nep-bec New Economics Papers
on Business Economics
Issue of 2021‒03‒08
ten papers chosen by
Vasileios Bougioukos
Bangor University

  1. Aggregate Implications of Barriers to Female Entrepreneurship By Gaurav Chiplunkar; Pinelopi K. Goldberg
  2. One Size Does Not Fit All: TFP in the Aftermath of Financial Crises in Three European Countries By Christian Abele; Agnes Benassy-Quere; Lionel Fontagné; Lionel Gérard Fontagné
  3. Recruiting Intensity, Hires, and Vacancies: Evidence from Firm-Level Data By Forsythe, Eliza; Weinstein, Russell
  4. Good business practices improve productivity in Myanmar's manufacturing sector: Evidence from two matched employer-employee surveys By Paolo Falco; Henrik Hansen; John Rand; Finn Tarp; Neda Trifkovi?
  5. Relationships that Last: Job Creation vs Job Duration By Britta Gehrke; Jacob Wong
  6. Women's Leadership and Pragmatism Incidences on Performance of Listed Family-Owned Firms in the Cultural Context of Arab Countries By Azzeddine Allioui; Badr Habba; Taib Berrada El Azizi
  7. Does Excellence Pay Off? Theory and Evidence from the Wine Market By Stefano Castriota; Alessandro Fedele
  8. The COVID-19 insolvency gap: First-round effects of policy responses on SMEs By Dörr, Julian Oliver; Murmann, Simona; Licht, Georg
  9. Non-linear Incentives, Worker Productivity, and Firm Profits: Evidence from a Quasi-Experiment By Freeman, Richard B.; Huang, Wei; Li, Teng
  10. Joint bidding and horizontal subcontracting By BOUCKAERT, Jan; VAN MOER, Geert

