nep-bec New Economics Papers
on Business Economics
Issue of 2021‒09‒20
eight papers chosen by
Vasileios Bougioukos
London South Bank University

  1. The Role Of CEO Characteristics In Firm Innovative Performance: A Comparative Analysis Of EU Countries And Russia By Fernanda Ricotta; Victoria Golikova; Boris Kuznetsov
  2. Anticompetitive Vertical Merger Waves By Johan Hombert; Jérôme Pouyet; Nicolas Schutz
  3. Project Aid and Firm Performance By Marchesi, Silvia; Masi, Tania; Paul, Saumik
  4. Wage Differences According to Workers' Origin: The Role of Working More Upstream in GVCs By Fays, Valentine; Mahy, Benoît; Rycx, Francois
  5. Sorting with Team Formation By Job Boerma; Aleh Tsyvinski; Alexander P. Zimin
  6. Does the gender mix influence collective bargaining on gender equality? Evidence from France By Anne-Sophie Bruno; Nathalie Greenan; Jeremy Tanguy
  7. Assessing the supply chain effect of natural disasters: Evidence from Chinese manufacturers By Längle, Katharina; Xu, Ankai; Tian, Ruijie
  8. Churning and profitability in the U.S. Corporate Sector By Leila Davis; Joao de Souza

