nep-bec New Economics Papers
on Business Economics
Issue of 2022‒08‒22
twelve papers chosen by
Vasileios Bougioukos
London South Bank University

  1. PATENTS, FAMILY, AND SIZE. EVIDENCE FROM ITALIAN MANUFACTURING FIRMS By Francesco Aiello; Paola Cardamone; Lidia mannarino; Valeria Pupo
  2. Yoke of Corporate Governance and Firm Performance: A Study of Listed Firms in Pakistan By Ali, Amjad; Alim, Wajid; Ahmed, Jawad; Nisar, Sabahat
  3. The performance of Italian Industrial Districts in and out of the 2008-2012 crisis By Valter Di Giacinto; Andrea Sechi; Alessandro Tosoni
  4. Job Satisfaction, Structure of Working Environment and Firm Size By Tansel, Aysit
  5. Relative performance evaluation and competitive aggressiveness By Feichter, Christoph; Moers, Frank; Timmermans, Oscar
  6. Branded Websites and Marketplace Selling: Competing during COVID-19 By Oksana Loginova
  7. Aggregate skewness and the business cycle By Martin Iseringhausen; Ivan Petrella; Konstantinos Theodoridis
  8. All you need is G(overnance): Sustainable Finance Following Ambrogio Lorenzetti's Frescoes By Costanza Consolandi; Giovanni Ferri; Andrea Roncella
  9. Identifying and boosting “gazelles”: evidence from business accelerators By Gonzalez-Uribe, Juanita; Reyes, Santiago
  10. "Corporate Governance and Financial Distress: Empirical Evidence from listed Consumer Services Firms in Sri Lanka " By Balagobei, S
  11. Growth and Firm Dynamics in a Banking System Favoring Big Firms By Nurlan Jahangirli
  12. Endogenous market structures, product liability, and the scope of product differentiation By Eric Langlais; Andreea Cosnita-Langlais

  1. By: Francesco Aiello (Department of Economics, Statistics and Finance 'Giovanni Anania', University of Calabria, Rende (Italy)); Paola Cardamone (Department of Economics, Statistics and Finance 'Giovanni Anania', University of Calabria, Rende (Italy)); Lidia mannarino (Department of Economics, Statistics and Finance 'Giovanni Anania', University of Calabria, Rende (Italy)); Valeria Pupo (Department of Economics, Statistics and Finance 'Giovanni Anania', University of Calabria, Rende (Italy))
    Abstract: This study explores whether the probability to patent differ between family and non-family firms, and whether any potential difference between firm-type is moderated by size. The analysis is based on a large archive of patenting activities (Orbis–PATSTAT dataset) carried out by around 3700 Italian manufacturing firms over the 2010–2017 period. The results from a probability model show that, on average, family firms patent less than non-family firms (the estimated average marginal effect is -0.0325). Firm size matters, as its average marginal effect is 0.0212, suggesting that the probability of patenting increases with size, no matter the firm ownership. The size effect differs, however, between family and non-family firms. It is demonstrated not only that family firms remain less likely to patent than non-family firms, but also that their disadvantages increase as they grow in size: in large firms, the probability of patenting is 0.22 for family firms and 0.39 for non-family firms. Importantly, the results hold when considering patent counts, citations and a number of additional sensitivity tests.
    Keywords: Family firms, Patenting activities, Firm size
    JEL: D22 L25 L60 O30
    Date: 2022–07
  2. By: Ali, Amjad; Alim, Wajid; Ahmed, Jawad; Nisar, Sabahat
    Abstract: The objective of this exploration is to show the relationships between corporate governance tools (board size, board independence, CEO status, Board Education, and Established Years of the firm) and firm performance which is determined by the return on asset (ROA). Quantitative data are used to discover the association between the variables. The top 75 companies registered on the Pakistan Stock Exchange involving the period from 2010 to 2019 are taken as a sample. The research found that there is a connection between the performance of the firm with the overall extent of directors, board independence, and average education of board representatives. Insignificant results came for CEO duality and established years of the firm. The result predicted that an increase in total board members and average education of board members will increase firm performance (ROA), whereas a reduction in board independence will reduce firm performance (ROA) which explains the importance of corporate governance for the success of firm performance. Unlike the previous studies, this study tried to find the long-term influence of corporate governance on firm performance by analyzing five different variables for the listed firms in Pakistan. The study provides the importance of corporate governance tools and their effectiveness for the success of organizations, especially in Pakistan.
    Keywords: Board education, board independence, the board size, CEO duality, corporate governance, firm performance, Pakistan, return on asset
    JEL: G3 G30
    Date: 2022–01
  3. By: Valter Di Giacinto (Bank of Italy); Andrea Sechi (Bank of Italy); Alessandro Tosoni (Bank of Italy)
    Abstract: By exploiting firm level balance sheet data from the Cerved database and employment data from the INPS database, we provide a detailed description of the productivity performance of Italian industrial districts firms over the 2003-2017 period. The main structural features of industrial districts are first compared with those of the other types of local labour market areas. The performance of district firms is subsequently analysed both overall and separately for the firms belonging to the core district industry and the remaining companies. We find evidence of a positive and sizeable district productivity premium, increasing over the period of analysis. However, in order to consolidate their performance, industrial districts had to undergo significant structural changes. Medium-sized and large firms have grown in importance, also through a process of capital deepening that involved both tangible and intangible fixed assets. At the same time, structural adaptation involved the acquisition of a more significant role by firms not operating in the main district industry.
