nep-bec New Economics Papers
on Business Economics
Issue of 2022‒11‒07
ten papers chosen by
Vasileios Bougioukos
London South Bank University

  1. Productivity and Firm Exit during the COVID-19 Crisis : Cross-Country Evidence By Muzi,Silvia; Jolevski,Filip; Ueda,Kohei; Viganola,Domenico
  2. Firm Resources, Strategies, and Survival and Growth during COVID-19: Evidence from Two-WaveGlobal Surveys By Fang,Sheng; Goh,Chorching; Li,Shaomin; Xu,L. Colin
  3. Firm-Level Adoption of Technologies in Senegal By Cirera,Xavier; Comin,Diego Adolfo; Vargas Da Cruz,Marcio Jose; Lee,Kyungmin
  4. Are Firm Capabilities Holding Back Firms in Mozambique ? By Aga,Gemechu A.; Campos,Francisco Moraes Leitao; Conconi,Adriana; Davies,Elwyn Adriaan Robin; Geginat,Carolin
  5. The effects of COVID-19 on businesses key versus non-key firms By Stemmler, Henry.
  6. Firm Productivity and Locational Choice : Evidence from Mozambique By Iimi,Atsushi
  7. Acquisitions, management and efficiency in Rwanda's coffee industry By Rocco Macchiavello; Ameet Morjaria
  8. The interaction effect of government non-financial support and firm’s regulatory compliance on firm innovativeness in Sub Saharan Africa By Sam Njinyah; Simplice A. Asongu; Ngozi B. Adeleye
  9. Economic Integration, Industrial Structure, and Catch-up Growth : Firm-Level Evidence from Poland By Bastos,Paulo S. R.; Lovo,Stefania; Varela,Gonzalo J.; Hagemejer,Jan
  10. Firms and inequality when unemployment is high By Ihsaan Bassier

  1. By: Muzi,Silvia; Jolevski,Filip; Ueda,Kohei; Viganola,Domenico
    Abstract: This paper examines whether the economic crisis induced by the COVID-19 pandemic exhibits a Schumpeterian “cleansing” of less productive firms. Using firm-level data for 31 economies, the study finds that less productive firms have a higher probability of permanently closing during the crisis, suggesting that the process of cleansing out unproductive arrangements may be at work. The paper also uncovers a strong and negative relationship between firm exit and innovation and digital presence, especially for small firms, confirming the relevance of the ability to adapt to market conditions as a determinant of firm survival. Finally, the study finds evidence of a negative relationship between firm exit and a burdensome business environment, as well as between firm exit and age.
    Keywords: Labor Markets,Financial Sector Policy,Business Environment,Food&Beverage Industry,Plastics&Rubber Industry,Textiles, Apparel&Leather Industry,Pulp&Paper Industry,Common Carriers Industry,Construction Industry,Business Cycles and Stabilization Policies,General Manufacturing
    Date: 2021–05–24
  2. By: Fang,Sheng; Goh,Chorching; Li,Shaomin; Xu,L. Colin
    Abstract: This study examines how firms have made strategic choices and performed during the COVID-19pandemic. Drawing on the organizational resources and strategic change literature, it uses World Bank EnterpriseSurveys and the COVID-19 Follow-up Enterprise Surveys to examine how different endowments in organizational resourcesaffected firm performance as measured by their survival status and sales growth, and how these resources interactwith and affect strategic responses in the supply of inputs, response to changing demand, liquidity management, andinnovation. The results indicate that larger firms, firms with foreign or state ownership, and subsidiary companiesperformed better during the pandemic by more effectively stabilizing supply, managing liquidity, and fostering newproduct development. Chief executive officers with longer tenure improved survival rates. Firms in richer countrieshave coped with the pandemic better and stringent government COVID-19 control policies have tended to hurt firms' performance.
    Date: 2022–04–05
  3. By: Cirera,Xavier; Comin,Diego Adolfo; Vargas Da Cruz,Marcio Jose; Lee,Kyungmin
    Abstract: Technology is key to boost productivity and generate more and better quality jobs in Senegal. This paper uses a novel approach to measure technology adoption at the firm level and applies it to a representative sample of firms in Senegal. It provides new measures of technology adoption at the firm level, which identify the purposes for which technologies are used and analyzes some of the key barriers to improving technology adoption at the firm level in Senegal. First, the adoption of general-purpose information and communications technologies, such as computers, the internet, and cloud computing for business purpose, is low but very heterogeneous and positively associated with size and formal status. Second, most firms still rely on pre-digital technologies to perform general business functions, such as business administration, production planning, supply chain management, marketing, sales, and payment. Third, most firms, including large and formal firms, still rely on manual methods or manually operated machines to perform critical pro duction tasks that are sector specific, such as harvesting in agriculture or packaging in food processing. The paper presents evidence of three main challenges to improve technology adoption: access to finance, information, and knowledge (firm capabilities), and access to markets and competition.