  1. By: Fernanda Ricotta (University of Calabria); Victoria Golikova (National Research University Higher School of Economics); Boris Kuznetsov (National Research University Higher School of Economics)
    Abstract: In this paper, we investigate whether CEO characteristics (owner-manager status, age and gender) influence firm innovative performance and test empirically if the effect differs for market and transition economies. We use cross-sectional data of manufacturing firms in six EU countries and in Russia. To address heterogeneity, we explore innovation performance by size among SMEs and large businesses and by Pavitt sector. In both institutional settings, the presence of a family CEO either has no effect or improves innovative performance. On the contrary, the role of CEO gender is different in Russia and in the EU. In the EU, female CEOs are associated with less innovation, especially in SMEs and in the traditional sector. In Russia, CEO gender is not associated with differences in innovative performance and when it is (for the traditional sector), it favors female-run firms. For CEO age, considering product innovations, the oldest group of CEOs are less active in European firms while mature CEOs are more innovative in Russia.
    Keywords: CEO age, gender, manager-owner status, innovation, manufacturing firms
    JEL: D21 L60 P50
    Date: 2021
  2. By: Johan Hombert (HEC Paris - Ecole des Hautes Etudes Commerciales); Jérôme Pouyet (THEMA - Théorie économique, modélisation et applications - CNRS - Centre National de la Recherche Scientifique - CY - CY Cergy Paris Université, ESSEC Business School - Essec Business School); Nicolas Schutz (Universität Mannheim [Mannheim])
    Abstract: We develop a model of vertical merger waves and use it to study the optimal merger policy. As a merger wave can result in partial foreclosure, it can be optimal to ban a vertical merger that eliminates the last unintegrated upstream firm. Such a merger is more likely to worsen market performance when the number of downstream firms is large relative to the number of upstream firms,
    Date: 2020–02–05
  3. By: Marchesi, Silvia (University of Milan Bicocca); Masi, Tania (University of Chieti Pescara); Paul, Saumik (Newcastle University)
    Abstract: This paper evaluates the effect of development project aid from the World Bank and China on firms' sales growth, using a large dataset of 110864 firms spanning 121 countries between 2001 and 2016. We find that, contrary to the World Bank, Chinese ODA projects increase, on average, firm sales and, compared to sector-specific, Chinese region-specific aid positively affect firm performance. Finally, we show that the positive effect of Chinese aid is stronger for firms lacking transport infrastructure (and with better electricity provision), suggesting that aid may improve firm performance by releasing their infrastructure constraints.
    Keywords: aid effectiveness, world bank projects, chinese projects, geo-coding, firm growth
    JEL: F35 O19 D22
    Date: 2021–08
  4. By: Fays, Valentine (University of Mons); Mahy, Benoît (University of Mons); Rycx, Francois (Free University of Brussels)
    Abstract: This paper is the first to investigate the role of firm-level upstreamness (i.e. the number of steps before the production of a firm meets final demand) in explaining wage differences according to workers' origin. Using unique linked employer-employee data relative to the Belgian manufacturing industry for the period 2002-2010, our estimates show that firms that are further up in the value chain pay significantly higher wages. However, the wage premium associated with upstreamness is also found to vary substantially depending on the origin of the workers. Unconditional quantile estimates suggest that those who benefit the most from being employed in more upstream firms are high-wage workers born in developed countries. In contrast, workers born in developing countries, irrespective of their earnings, appear to be unfairly rewarded. Quantile decompositions further show that, while differences in average values of upstreamness according to workers' origin play a limited role, differences in wage premia associated with upstreamness account for a substantial part of the wage gap between workers born in developed and developing countries, especially at the top of the earnings distribution. These results are shown to be robust to a number of sensitivity tests, including broader or narrower definitions of workers' wages and different firm environments in terms of technological and knowledge intensity.
    Keywords: wage gaps, workers’ origin, global value chains, upstreamness, unconditional quantile estimates and decompositions
    JEL: J15 J31 F16
    Date: 2021–08
  5. By: Job Boerma; Aleh Tsyvinski; Alexander P. Zimin
    Abstract: We fully solve an assignment problem with heterogeneous firms and multiple heterogeneous workers whose skills are imperfect substitutes, that is, when production is submodular. We show that sorting is neither positive nor negative and is characterized sufficiently by two regions. In the first region, mediocre firms sort with mediocre workers and coworkers such that output losses are equal across all these pairings (complete mixing). In the second region, high skill workers sort with a low skill coworker and a high productivity firm, while high productivity firms employ a low skill worker and a high skill coworker (pairwise countermonotonicity). The equilibrium assignment is also necessarily characterized by product countermonotonicity, meaning that sorting is negative for each dimension of heterogeneity with the product of heterogeneity in the other dimensions. The equilibrium assignment as well as wages and firm values are completely characterized in closed form. We illustrate our theory with an application to show that our model is consistent with the observed dispersion of earnings within and across U.S. firms. Our counterfactual analysis gives evidence that the change in the firm project distribution between 1981 and 2013 has a larger effect on the observed change in earnings dispersion than the change in the worker skill distribution.
    Date: 2021–09
  6. By: Anne-Sophie Bruno (CHS - Centre d'histoire sociale des mondes contemporains - UP1 - Université Paris 1 Panthéon-Sorbonne - CNRS - Centre National de la Recherche Scientifique); Nathalie Greenan (TEPP - Travail, Emploi et Politiques Publiques - UPEM - Université Paris-Est Marne-la-Vallée - CNRS - Centre National de la Recherche Scientifique, CEET - Centre d'études de l'emploi et du travail - CNAM - Conservatoire National des Arts et Métiers [CNAM] - M.E.N.E.S.R. - Ministère de l'Education nationale, de l’Enseignement supérieur et de la Recherche - Ministère du Travail, de l'Emploi et de la Santé, LIRSA - Laboratoire interdisciplinaire de recherche en sciences de l'action - CNAM - Conservatoire National des Arts et Métiers [CNAM], CNAM - Conservatoire National des Arts et Métiers [CNAM]); Jeremy Tanguy (IREGE - Institut de Recherche en Gestion et en Economie - USMB [Université de Savoie] [Université de Chambéry] - Université Savoie Mont Blanc)
    Abstract: Gender equality at work has become in recent years a priority for governments. In France, collective bargaining is a main lever to achieve progress on gender equality issues. In a two-tier bargaining framework, industries and firms are required by law to negotiate on the reduction of gender inequalities. Using firm-level survey data on labor relations issues combined with administrative data, this paper seeks to better understand the dynamics of collective bargaining on gender equality at the firm level by questioning the role played by the gender mix. We find that gender diversity favors gender equality bargaining at the firm level. Under-representation and over-representation of women reduce the probability of firms negotiating an agreement on gender equality. The introduction of sanctions in the recent period has prompted low-feminized firms to negotiate more on gender equality but had little impact on highly feminized firms.
    Keywords: gender equality,collective bargaining,gender diversity
    Date: 2021–08–25
  7. By: Längle, Katharina; Xu, Ankai; Tian, Ruijie
    Abstract: This paper uses Chinese firm level data to detect the international propagation of adverse shocks triggered by the US hurricane season in 2005. We provide evidence that Chinese processing manufacturers with tight trade linkages to the United States reduced their intermediate imports from the United States between July and October 2005. We further show that the direct exposure to US supply shocks led to a temporary decline of firm exports between September and November 2005, although we do not find consistent evidence of international propagation of supply shocks along global value chains. Moreover, the paper finds that firms with more diversified suppliers tend to be less affected by the US hurricane disaster, pointing to firm sourcing diversification as a way to increase resilience to adverse shocks.
    Keywords: production networks,resilience,diversification,shock transmission,supply chains,natural disasters
    JEL: F12 F14 F15 F61 L14 E23
    Date: 2021
  8. By: Leila Davis (Department of Economics, University of Massachusetts Boston); Joao de Souza (Department of Economics, University of Massachusetts Boston)
    Abstract: This paper establishes that entry and exit regulate the top half of the profitability distribution in the post-1970 U.S. economy. We, first, document stability in the distribution of total profits earned on tangible, intangible, and financial capital. Whereas a narrower measure of returns on tangible capital, instead, suggests rising dispersion, it fails to capture post-1970 growth in intangible and financial assets. Second, we use quantile decompositions to show that churning – specifically, exit for cause – regulates median and top-end profitability. Thus, the process by which competition drives out unprofitable firms acts to stabilize profit rates in the U.S. economy.
    Keywords: Profit rates, competition, entry and exit dynamics
    JEL: B5 L1
    Date: 2021

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