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on Business Economics |
| By: | Patrizia Fanasch (University of Paderborn); Bernd Frick (University of Paderborn) |
| Abstract: | The succession of chief executive officer (CEO) and chief operating officer (COO) is inevitable in the life cycle of a company and especially in family businesses. However, the majority of family businesses fail to survive across multiple generations. Although the relevance of effective succession planning to secure a competitive advantage is undisputed, no attempts have yet been made to assess the impact of family-internal changes on firm performance in general and firm reputation in particular with respect to the positions of CEO and COO. In an attempt to close these gaps, this study uses event study methodology to analyze the impact of multiple managerial changes in a sample of 1,397 German wineries in the period 1994 to 2017. The results indicate that family-internal CEO and COO changes have a significantly positive impact on firm reputation. Relay succession turns out to be a particularly well-suited instrument to increase reputation. |
| Keywords: | Family firms; Succession planning; Reputation; Wine industry |
| JEL: | M12 L22 L66 L14 J24 |
| Date: | 2021–04 |
| URL: | http://d.repec.org/n?u=RePEc:pdn:dispap:69&r=all |
| By: | Severin Lenhard |
| Abstract: | This paper studies the disposal costs’ effect on consumer surplus and firms’ profits. The costlier disposal, the less is disposed of, firms’ competition for market shares increases, thereby benefiting consumers. Yet firms decrease their produc- tion to mitigate costs, affecting consumer surplus negatively. We present a model with ex ante homogeneous firms producing inventories either early at low cost and with little information about demand, or later with more information yet at higher costs. Unsold products are disposed of. In equilibrium, firms may be asymmetric. Disposal goes down with costs but so do inventories. In our set-up, the negative effect on the trade volume dominates decreasing consumer surplus and firms’ profits. We show, however, that low disposal costs substitute infor- mation about demand. Increasing disposal costs improve a firm’s information advantage and may increase its profits. |
| Keywords: | Disposal, Inventory, Uncertain Demand, Market Structure |
| JEL: | D43 L11 L13 L50 |
| Date: | 2021–04 |
| URL: | http://d.repec.org/n?u=RePEc:ube:dpvwib:dp2105&r=all |
| By: | Léa Marchal (UP1 - Université Paris 1 Panthéon-Sorbonne, CES - Centre d'économie de la Sorbonne - UP1 - Université Paris 1 Panthéon-Sorbonne - CNRS - Centre National de la Recherche Scientifique); Giulia Sabbadini (Institut de hautes études internationales et du développement - Graduate Institute of International and Development Studies [Geneva, Switzerland]) |
| Abstract: | This paper investigates whether the employment of immigrant workers affects the performance of firms in their export markets when they are facing an increase in import competition. Exploiting the surge of Chinese imports following its accession to the World Trade Organization and using a sample of French manufacturing exporters from 2002 to 2015, we find that an increase in the growth rate of Chinese imports in a market has a negative effect on both the survival probability of firms and the growth rate of sales on that market. This negative effect on firm performance is mitigated by the employment of immigrant workers. |
| Keywords: | Firm,Heterogeneity,Immigrant workers,Import competition,Productivity |
| Date: | 2021–03 |
| URL: | http://d.repec.org/n?u=RePEc:hal:cesptp:halshs-03182662&r=all |
| By: | Brent H. Meyer (Federal Reserve Bank of Atlanta); Nicholas B. Parker (Federal Reserve Bank of Atlanta); Xuguang Simon Sheng (American University) |
| Abstract: | We rely on the Atlanta Fed's Business Inflation Expectations Survey to draw inference about firm's inflation perceptions, expectations, and uncertainty through the lens of firms' unit (marginal) costs. Using methods grounded in the survey literature, we find evidence that the concept of “aggregate inflation" as measured through price statistics like the Consumer Price Index (CPI) hold very little relevance for business decision makers. This lack of relevance manifests itself through experiments (including randomized controlled trials) that show varying question wording researchers use to elicit inflation expectations and perceptions significantly changes firm's responses. Our results suggest firms have become rationally