|
on Business Economics |
| By: | Peter Cziraki; Dirk Jenter |
| Abstract: | We study the market for CEOs of large publicly-traded US firms, analyze new CEOs’ prior connections to the hiring firm, and explore how hiring choices are determined. Firms are hiring from a surprisingly small pool of candidates. More than 80% of new CEOs are insiders, defined as current or former employees or board members. Boards are already familiar with more than 90% of new CEOs, as they are either insiders or executives who directors have previously worked with. There are few reallocations of CEOs across firms – firms raid CEOs of other firms in only 3% of cases. Pay differences appear too small to explain these hiring choices. The evidence suggests that firm-specific human capital, asymmetric information, and other frictions have first-order effects on the assignment of CEOs to firms. |
| Keywords: | CEO labor markets, CEO-firm matching, assignment models, CEO turnover, CEO compensation |
| JEL: | D22 G34 J23 M12 M51 |
| Date: | 2021 |
| URL: | http://d.repec.org/n?u=RePEc:ces:ceswps:_9143&r= |
| By: | Giuseppe Fiori; Filippo Scoccianti |
| Abstract: | This paper uses over two decades of Italian survey data on business managers' expectations to measure subjective firm-level uncertainty and quantify its economic effects. We document that firm-level uncertainty persists for a few years and varies across firms' demographic characteristics. Uncertainty induces long-lasting economic effects over a broad array of real and financial variables. The source of uncertainty matters with firms responding only to downside uncertainty, that is, uncertainty about future adverse outcomes. Economy-wide uncertainty, constructed aggregating firm-level uncertainty, is countercyclical but uncorrelated with typical proxies in the literature, and accounts for a sizable amount of GDP variation during crises. |
| Keywords: | Uncertainty; Business cycles; Investment; Expectations; Cash holdings; Downside uncertainty |
| JEL: | D24 E22 E24 |
| Date: | 2021–06–28 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fedgif:1320&r= |
| By: | Brian McCaig; Nina Pavcnik |
| Abstract: | Non-farm informal businesses comprise the majority of the firm distribution in developing countries. We document novel stylized facts about entry and exit of informal, non-farm firms using nationally representative panel data over 15 years and across regions with varying levels of local economic development in Vietnam. First, we find that informal businesses exhibit rates of entry and exit around 14-18% annually. Entry and exit rates are similar and highly correlated at a point in time, within industries, and within regions. They both decline over time and across space with economic development. Second, although market selection influences which firms survive, entry and exit has little net effect on aggregate (revenue) productivity or hiring of workers outside the household. This owes to overlapping labor productivity of entering and exiting firms and low subsequent productivity growth and hiring among the surviving entrants. Nonetheless, entry and exit are associated with large changes in individual income. Third, the large overlap in revenue of entering and exiting informal businesses and the high correlation between entry and exit rates are related to the education of owners and their economic activities before and after operating an informal business. Informal business owners are less educated on average than wage workers in the formal sector, but more educated than agricultural workers. The transitions in and out of operating an informal business reflect the underlying structure of economic activities of the working age population, with education gaps also playing a role. The most common transition into non-farm businesses is to and from self-employment in agriculture. The likelihood of this transition declines with economic development, highlighting the role of net entry from agriculture into informal non-farm businesses in structural change. |
| JEL: | J46 L2 O17 O53 |
| Date: | 2021–07 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:28986&r= |
| By: | Antonin Bergeaud (Banque de France - Banque de France - Banque de France); Clément Malgouyres (IPP - Institut des politiques publiques, PSE - Paris School of Economics - ENPC - École des Ponts ParisTech - ENS Paris - École normale supérieure - Paris - PSL - Université Paris sciences et lettres - UP1 - Université Paris 1 Panthéon-Sorbonne - CNRS - Centre National de la Recherche Scientifique - EHESS - École des hautes études en sciences sociales - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement, PJSE - Paris Jourdan Sciences Economiques - UP1 - Université Paris 1 Panthéon-Sorbonne - ENS Paris - École normale supérieure - Paris - PSL - Université Paris sciences et lettres - EHESS - École des hautes études en sciences sociales - ENPC - École des Ponts ParisTech - CNRS - Centre National de la Recherche Scientifique - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement); Clément Mazet-Sonilhac (Banque de France - Banque de France - Banque de France, Institut d'Études Politiques [IEP] - Paris); Sara Signorelli (UvA - University of Amsterdam [Amsterdam]) |
| Abstract: | Domestic outsourcing has grown substantially in developed countries over the past two decades. This paper addresses the question of the technological drivers of this phenomenon by studying the impact of the staggered diffusion of broadband internet in France during the 2000s. Our results confirm that broadband technology increases firm productivity and the relative demand for high-skill workers. Further, we show that broadband internet led firms to outsource some non-core occupations to service contractors, both in the low and high-skill segments. In both cases, we find that employment related to these occupations became increasingly concentrated in firms specializing in these activities, and was less likely to be performed in-house within firms specialized in other activities. As a result, after the arrival of broadband internet, establishments become increasingly homogeneous in their occupational composition. Finally, we provide suggestive evidence that high-skill workers experience salary gains from being outsourced, while low-skill workers lose out. |
| Keywords: | Broadband,Firm organization,Labor market,Outsourcing |
| Date: | 2021–06 |
| URL: | http://d.repec.org/n?u=RePEc:hal:psewpa:halshs-03265792&r= |
| By: | Robert Hillman; Sebastian Barnes; George Wharf; Duncan MacDonald |