    Keywords: industrial districts, agglomeration economies, structural adaptation
    JEL: L25 L60 R11
    Date: 2022–06
  4. By: Tansel, Aysit (Middle East Technical University)
    Abstract: Employees' wellbeing is important to the firms. Analysis of job satisfaction may give insight into various aspect of labor market behavior, such as worker productivity, absenteeism and job turn over. Little empirical work has been done on the relationship between structure of working environment and job satisfaction. This paper investigates the relationship between working environment, firm size and worker job satisfaction. We use a unique data of 28,240 British employees, Workplace Employee Relations Survey. In this data set the employee questionnaire is matched with the employer questionnaire. Four measures of job satisfaction considered are satisfaction with influence over job, satisfaction with amount of pay, satisfaction with sense of achievement and satisfaction with respect from supervisors. They are all negatively related to the firm size implying lower levels of job satisfaction in larger firms. The firm size in return is negatively related to the degree of flexibility in the working environment. The small firms have more flexible work environments. This is the first study that explore the effect of work amenities. We further find that, contrary to the previous results lower levels of job satisfaction in larger firms can not necessarily be attributed to the inflexibility in their structure of working environment.
    Keywords: job satisfactions, firm size, working environment, linked employer-employee data, Britain
    JEL: J21 J28 J29 J81
    Date: 2022–06
  5. By: Feichter, Christoph; Moers, Frank; Timmermans, Oscar
    Abstract: We examine the relation between incentive plans based on relative performance and competitive aggressiveness. Using data on executive incentive-compensation contracts in large U.S. firms, we find a positive association between competitive aggressiveness and peer group overlap—that is, the extent to which two firms select each other as peers in these incentive plans. Our findings indicate that managers of such firms take more frequent as well as more complex competitive actions, relative to managers evaluated on relative performance without peer group overlap. Moreover, we show that these competitive tactics are more pronounced when managers compete against: (1) peers with similar grant sizes, (2) peers on similar performance metrics, and (3) peers in the same industry. Collectively, our findings provide evidence on how widely used incentive-compensation practices relate to strategic firm decisions.
    Keywords: collusion; competitive aggressiveness; peer group overlap; relative performance evaluation; strategic interaction
    JEL: M40
    Date: 2022–03–13
  6. By: Oksana Loginova (Department of Economics, University of Missouri)
    Abstract: I consider a market for differentiated products with an online marketplace (the platform) and two types of firms. Marketplace firms sell through the platform. Branded firms sell to consumers directly and, if they choose, through the platform. When a branded firm joins the platform, the firm expands its reach beyond its branded website/physical store(s) to consumers who visit the platform for all their purchases. The drawback is that the firm has to pay a referral fee for all sales on the platform, some of which are from its loyal consumers who would otherwise have purchased from the firm directly. I investigate the role of the firm composition in determining the equilibrium outcome. Interestingly, a higher fraction of branded firms translates into more firms on the platform and intense price competition. In the midst of the COVID-19 pandemic, consumers who used to shop at physical stores turn to the platform. I show that if they do (do not) consider other products, more (fewer) branded firms will join the platform in equilibrium.
    Keywords: price competition, online marketplace platform, brands, consumer shopping behavior, COVID-19
    JEL: C72 D43 L11 L13 M31
    Date: 2022–01–21
  7. By: Martin Iseringhausen (ESM); Ivan Petrella (University of Warwick, CEPR); Konstantinos Theodoridis (ESM)
    Abstract: We develop a data-rich measure of expected macroeconomic skewness in the US economy. Expected macroeconomic skewness is strongly procyclical, mainly reflects the cyclicality in the skewness of real variables, is highly correlated with the cross-sectional skewness of firm-level employment growth and is distinct from financial market skewness. Revisions in expected skewness deliver dynamics that are nearly indistinguishable from those produced by the main business cycle shock of Angeletos et al. (2020). This result is robust to controlling for macroeconomic volatility and uncertainty, and alternative macroeconomic shocks. Our findings highlight the importance of higher-order dynamics for business cycle theories.
    Keywords: Business cycles, downside risk, skewness
    JEL: C22 C38 E32
    Date: 2022–07–20
  8. By: Costanza Consolandi (University of Siena); Giovanni Ferri (LUMSA University); Andrea Roncella (Fondazione RUI)
    Abstract: This paper takes at firm level the inspiration of the Allegory of the Good and Bad Government, the 14th century series of frescoes by Ambrogio Lorenzetti. Namely, we investigate whether a good corporate governance stabilizes financial performance and whether such superior governance improves ‘ESG (Environmental, Social, Governance) resilience’ against controversies related to sustainability issues. Using a large sample of European listed firms from 2006 to 2019, we find that a good governance is the key factor not only in getting ESG controversies managed, therefore increasing firm sustainability resilience, but also in reducing equity volatility, therefore stabilizing firm financial performance.
