nep-bec New Economics Papers
on Business Economics
Issue of 2022‒03‒21
ten papers chosen by
Vasileios Bougioukos
London South Bank University

  1. Human Capital Reallocation Across Firms: Evidence from Idiosyncratic Shocks By Erik P. Gilje; Jérôme P. Taillard; Linghang Zeng
  2. Wage dispersion and firm performance: evidence from Kazakhstan By Dinara Alpysbayeva; Jozef Konings; Venkat Subramanian; Aigerim Yergabulova
  3. Belief-Dependent Pricing Decisions By Serafín Frache; Rodrigo Lluberas; Javier Turen
  4. Organizational Performance and Capabilities to Analyze Big Data: Do the Ambidexterity and Business Value of Big Data Analytics Matter? By Aljumah, Ahmad Ibrahim; Nuseir, Mohammed T.; Alam, Md. Mahmudul
  5. Beyond Illyria: Workers' Firm in Mixed Oligopoly By Flavio Delbono; Diego Lanzi; Carlo Reggiani
  6. Unemployment Insurance as a Subsidy to Risky Firms By Bernardus Van Doornik; Dimas Fazio; David Schoenherr; Janis Skrastins
  7. Corporate governance, market orientation and performance of Iran’s upscale hotels By Soheil Kazemian; Hadrian Djajadikerta; Jamaliah Said; Saiyidi Roni; Terri Trireksani; Md. Mahmudul Alam
  8. Corporate Flexibility in a Time of Crisis By John W. Barry; Murillo Campello; John Graham; Yueran Ma
  9. Households and entrepreneurship in England and Wales, 1851–1911 By Smith, Harry; Bennett, Robert J.; van Lieshout, Carry; Montebruno, Piero
  10. Bridging Level-K to Nash Equilibrium By Dan Levin; Luyao Zhang