  1. By: Gaurav Chiplunkar; Pinelopi K. Goldberg
    Abstract: We develop a framework for identifying and quantifying barriers to entry and operation faced by female entrepreneurs in developing countries, and apply it to the Indian economy. We find that despite considerable progress over time, female entrepreneurs still face substantial entry and business registration costs (almost twice their male counterparts’). The costs of expanding a business, conditional on entry, are also substantially higher for women. However, there is one area in which female entrepreneurs have an advantage: hiring female workers is easier for them. We show that this pattern is not driven by the sectoral composition of female employment. Counterfactual simulations indicate that removing all excess barriers faced by women entrepreneurs would: (a) increase the fraction of female-owned firms significantly (nine times); (b) increase the real wages of female relative to male workers; and (c) generate substantial aggregate productivity and welfare gains (ca. 7% and 18% respectively). These large gains are due to reallocation: low productivity male-owned firms previously sheltered from female competition are replaced by higher productivity female-owned firms previously excluded from the economy.
    JEL: J16 J70 O17 O40
    Date: 2021–02
  2. By: Christian Abele; Agnes Benassy-Quere; Lionel Fontagné; Lionel Gérard Fontagné
    Abstract: We analyse the impact of both the Global Financial Crisis of 2008 and the European sovereign and banking crisis of 2011-13 on firm-level productivity in France, Italy and Spain. We show that relying on a single break date in 2008 misses both the Eurozone crisis and countries' institutional specificities. Although leverage and financial constraints affect firm-level productivity negatively, high-leverage firms suffer more from financial constraints only in Italy, when they are relatively small or when their debt is of short maturity. These results call for approaches taking into consideration country-level characteristics of financial institutions and time varying financing constraints of the firms, instead of pooling data and adopting a common break date. One size does not fit all when it comes to identifying the impact of financial crises on firm level productivity.
    Keywords: total factor productivity, firm-level data, financial constraints, crises
    JEL: E22 E23 E44 D24
    Date: 2021
  3. By: Forsythe, Eliza (University of Illinois at Urbana-Champaign); Weinstein, Russell (University of Illinois at Urbana-Champaign)
    Abstract: We investigate employer recruiting behavior, using detailed firm-level data from a national survey of employers hiring recent college graduates. We show employers adjust recruiting effort, hiring standards, and compensation with the business cycle, beliefs about tightness, and their own hiring plans. We then show that firms expending greater recruiting effort hire more individuals per vacancy. The results suggest that when firms want to increase hires they adjust vacancies and recruiting intensity per vacancy, which may help explain the breakdown in the standard matching function during the Great Recession. Our measure of recruiting effort explains roughly 16% of the residual elasticity of the vacancy yield with respect to hires.
    Keywords: recruiting intensity, vacancy yield, labor market search and matching, recent college graduates
    JEL: J63 D20 E24
    Date: 2021–02
  4. By: Paolo Falco; Henrik Hansen; John Rand; Finn Tarp; Neda Trifkovi?
    Abstract: We look into the relationship between business practices and enterprise productivity using panel data with matched employer and employee information from Myanmar. The data show that micro, small, and medium-size enterprises in Myanmar typically do only a few modern business practices. Even so, through estimates of value-added functions and labour demand relations we find a positive and economically important association between business practices and productivity. The results are confirmed when we utilize employer-employee information to estimate Mincer-type wage regressions.
    Keywords: Business, Management, Productivity, Myanmar, Small and medium enterprises, Firm behaviour, Manufacturing firms
    Date: 2021
  5. By: Britta Gehrke (Universitat Rostock & IAB); Jacob Wong (School of Economics, University of Adelaide)
    Abstract: This paper documents observations about the duration of jobs created by establishments at various points along an establishment age curve. Using an employer-employee matched dataset from Germany, we observe a checkmark-shaped relationship between expected job duration and establishment age at the time of job creation. A simple frictional labour market model with two-sided heterogeneity featuring on-the-job search, a simple learning mechanism about worker ability and a life cycle productivity profile for firms is built to frame a discussion around the empirical finding. The model's mechanical job-ladder is shown to be able to produce such stylized correlations.
    Keywords: job duration,firm age, frictional labour markets
    JEL: E24 J63 J64
    Date: 2021–03
  6. By: Azzeddine Allioui (LAREGO Laboratory, ENCG, Cadi Ayyad University, Marrakesh, Morocco); Badr Habba (Chair of Moroccan Family businesses, ESCA Ecole de Management, Casablanca, Morocco, LAREGO Laboratory, ENCG, Cadi Ayyad University, Marrakesh, Morocco); Taib Berrada El Azizi (Chair of Moroccan Family businesses, ESCA Ecole de Management, Casablanca, Morocco)
    Abstract: This research paper aims to study the level and determinants of the financial performance of family businesses, according to the gender of the board of directors' chairman in the Arab world. Our research approach is based on a sample of 152 listed family-owned businesses and a control sample of 166 listed non-family businesses over the 2011-2018 periods. The research results indicate that the female gender issue has a positive influence on the financial performance of businesses with family ownership. This is explained by the fact that women leaders have a prudent and pragmatic leadership style that limits stereotypical images of women presidents' leadership style in the Arab world. This result is original since it can be considered as the first one to ever clarify the relationship between female leadership in the board of directors, risk-taking, and financial performance in the context of family ownership in the Arab countries.
    Keywords: family business,female leadership,women's leadership,transformational leadership,financial performance,risk-taking
    Date: 2021–01–11
  7. By: Stefano Castriota (University of Pisa, Department of Political Science); Alessandro Fedele (Free University of Bolzano‐Bozen, Faculty of Economics and Management)
    Abstract: We investigate the effect of product excellence on firm profitability in a competitive market with vertical and horizontal differentiation. We develop a theoretical model and derive conditions under which the effect of excellence on profitability, the latter defined as the ratio of equilibrium profits to the invested capital, can be either positive, zero, or negative. We test our theoretical predictions by examining a sample of 1,052 Italian wineries over the period 2006-2015. Using different econometric methodologies, we find that excellence, proxied by firm reputation for quality, has no significant impact on profitability, measured by the return on invested capital (ROIC). We conclude by discussing policy and managerial implications. (NOTE: This paper is a radically revised version of the paper "Does Excellence Pay Off? Evidence from the Wine Market", published in this series as BEMPS49)
    Keywords: product excellence; firm profitability; vertical and horizontal differentiation; reputation for quality; wine market
    JEL: L15 L14 L66 L13 Q1 D21 D22
    Date: 2021–02
  8. By: Dörr, Julian Oliver; Murmann, Simona; Licht, Georg
    Abstract: COVID-19 placed a special role to fiscal policy in rescuing companies short of liquidity from insolvency. In the first months of the crisis, SMEs as the backbone of Europe's real economy benefited from large and mainly indiscriminate aid measures. Avoiding business failures in a whatever it takes fashion contrasts, however, with the cleansing mechanism of economic crises: a mechanism which forces unviable firms out of the market, thereby reallocating resources efficiently. By focusing on firms' pre-crisis financial standing, we estimate the extent to which the policy response induced an insolvency gap and analyze whether the gap is characterized by firms which had already struggled before the pandemic. With the policy measures being focused on smaller firms, we also examine whether this insolvency gap differs with respect to firm size. Based on credit rating and insolvency data for the near universe of actively rated German firms, our results suggest that the policy reponse to COVID-19 has triggered a backlog of insolvencies in Germany that is particularly pronounced among financially weak, small firms, having potential long term implications on economic recovery.
    Keywords: COVID-19 policy response,Corporate bankruptcy,Cleansing e ect,SMEs
    JEL: C83 G33 H12 O38
    Date: 2021
  9. By: Freeman, Richard B. (Harvard University); Huang, Wei (National University of Singapore); Li, Teng (National University of Singapore)
    Abstract: Using administrative data from a major Chinese insurance firm that raised its sales targets and rewards for insurance agents in a highly non-linear incentive system, we find that the improvement in productivity far outweighed the costs associated with bunching distortions and other gaming behaviors. Labor turnover decreased, which suggests that the extra pay for workers exceeded the non-pecuniary cost of extra effort by workers, and thus improved their well-being. The firm gained about two-thirds of the higher net output, making the reform profitable. Analysis of non-linear incentive systems should accordingly focus more on the productivity-enhancing than on the distortionary effects.
    Keywords: non-linear incentives, insurance commission, strategic gaming behavior, productivity, turnover rates
    JEL: J33 M52
    Date: 2021–02
  10. By: BOUCKAERT, Jan; VAN MOER, Geert
    Abstract: This paper investigates joint bidding when firms have incentives to sign subcontracts with each other after competing in the bidding stage. A bidding consortium affects the horizontal subcontracting market and, through backward induction, alters firms’ bids. Our findings challenge the current legal practice that consortia without efficiencies must pass the “no-solo-bidding test”, requiring that its members could not bid stand-alone. Our framework predicts that the formation of a temporary consortium, which has the feature that it dissolves after submitting a losing bid, benefits the procurer. The winning bid is more competitive with a temporary as compared to a structural consortium.
    Keywords: Joint bidding, Horizontal subcontracting, buyer power
    JEL: D43 L13 L14 L41
    Date: 2021–02

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