    Keywords: Corporate governance, financial performance, ESG resilience
    JEL: G32
    Date: 2022–07
  9. By: Gonzalez-Uribe, Juanita; Reyes, Santiago
    Abstract: Why is high-growth entrepreneurship scarce in developing countries? Does this scarcity reflect firm capabilities constraints? We explore these questions using as a laboratory an accelerator in Colombia that selects participants using scores from randomly assigned judges and offers them training, advice, and visibility but no cash. Exploiting exogenous differences in judges’ scoring generosity, we show that alleviating constraints to firm capabilities unlocks innovative entrepreneurs’ potential but does not transform subpar ideas into high-growth firms. The results demonstrate that some high-potential entrepreneurs in developing economies face firm capabilities constraints and accelerators can help identify these entrepreneurs and boost their growth.
    Keywords: High growth entreprenuership; Business accelerators; Young firms; firm capabilities
    JEL: G24 M13
    Date: 2021–01–01
  10. By: Balagobei, S (University of Jaffna, Sri Lanka. Author-2-Name: Keerthana, G Author-2-Workplace-Name: University of Jaffna, Sri Lanka. Author-3-Name: Author-3-Workplace-Name: Author-4-Name: Author-4-Workplace-Name: Author-5-Name: Author-5-Workplace-Name: Author-6-Name: Author-6-Workplace-Name: Author-7-Name: Author-7-Workplace-Name: Author-8-Name: Author-8-Workplace-Name:)
    Abstract: " Objective - COVID – 19 has created unique and very profound challenges for almost all listed firms in Sri Lanka. The purpose of the study is to examine the influence of corporate governance practices on the financial distress status of listed companies in the consumer services sector in Sri Lanka. Methodology/Technique - To assess the level of corporate governance, the current study constructs six dimensions of corporate governance, such as board size, board composition, CEO duality, board meeting, director ownership, and audit committee size. The Altman Z-score is used as a proxy for financial distress and measures it inversely. The bigger the Z-score indicates the smaller the risk of financial distress. Using 108 individual observations of consumer services firms listed on the Colombo Stock Exchange for the period of 2019 to 2021 and employing the fixed effects model, the effect of corporate governance practices on financial distress is evaluated. Findings - The results from panel data regression analysis reveal that firms having a large number of directors on the board have a low likelihood of financial distress of listed consumer services companies in Sri Lanka. Furthermore, when a chief executive officer serves as the chairman of the board at a company, the more likely it is that the company will experience financial distress. The current study also provides evidence that firm-specific characteristics, such as firm size, leverage, and profitability, could be useful in determining the likelihood of financial distress. Novelty - This study extends the existing literature by investigating the association between corporate governance practices and financial distress in listed companies in the emerging markets during the period of the COVID 19 pandemic. Type of Paper - Empirical."
    Keywords: Board size, CEO duality, corporate governance, financial distress
    JEL: G30 G34
    Date: 2022–07–30
  11. By: Nurlan Jahangirli (Monash)
    Abstract: Banks favor big firms by offering small firms different menu choices, which leads to disproportionate borrowing costs. I study big firm favorism in credit markets as a source of cross-country divergence and lower business dynamism. First, I provide some new evidence on the nature of this relationship across low-, middle-, and high-income countries. The disproportionate cost of borrowing drastically declines as we move from low-income to high-income countries. Then, I integrate these stylized empirical facts into a Schumpeterian growth model with heterogeneous firm dynamics. Counterfactual policy interventions to alleviate disproportionate borrowing costs suggest a 10% to 21% increase in the economic growth rate in the US.
    Keywords: firm dynamics, cross-country convergence, borrowing costs, economic growth, pricing of corporate loans
    JEL: O16 O40
    Date: 2022–08
  12. By: Eric Langlais; Andreea Cosnita-Langlais
    Abstract: The paper considers how product liability may shape firm size, product specification choices and market structure. We introduce a spatial Cournot duopoly on the linear market, where firms make an initial decision of product differentiation, then invest in precaution, before competing in quantity. Our main results are fourfold; 1) with full coverage of the market by the duopoly, there exist two equilibria (in pure strategies): central agglomeration (which is stable for low liability costs), and dispersion (which is stable for not too large liabiliy costs); 2) for larger liability costs, a mixed market structure duopoly/monopoly sustains a unique equilibrium with product differentiation; 3) this equilibrium enables a scope of differentiation higher (smaller) than the full duopoly (the social optimum); 4) the impact of liability costs on firms size and profits is complex, since it depends on the impact on both product differentiation and market structure. Finally, we show that consumer surplus and social welfare are both higher under the mixed market structure than under the full duopoly in an equilibrium with product differentiation.
    Keywords: horizontal differentiation, Cournot competition, spatial model, endogenous market structures, product liability, strict liability, negligence
    JEL: L41 K21 D82
    Date: 2022

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