nep-bec New Economics Papers
on Business Economics
Issue of 2022‒08‒08
seven papers chosen by
Vasileios Bougioukos
London South Bank University

  1. Family Firms and Input Procurement: Firm-Level Evidence from Italy By Pietro De Ponti; Valeria Gattai
  2. A snapshot of characteristics and dynamics of Austrian exporting firms By Robert Stehrer; Bernhard Dachs
  3. Firm responses to a more generous insurance against high sick pay costs By Hall, Caroline; Liljeberg, Linus; Lindahl, Erica
  4. Informal versus Formal: Microfirms' Productivity Gaps By Gutiérrez, L. H.; Rodríguez- Lesmes, P.
  5. The Pro-competitive Effects of Trade Agreements By Crowley, M. A.; Han, L.; Prayer, T.;
  6. Spillover Effects of Foreign and Domestic Exporting Firms on Export Decisions of Local Manufacturing Firms: Evidence from Viet Nam By Quang Hoan Truong; Van Chung Dong
  7. Creative-entrepreneurs and new venture performance a study of the creative class at the firm-level. By Marcos Segantini; Lori A. Dickes

  1. By: Pietro De Ponti; Valeria Gattai
    Abstract: This paper empirically analyses input procurement using Italian firm-level data. Combining the international economics literature on global sourcing with the family business and international business literature on family firms (FFs)’ internationalization, we build a comprehensive framework in which sourcing is shaped by location (domestic versus foreign sourcing) and ownership (integration versus outsourcing) decisions. Relying on a new firm-level, cross-sectional dataset on a large and stratified sample of Italian manufacturing firms, we address the relationship between global sourcing and firm-level features, such as family presence in ownership and control, productivity, and input specificity. Our probit and multinomial probit estimates suggest that the FF status is negatively related to foreign sourcing, and it plays little role in orienting firms’ ownership decision; moreover, firms’ productivity fosters foreign sourcing, and reliance on specific inputs favours integration. Our study contributes to the International Economics literature on global sourcing by studying factors other than productivity and input specificity that affect input procurement; moreover, it contributes to the Family Business and International Business literature on FFs’ internationalization by taking a supply-side perspective and investigating sourcing through the interplay between location and ownership choices.
    Keywords: productivity, input specificity, family firms, input procurement, sourcing
    JEL: F23 D23 C35 L24
    Date: 2022–06
  2. By: Robert Stehrer; Bernhard Dachs
    Abstract: In view of the importance of the export economy for Austria this study examines the role and characteristics of Austrian exporting firms compared with non-exporting firms. Specifically, it assesses how the share of exporting firms has developed in recent years, whether exports have become more important for firms over time and to what extent exporters have an advantage over other firms (export premium). The results show that about two third of the Austrian manufacturing firms are engaged in exporting activities and indicate that – in line with existing literature - exporting firms are larger, more productive, generate higher surpluses, invest more, and spend more on environmental protection than non-exporters. Further, the results highlight that only a small number of firms account for a large share of Austrian manufacturing exports. Finally, the results point towards a mutual positive relationship between export behaviour, productivity, and R&D expenditures.
    Keywords: export premium, firm-level analysis, productivity and exporting
    JEL: D22 F14
    Date: 2022–07
  3. By: Hall, Caroline (IFAU - Institute for Evaluation of Labour Market and Education Policy); Liljeberg, Linus (IFAU - Institute for Evaluation of Labour Market and Education Policy); Lindahl, Erica (IFAU - Institute for Evaluation of Labour Market and Education Policy)
    Abstract: This paper presents evidence on how firms react to a more generous insurance against high sick pay costs. We exploit a reform launched in Sweden in 2015, which introduced different thresholds for insurance reimbursement depending on firm size. By comparing workers in smaller firms with workers in large firms over time, we evaluate the effects of the reform. We find no indication of changed behaviour among employees in the smallest firms (on average 15 employees), but an increase in sickness absence among those employed in middle-sized firms (on average 38 employees). The increased absence in middle-sized firms is entirely driven by new hires, but the newly hired employees do not seem to be differently selected. We find no evidence indicating that the more generous insurance made firms more inclined to employ more sick-prone individuals. Further analysis suggests that the absence of behavioural responses among employees in the smallest firms might be related to a large production loss from an absent worker, which the insurance cannot fully compensate for. Taken together, we find no support for any societal benefits of a more generous insurance against high sick pay costs in terms of an increased employment-probability among more sick-prone individuals.
    Keywords: sickness absence; sick pay; firm size; insurance; recruitment
    JEL: J22 J23 L23 M51
    Date: 2022–07–04
  4. By: Gutiérrez, L. H.; Rodríguez- Lesmes, P.
