants |
| JEL: | J21 J23 J61 H2 |
| Date: | 2021–01 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izapps:pp171&r=all |
| By: | Artz, Georgeanne M.; Eathington, Liesl; Francois, Jasmine; Masinde, Melvin; Orazem, Peter F. |
| Abstract: | Using data on the universe of taxable retail sales, retail firm start-ups, and retail firm exits in Iowa from 1992 through 2011, we test whether patterns of retail firm entry and exit are consistent with churning. Consistent with churning, the same factors that increase retail sales in a local market also increase new retail firm entry and either increase or do not affect retail firm exit. Evidence suggests that there is more churning in urban than in rural markets. Similar evidence is found using a sample of national firm entry and exit into local markets. If churning increases productivity growth, then the greater churning rate in urban markets is another source of agglomeration advantages in thick markets. |
| Date: | 2020–01–01 |
| URL: | http://d.repec.org/n?u=RePEc:isu:genstf:202001010800001782&r=all |
| By: | Ezra Oberfield; Esteban Rossi-Hansberg; Pierre-Daniel G. Sarte; Nicholas Trachter |
| Abstract: | We study the number, size, and location of a firm's plants. The firm's decision balances the benefit of delivering goods and services to customers using multiple plants with the cost of setting up and managing these plants and the potential for cannibalization that arises as their number increases. Modeling the decisions of heterogeneous firms in an economy with a vast number of widely distinct locations is complex because it involves a large combinatorial problem. Using insights from discrete geometry, we study a tractable limit case of this problem in which these forces operate at a local level. Our analysis delivers clear predictions on sorting across space. Productive firms place more plants in dense locations that exhibit high rents compared with less productive firms and place fewer plants in markets with low density and low rents. Controlling for the number of plants, productive firms also operate larger plants than those operated by less productive firms in locations where both are present. We present evidence consistent with these and several other predictions using U.S. establishment-level panel data. |
| Keywords: | plants; economics; rents |
| Date: | 2020–05–26 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fedrwp:88430&r=all |
| By: | Fujitani, Ryosuke; Kim, Hyonok; Yamada, Kazuo |
| Abstract: | We show that a peer firm’s management forecast provides information for other firms in the same industry. Specifically, we show that a firm’s management forecast is positively associated with the stock return of other firms in the same industry. Furthermore, we show that such peer effect is observed when peer firms are the first disclosure company in the industry. We also find that the peer effect is more pronounced among firms with higher information asymmetry. Finally, we find that the peer effect is observed only in 2020 and not in other years between 2001 and 2019. Overall, the analysis provides strong evidence of peer effects under the COVID-19 pandemic period. This paper suggests that management forecast of peer firm plays a vital role as useful information set for investors that have limited access to public information due to the global pandemic. |
| Keywords: | information spillover, COVID-19 pandemic, management forecast |
| JEL: | M4 G14 |
| Date: | 2021–01 |
| URL: | http://d.repec.org/n?u=RePEc:hit:hmicwp:240&r=all |
| By: | Maximilian Andres; Lisa Bruttel; Jana Friedrichsen |
| Abstract: | The experimental literature on antitrust enforcement provides robust evidence that communication plays an important role for the formation and stability of cartels. We extend these studies through a design that distinguishes between innocuous communication and communication about a cartel, sanctioning only the latter. To this aim, we introduce a participant in the role of the competition authority, who is properly incentivized to judge communication content and price setting behavior of the firms. Using this novel design, we revisit the question whether a leniency rule successfully destabilizes cartels. In contrast to existing experimental studies, we find that a leniency rule does not affect cartelization. We discuss potential explanations for this contrasting result. |
| Keywords: | cartel, judgment of communication, corporate leniency program, price competition, experiment |
| JEL: | C92 D43 L41 |
| Date: | 2021 |
| URL: | http://d.repec.org/n?u=RePEc:diw:diwwpp:dp1926&r=all |