  1. By: Erik P. Gilje; Jérôme P. Taillard; Linghang Zeng
    Abstract: We study human capital reallocation following firm-specific idiosyncratic shocks. Theory offers diverging predictions as to whether human capital gets reallocated to its most productive use following these shocks. To empirically test these predictions, we focus on relegation battles in the English Premier League. This setting offers well identified idiosyncratic shocks as well as both individual-level and firm-level productivity metrics. We find that human capital exits firms after a negative idiosyncratic shock. Specifically, we find that more productive players move to more productive clubs and maintain their long-term productivity. They get replaced with lower productivity players. Overall, our results show that in a setting with highly transferable skills, idiosyncratic shocks lead to a reallocation of human capital that moves an industry towards a better overall match between individual-level and firm-level productivity.
    JEL: G31 G32 G33 J24
    Date: 2022–02
  2. By: Dinara Alpysbayeva (Norwegian University of Life Sciences, School of Economics and Business); Jozef Konings (Nazarbayev University, Graduate School of Business); Venkat Subramanian (Nazarbayev University, Graduate School of Business); Aigerim Yergabulova (Nazarbayev University, Graduate School of Business)
    Abstract: This paper studies within-firm pay inequality and its impact on firm performance in Kazakhstan. We measure within-firm pay inequality as the wage differential between the top- and the bottom-level job occupations. First, we report that wage inequality is higher in larger firms. This finding is consistent with the theories of differentiated pay schemes and the scope of control. Further, we explore to what extent a rise in firm inequality affects firm performance. Although a higher wage dispersion may serve as a signal to attract more productive or talented workers, we find no evidence to support the idea that incentive-based pay can boost overall firm performance. The negative impact points to rent extraction by top job occupations.
    Keywords: Pay inequality, Job occupations, Performance, Firm size
    JEL: J31 L25 M52
    Date: 2022–03
  3. By: Serafín Frache (Universidad de Montevideo, Facultad de Ciencias Empresariales y Economía); Rodrigo Lluberas (Banco Central del Uruguay); Javier Turen (Pontificia Universidad Católica de Chile)
    Abstract: This paper studies the effects of inflation and idiosyncratic cost expectations on firms’ price-adjusting decisions. Evidence of price-settings frictions using micro data has been studied through the lens of both time-dependent and state-dependent models. Using data from a unique survey, we argue that priceadjustment decisions are also belief-dependent. While controlling for time- and state- ependent factors, we find that, for the extensive margin of price-changes, expectations of inflation do not play any role, but firms’ beliefs about their overall costs do. The expectation channel is, however, heterogeneous across firms, driven exclusively by large companies, and operates with a delay. Nonetheless, when looking at firms’ beliefs about the intensive margin of price-changes, besides costs, the relevance of current inflation expectations is recovered. Our evidence supports the presence of price rigidities at the firm level but is also consistent with theories of limited attention.
    Keywords: inflation expectations, cost expectations, firm surveys, price adjustments
    JEL: D22 D84 E31
    Date: 2021
  4. By: Aljumah, Ahmad Ibrahim; Nuseir, Mohammed T.; Alam, Md. Mahmudul (Universiti Utara Malaysia)
    Abstract: Objective/Purpose: The aim of the study is to examine the impact of the big data analytics capabilities (BDAC) on the organizational performance. The study also examines the mediating role of ambidexterity and the moderating role of business value of big data (BVBD) analytics in the relationship between the big data analytics capabilities and the organizational performance. Methodology/Design: This study collected primary data based on a questionnaire survey among the large manufacturing firms operating in UAE. A total of 650 questionnaires were distributed among the manufacturing firms and 295 samples were used for final data analysis. The survey was conducted from September to November in 2019 and partial least squares structural equation modeling (PLS-SEM). Findings: The BDA scalability is supported by the findings on the performance of firm and its determinants such as system, value of business, and quality of information. The role of business value as a moderator and ambidexterity as mediator are found significant. The results reveal that there is a need for managers to consider the business value and quality dynamics as crucial strategic objectives to achieve high performance of the firm. Implications: The study has significant policy implication for practitioners and researchers for understanding the issues related to big data analytics. Originality/Value: This is an original study based on primary data from UAE manufacturing firms.
    Date: 2021–11–30
  5. By: Flavio Delbono; Diego Lanzi; Carlo Reggiani
    Abstract: We rationalize several facts emerging from the recent empirical research on cooperatives owned by workers (workers’ firms, WF) as: the concern of WFs for employment; the interplay between membership and workplace safeguard within WFs; the different reaction to shocks between WFs and profit-making firms. We do so by means of a new model of WFs short-run behavior in mixed duopoly. We consider an industry in which a WF competes with a profit maximizing company and we innovate with respect to the conventional Illyrian objective function. We then reconcile the literature on labor-concerned maximands in competitive markets and the one dealing with WFs in oligopolistic markets under the Illyrian maximand.
    JEL: L13 L21 P13
    Date: 2022–03
  6. By: Bernardus Van Doornik (Banco Central do Brasil); Dimas Fazio (National University of Singapore); David Schoenherr (Princeton University); Janis Skrastins (Washington University in St. Louis)
    Abstract: We document that a more generous unemployment insurance (UI) system shifts labor supply from safer to riskier firms and reduces compensating wage differentials risky firms need to pay. Consequently, a more generous UI system increases risky firms’ value and fosters entrepreneurship by reducing new firms’ labor costs. Exploiting a UI reform in Brazil that affects only part of the workforce allows us to compare labor supply for workers with different degrees of UI protection within the same firm, sharpening identification of the results. Altogether, our results suggest that UI provides a transfer system from safe to risky firms.
    Keywords: unemployment insurance, labor supply, firm risk, entrepreneurship
    JEL: J21 J22 J46 J65 K31
    Date: 2022–01
  7. By: Soheil Kazemian (ECU - Edith Cowan University); Hadrian Djajadikerta (ECU - Edith Cowan University); Jamaliah Said (UiTM - Universiti Teknologi MARA [Shah Alam]); Saiyidi Roni (Murdoch University); Terri Trireksani (Murdoch University); Md. Mahmudul Alam (UUM - Universiti Utara Malaysia)
    Abstract: Market orientation has been known as an efficient managerial tool to assist in sustaining the performance of organisations. Market orientation has three dimensions, namely customer orientation, competitor orientation and inter-function coordination. This paper evaluates how corporate governance influences the three dimensions of market orientation within Iran's upscale hotels. The impacts of the three dimensions of market orientation on the hotels' social and financial performance are also examined to determine if market orientation mediates the relationships between corporate governance and performance. Partial least squares structural equation modelling (PLS-SEM) is used to analyse the survey data collected from the executives of four- and five-star hotels in Mashhad, Iran. Results show that corporate governance positively influences the three dimensions of market orientation, while overall market orientation influences financial and social performance. Specifically, customer orientation and inter-function coordination significantly reinforce such mediation, whereas the influence of competitor orientation is limited to financial performance.
    Keywords: upscale hotels,tourism and hospitality,social performance,financial performance,market orientation,Corporate governance,Iran,partial least squares,PLS
    Date: 2021
  8. By: John W. Barry; Murillo Campello; John Graham; Yueran Ma
    Abstract: We use the COVID shock to study the direct and interactive effects of several forms of corporate flexibility on short- and long-term real business plans. We find that i) workplace flexibility, namely the ability for employees to work remotely, plays a central role in determining firms’ employment plans during the health crisis; ii) investment flexibility allows firms to increase or decrease capital spending based on their business prospects in the crisis, with effects shaped by workplace flexibility; and iii) financial flexibility contributes to stronger employment and investment, in particular when fixed costs are high. While the role of workplace flexibility is new to the COVID crisis, CFOs expect lasting effects for years to come: high workplace flexibility firms foresee continuation of remote work, stronger employment recovery, and shifting away from traditional capital investment, whereas low workplace flexibility firms rely more on automation to replace labor.
    JEL: G01 G17 G31
    Date: 2022–02
  9. By: Smith, Harry; Bennett, Robert J.; van Lieshout, Carry; Montebruno, Piero
    Abstract: This article uses the British Business Census of Entrepreneurs (BBCE) to examine the relationship between the household and entrepreneurship in England and Wales between 1851 and 1911. The BBCE allows three kinds of entrepreneurial households to be identified: those where an entrepreneur employs co-resident family members in their business, those where two or more household members are partners in the same firm, and households with two or more entrepreneurs resident who are running different firms. The article traces the number of these different households across the period and examines their sector and gender breakdowns as well as their geographical distribution. The article demonstrates that these different kinds of entrepreneurial households served different purposes; co-resident family businesses were used in marginal areas where other sources of labour and capital were scarce and the incidence of such firms decreased over this period. In contrast, household partnerships and co-entrepreneurial households were used to share risk or diversify; they were found throughout England and Wales at similar levels during this period.
    Keywords: census; economic history; England and Wales; entrepreneurship; household; ES/M010953; RG66385
    JEL: R14 J01 N0
    Date: 2020–08–18
  10. By: Dan Levin; Luyao Zhang
    Abstract: We introduce NLK, a model that connects the Nash equilibrium (NE) and Level-K. It allows a player in a game to believe that her opponent may be either less or as sophisticated as, she is, a view supported in psychology. We apply NLK to data from five published papers on static, dynamic, and auction games. NLK provides different predictions than those of the NE and Level-K; moreover, a simple version of NLK explains the experimental data better in many cases, with the same or lower number of parameters. We discuss extensions to games with more than two players and heterogeneous beliefs.
    Date: 2022–02

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