ignorant of the concept of inflation in a low inflation environment. Instead, we find that unit (marginal) costs are the relevant lens with which to capture firms' views on the nominal side of the economy. We then investigate both firm-level (micro) and aggregated (macro) probabilistic unit cost expectations. On a firm-level, unit costs are an important determinant of firms' price-setting behavior. Aggregating across firms' beliefs, firms' unit cost perceptions strongly co-move with official aggregate price statistics and, importantly, firms' expectations for the nominal side of the economy bear little in common with the \prices in general" expectations of households. Rather, firms' aggregated beliefs strongly covary with the inflation expectations of professional forecasters and market participants. |
| Keywords: | Bimodality, Inflation Expectations, Probability Distributions, Randomized Controlled Trials, Uncertainty, Unit Cost |
| JEL: | E31 E52 |
| Date: | 2021–03 |
| URL: | http://d.repec.org/n?u=RePEc:gwc:wpaper:2021-002&r=all |
| By: | Morikawa, Masayuki |
| Abstract: | Using data from original surveys of employees and employers, this study examines the prevalence, intensity, and productivity of working from home (WFH) practices during the coronavirus disease 2019 (COVID-19) pandemic in Japan. The results reveal that the mean WFH productivity relative to working at the usual workplace was about 60–70 percent, and it was lower for employees and firms that started WFH practice only after the spread of the COVID-19 pandemic. However, there is a large dispersion of WFH productivity, both by individual and firm characteristics. Highly educated and high-wage employees tended to exhibit a relatively small reduction in WFH productivity. The results obtained from the employee and employer surveys were generally consistent with each other. |
| Keywords: | COVID-19, productivity, social distancing, working from home |
| JEL: | D24 I12 J22 J24 M12 M54 R41 |
| Date: | 2021–03 |
| URL: | http://d.repec.org/n?u=RePEc:hit:sspjdp:dp20-007&r=all |
| By: | Yamasaki, Junichi; Nakajima, Kentaro; Teshima, Kensuke |
| Abstract: | Can transaction costs in the urban land market generate lot size persistence and persistently hinder efficient land use? Using historical data in Tokyo, we study how initial lot fragmentation has affected urban development by exploiting the plausibly exogenous supply shock of large lots in 1868, the release of local lords’ estates (daimyo yashiki) scattered throughout old Tokyo, now the central business district. We construct a 100 m*100 m-cell-level dataset spanning 150 years. Using ordinary least squares and a regression discontinuity design, we find that cells previously used as local lords’ estates have larger lots today, implying that lot size persistence exists. We also find positive effects on land use and activities, that is, taller buildings, higher land prices, and higher firm productivity, implying lot size premia due to assembly frictions. We provide two pieces of evidence that these positive effects are explained by the growth of skyscrapers requiring large footprints. First, tall buildings explain the effect of local lords’ estates on firm productivity today. Second, we find no positive impact on land prices before the skyscraper age. Instead, it was negative, suggesting that split frictions were dominant at that time and assembly frictions became more relevant with the emergence of skyscrapers. |
| Keywords: | Transaction costs, Historical persistence, Skyscrapers, Lot fragmentation, Agglomeration economy |
| JEL: | R14 R30 O18 N95 |
| Date: | 2021–03 |
| URL: | http://d.repec.org/n?u=RePEc:hit:tdbcdp:e-2020-02&r=all |
| By: | Cristina Herghelegiu (ECARES, Université Libre de Bruxelles, B); Evgenii Monastyrenko (Department of Economics and Management, Université du Luxembourg) |
| Abstract: | Firms are exposed to important risks and costs when trading across borders. Based on a set of standardized rules known as Incoterms, firms decide ex ante how to delimit their responsibilities throughout the shipping process to reduce the inherent contractual frictions. This paper investigates how sellers and buyers share risks and costs in international trade transactions depending on the characteristics of the exchanged product. We rely on a highly detailed dataset involving all Russian exporters and their foreign customers during 2012-2015. Our results suggest that buyers are more likely to bear responsibilities for goods that are (a) more distant from final use and (b) less tailored to their specific needs. These results are reinforced for products that constitute important inputs for buyers but reversed when there is a positive difference between the buyer and the seller size. |