| Abstract: | This paper develops a new large-scale firm-level simulation model, the Corporate Sector Agent-Based (CAB) Model, which is applied to analyse the COVID-19 shock and policy options in Barnes, Hillman, MacDonald and Wharf (2021). Agent-based models (ABMs) simulate the interaction of autonomous agents to generate emergent aggregate behaviours. The CAB model takes into account: heterogeneity across firms; a realistic customer-supplier network; interactions between firms; rule-of-thumb behaviour by firms and bankruptcy constraints. |
| Keywords: | agent-based modelling, bankruptcy, Covid-19, credit guarantees, financial stability, firm dynamics, firm-level data, input-output analysis, network analysis, short-time working schemes |
| JEL: | D21 D22 D57 D85 E27 G33 |
| Date: | 2021–07–13 |
| URL: | http://d.repec.org/n?u=RePEc:oec:ecoaaa:1675-en&r= |
| By: | Michel Ferrary (SKEMA Business School) |
| Abstract: | This article makes a theoretical contribution by applying two concepts from complex network theory to stakeholder management and corporate political strategy: systemic shocks and small-world networks. Shocks may be random or intentionally caused by a firm. The nature of a shock determines the urgency of the situation faced by a firm and the legitimacy of managerial decisions. A small-world network is a set of dense clusters loosely connected with one another. This study characterizes the structure of the stakeholders' network in which the firm is embedded. A firm may be highly or loosely embedded in a given cluster. Embeddedness relates both to the firm's resource dependence and its quest for legitimacy. Combining the nature of the shock and the degree of embeddedness offers a conceptual framework to explore corporate political strategy aimed at managing stakeholders. When a firm that is loosely embedded in a cluster of stakeholders faces a random shock, it chooses a reactive corporate political strategy. A firm that is highly embedded in a cluster and facing a random shock favours an accommodative corporate political strategy. A firm loosely embedded in a cluster in which it intentionally causes a shock chooses a proactive corporate political strategy. A firm highly embedded in a cluster in which it intentionally provokes a shock adopts a defensive corporate political strategy. Four examples of industrial downsizing understood as systemic shocks illustrate this conceptual framework. |
| Keywords: | stakeholder theory,corporate political strategy,complex network theory,industrial downsizing |
| Date: | 2020–05–12 |
| URL: | http://d.repec.org/n?u=RePEc:hal:journl:hal-03233530&r= |
| By: | Ohlsbom, Roope |
| Abstract: | Abstract Data collected with the Finnish Management and Organizational Practices Survey (FMOP) is used to study the association between management practices and firm productivity, and to examine whether human capital intensity acts as a moderator variable for this relationship. A comparison of how well different models predict productivity from management practices and human capital reveals a linear two-way interaction between the education of managers and management practices. We find evidence that the marginal benefit of adopting more structured management practices is different for establishments with different levels of managerial human capital. Testing and accounting for this interaction is important for reliable estimation of the management-productivity relationship. Accounting for the interaction, a 10 percent increase in the FMOP management score is found to be associated with an average of 7.1 percent higher labour productivity. Management practices can account for more than 24 percent of the observed productivity dispersion. This is close to as much as is accounted for by information and communication technologies and more than by research and development and human capital. |
| Keywords: | Management practices, Management survey, FMOP, Productivity, Human capital, Education |
| JEL: | D22 J24 L25 L60 M11 M50 |
| Date: | 2021–07–06 |
| URL: | http://d.repec.org/n?u=RePEc:rif:wpaper:88&r= |
| By: | Drilo, Boris; Stojcic, Nebojsa; Vizek, Maruska |
| Abstract: | We explore how improvements in digital infrastructure contribute to digital transformation of the Croatian economy. More specifically, we investigate under what conditions improvements in broadband speed are conductive for firm entry in digitally intensive sectors at the local level (cities and municipalities; LGUs) during the period 2014–2017. The results of the benchmark random effects panel data model suggest a 10 percent increase in broadband speed increases the number of new digitally intensive firms by 0.68. Two-way interactions between explanatory variables suggest improvements in broadband infrastructure yield the greatest number of new firm entries in densely populated LGUs, and in LGUs with a higher quality of human capital and greater public investment in physical infrastructure. Using the spatial Durbin panel method, we find improvements in broadband infrastructure exhibit positive firm entry effects both within and between cities and municipalities. |
| Keywords: | firm entry; digitally intensive sectors; broadband speed; digital transformation; Croatia; spatial spillovers |
| JEL: | D22 L26 M13 O33 |
| Date: | 2021–07 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:108717&r= |
| By: | Sebastian Barnes; Robert Hillman; George Wharf; Duncan MacDonald |
| Abstract: | Covid-19 and the associated restrictions on interaction have led to an unprecedented shock to activity and firms’ balance sheets. To assess the impact, this paper applies a new large-scale firm-level simulation model calibrated to the United Kingdom (UK). The paper specifically examines the Coronavirus Job Retention Scheme (CJRS) furlough program and a credit guarantee.The Corporate Sector Agent-Based (CAB) Model (Hillman, Barnes, Wharf and MacDonald, 2021) takes into account: heterogeneity across firms; interactions between firms across a realistic customer-supplier network; and rule-of-thumb behaviour by firms and bankruptcy constraints. The model amplifies the effect of shocks and generates substantial persistence and overshooting, as well as displaying a number of non-linearities. The CAB uses a data-rich approach based on ORBIS firm-level data and the OECD Input-Output tables. Simulations in this paper are calibrated to the observed path of UK output in 2020. |
| Keywords: | agent-based modelling, bankruptcy, Covid-19, credit guarantees, financial stability, firm dynamics, firm-level data, input-output analysis, network analysis, short-time working schemes |
| JEL: | D21 D22 D57 D85 E27 G33 |
| Date: | 2021–07–13 |
| URL: | http://d.repec.org/n?u=RePEc:oec:ecoaaa:1674-en&r= |