    Abstract: Although evidence of a productivity gap between formal and informal firms is observed, this 'formality premium' is less explored for microfirms. The informality of microfirms is a central concern in low- and middle-income countries, and a crucial demand is noted for designing policies addressing this issue because they are the bulk of the economic tissue. We fill this void by estimating a productivity premium for the case of Colombia, considering two margins of informality: extensive, referring to business registration, and the intensive, which includes as well labor regulations. We use a unique longitudinal dataset from the Microenterprise Survey by the Colombian Statistics Department, which follows approximately 39,000 micro-establishments with up to 9 employees during 2012–2016. We utilize the transition into and out of formality to estimate the productivity premium (yearly sales per worker) between informal and formal firms, thereby exploring differences concerning initial productivity. We use a fixed-effects quantile regression to explore differential effects along the productivity distribution. We find evidence of a premium for both the extensive (20%) and intensive margins (6%), a gap that is decreasing along with the firm's productivity. The evidence of these premiums is related to two growth strategies of firms: an increase in capital investments for the extensive margin and an increase in human capital quality for the intensive margin. Further, we find the premium is notoriously wider for young firms (less than three years in the business) with a steeper gradient. We do not find systematic differences across sectors, gender of the owners, and motivation. These results are new evidence that supports the existence of a premium and the transition into and out of formality of microfirms in middleincome countries. Moreover, they suggest that microfirms' formalization and growth policies should be oriented toward promoting and enhancing formality's benefits.
    Keywords: Microfirms, firm informality, productivity premium, Colombia
    Date: 2022–07–05
  5. By: Crowley, M. A.; Han, L.; Prayer, T.;
    Abstract: How does trade policy affect competition? Using the universe of product exports by firms from eleven low and middle-income countries, we document that tariff reductions under trade agreements have strong procompetitive effects - they encourage entry and reduce the (tariff exclusive) price-cost markups of exporters. This finding, that markups fall with tariff cuts, contradicts a core prediction of standard oligopolistic competition models of trade. We extend a classic international pricing model of oligopolistic competition to include multiple countries and a rich preference structure. Our preference structure allows for fierce competition among firms from the same country and less intense competition among firms from different countries. We show a firm's optimal markup after a tariff cut can rise or fall depending on the parameters of the preference structure and tariff-induced reallocation of market share among firms and across countries.
    Keywords: competition policy, firm level data, markup elasticity, trade agreements, trade elasticity, variable markups
    JEL: F13 F14 F15
    Date: 2022–06–23
  6. By: Quang Hoan Truong (Institute for Southeast Asian Studies, Vietnam Academy of Social Sciences (VASS)); Van Chung Dong (Institute for Southeast Asian Studies, Vietnam Academy of Social Sciences (VASS))
    Abstract: Our paper investigates the spillover effects generated by foreign and domestic exporting firms on export decisions of local manufacturing firms in Viet Nam – a developing economy – over 2010–18. In the export participation, we find positive spillover effects from foreign and domestic exporting firms on domestic firms’ export participation, while negative spillover effects are detected with the backward channel. Estimation shows the positive forward spillover effects from domestic exporting firms on domestic counterparts’ export participation; on the contrary, the forward spillover effects generated by foreign direct investment exporting firms are negative. In addition, we discover the opposite spillover effects from foreign direct investment and domestic exporting firms on the probability of export exit of domestic firms, with the negative impact under the horizontal channel and the positive one under the backward channel. There are also effects of firms’ characteristics such as labour productivity, wage, firm size, and capital intensity on the export participation and export exit of domestic firms. From empirical evidence, the paper provides policy implications to strengthen linkages between foreign and domestic exporting firms with local firms in Viet Nam.
    Keywords: Spillover Effects; export status; foreign and domestic exporting firms; Viet Nam
    JEL: F15 F23
    Date: 2021–12–15
  7. By: Marcos Segantini (Universidad ORT Uruguay. Facultad de Administración y Ciencias Sociales. Departmento de Economía); Lori A. Dickes (Clemson University)
    Abstract: Human capital has been a central topic since the beginning of entrepreneurship as a field of academic research. This paper analyzes the association of the human capital level of entrepreneurial teams on the performance of nascent projects by applying a relatively new theory of human capital. The creative class theory, widely used in the research of entrepreneurship at the regional level, is applied here for its first time at the firm level. This article's findings indicate similar results at the firm level to those found at the regional level. More creative-entrepreneur-owned startups are strongly associated with job creation, and to less extent, with projects' survival. As in regional studies, the results of this research also question the classic measures of human capital focused on entrepreneurs' formal education, but now at the firm level.
    Keywords: entrepreneurship, human capital, creative class.
    Date: 2020–12

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