| Keywords: | Risks, Costs, Incoterms, Firms Exports. |
| JEL: | F14 D22 D23 L11 |
| Date: | 2020 |
| URL: | http://d.repec.org/n?u=RePEc:luc:wpaper:20-24&r=all |
| By: | Schubert, Torben (CIRCLE, Lund University) |
| Abstract: | The effects of establishing foreign-based subsidiaries on firm performance have long been debated, where empirical evidence hints at gains in terms of costs reductions, productivity or growth. Yet, little is known about the effects on innovative capabilities at the home base. Using a matched-employer-employee panel dataset of the Swedish Community Innovation Surveys (CIS) between 2008 and 2014, we estimate whether the employee share at subsidiaries abroad affects product innovation performance at home. Our results show the effects are positive on average. However, there is also evidence of detrimental effects of having employees abroad on innovation. In particular, for excessive shares of employees at foreign location, we provide evidence of an inverted u-shape between the probability to introduce product innovations and the share of foreign employment. Moreover, we show that the benefits of foreign employment are larger for firms with a more nationally diverse workforce at the home base. Our results are robust to a wide variety of robustness checks. |
| Keywords: | Internationalization; Innovation; Diversity |
| JEL: | M14 M16 O32 |
| Date: | 2021–03–30 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:lucirc:2021_003&r=all |
| By: | Claudia Custodio; Bernardo Mendes; Diogo Mendes |
| Abstract: | We estimate dynamic treatment effects of violent political conflicts on firm decisions to purchase inventory. We analyze monthly purchase data of 431 clients of a multinational beverage firm in Mozambique, as well as annual survey data. Firms respond to increases in conflict by decreasing purchases of inventory by up to 15%. This effect is significantly more pronounced for smaller firms. Firms exposed to violent conflicts also show greater intention to expand to less violent locations. The eruption of violent conflicts have significant short-term economic impact for small firms however, these do not persist beyond 2 months. |
| Keywords: | Conflicts, inventory management, working capital management, developing countries |
| JEL: | D22 D74 G31 I32 O12 |
| Date: | 2021 |
| URL: | http://d.repec.org/n?u=RePEc:unl:novafr:wp2106&r=all |
| By: | Haraguchi, Junichi; Matsumura, Toshihiro |
| Abstract: | Mixed oligopolies are characterized by the coexistence of private and public enterprises. The literature on mixed oligopolies indicates that, assuming all private firms are identical, the optimal degree of privatization increases with the number of private firms. In other words, the more concentrated the market is, the more the government should privatize public firms. We revisit this problem by introducing cost-heterogeneity among private firms. We show that under the assumption of constant marginal costs, a new entry by a private firm will not reduce the optimal degree of privatization, regardless of the cost differences among private firms. However, under the assumption of increasing marginal costs, we show that a new entry will reduce the optimal degree of privatization when the new entrant is significantly less efficient than the private firms already present. Our results imply that the relationship between competition and privatization policies are more complicated than the literature suggests, and they depend on the cost structure of private firms. |
| Keywords: | privatization and competition policies, market concentration index, partial privatization, new entry, production substitution |
| JEL: | D43 H44 L33 |
| Date: | 2021–04–03 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:106975&r=all |
| By: | Jiang, Edwin |
| Abstract: | I develop a multi-country general equilibrium model on global sourcing which considers individual firm's decisions on outsourcing as well as offshoring. These decisions are closely connected as more extensive offshoring provides incentives for further integration of inputs. The firm-level decisions aggregate to produce gravity style equations of trade flows between countries, and intra-firm transactions. |
| Date: | 2021–02 |
| URL: | http://d.repec.org/n?u=RePEc:syd:wpaper:2021-02&r=all |