    Keywords: Food Security,Energy Policies&Economics,Agricultural Irrigation and Drainage,Irrigation and Drainage,Livestock and Animal Husbandry,Textiles, Apparel&Leather Industry,Pulp&Paper Industry,Plastics&Rubber Industry,Food&Beverage Industry,Common Carriers Industry,Construction Industry,Business Cycles and Stabilization Policies,General Manufacturing
    Date: 2021–05–12
  4. By: Aga,Gemechu A.; Campos,Francisco Moraes Leitao; Conconi,Adriana; Davies,Elwyn Adriaan Robin; Geginat,Carolin
    Abstract: Firm capabilities—the abilities and practices to operate and innovate—are considered important drivers of firm performance. While the analysis of their importance is well established in developed countries, its study in the African context is more recent. The paper uses a new representative sample of enterprises in Mozambique comprising data on management and organizational practices, as well as skills, to study the importance of firm capabilities in Mozambique. The analysis suggests that the private sector in Mozambique scores below other developing countries in all dimensions of firm capabilities. Enterprises engaging in more contractual relationships demonstrate stronger firm capabilities. Firm capabilities are key drivers of performance; controlling for other input factors, firms in Mozambique with better firm capabilities perform better. The relationship is robust to various measures of performance and to including various firm and manager characteristics. The analysis finds that for smaller firms, non-exporters, and female-owned enterprises, their gap in business performance can be explained by differences in management practices. The results suggest Mozambique should explore mechanisms of expanding firm capabilities in targeted types of firms.
    Keywords: Common Carriers Industry,Food&Beverage Industry,Pulp&Paper Industry,Plastics&Rubber Industry,Business Cycles and Stabilization Policies,General Manufacturing,Textiles, Apparel&Leather Industry,Construction Industry,Educational Sciences,Financial Sector Policy,Hydrology
    Date: 2021–06–30
  5. By: Stemmler, Henry.
    Abstract: During the COVID-19 pandemic, governments designated specific services as “essential,” which allowed firms operating in those sectors to remain (partially) open as well as being granted other preferential treatment. This paper analyses the effects of the key-status, by mapping the countries’ lists to the sectoral level, and matching these sectors with firm-level Covid-19 survey data from 27 countries. The findings reveal that, controlling for a rich set of firm-level and sectoral characteristics, firms deemed key less often reported declining sales and demand for their goods or services, and had a smaller number of furloughed workers. Nonetheless, non-key firms were more likely to employ online business activities and to change the main product or service they offered, reflecting the necessity to otherwise adjust to the economic downturn and changes in demand.
    Keywords: enterprise, productivity, business strategy, COVID-19
    Date: 2022
  6. By: Iimi,Atsushi
    Abstract: Transport infrastructure is an important driving force for economic growth. Africa has been lagging behind in the global manufacturing market. Among others, infrastructure is often an important constraint. The paper reexamines the impacts of transport infrastructure on firm productivity in Mozambique. A conventional cost function is estimated with two rounds of firm data collected in 2007 and 2018. It is found that improved transport connectivity, particularly access to a port, has a positive impact on firm production. Firm inventory is also an important determinant of firm productivity. Over the long term, agglomeration economies are also found to be significant and associated with port accessibility. These findings are consistent with the fact that the Government of Mozambique heavily invested in the primary road network during the first half of the 2010s. The improved transport network is considered to have contributed to the country’s robust economic growth in the industrial and service sectors until the mid-2010s.
    Keywords: Transport Services,Food&Beverage Industry,Common Carriers Industry,Construction Industry,Business Cycles and Stabilization Policies,General Manufacturing,Plastics&Rubber Industry,Pulp&Paper Industry,Textiles, Apparel&Leather Industry,Energy Policies&Economics,Energy and Mining,Energy and Environment,Energy Demand
    Date: 2021–07–02
  7. By: Rocco Macchiavello; Ameet Morjaria
    Abstract: Well-functioning markets allocate assets to owners that improve firms' management and performance. We study the effects of ownership changes on coffee mills in Rwanda - an industry in which managing relationships with farmers and seasonal workers is important and that has seen many ownership changes in recent years. We combine administrative data, a survey panel of mills and an original survey of acquirers that allows us to construct acquirer-specific and target-specific control groups. A difference-in-differences design reveals that ownership changes do not improve performance unless the mill is acquired by a foreign firm. Our preferred interpretation - supported by detailed survey evidence that considers alternative hypotheses - is that foreign firms successfully implement management changes in key operational areas. Upon acquisition, both domestic and foreign owned mills attempt to implement similar changes, but domestic firms face resistance from workers and farmers. Domestic owners have relationships with their local communities, which can create opportunities to establish new mills and acquire existing ones. However, these same relationships create pressure to maintain status-quo relational arrangements, which makes it harder to implement managerial changes.
    Keywords: management, performance, market reforms, coffee, Rwanda
    Date: 2022–07–21
  8. By: Sam Njinyah (Manchester Metropolitan University, UK); Simplice A. Asongu (Yaoundé, Cameroon); Ngozi B. Adeleye (Covenant University, Ogun State, Ota, Nigeria)
    Abstract: Firms' regulatory compliance with environmental and safety issues has been suggested as one of the reasons why firms innovate. Such compliance provides legitimacy, improves reputation and corporate image, and enhances customer loyalty and competitive advantages, which influences firm innovativeness. However, regulatory compliance is costly and with limited resources, the role of government support is crucialas a moderator, to help firms become more compliant and influence their innovativeness. The study uses data from the World Bank Enterprise Innovation Survey for seven countries in Sub Saharan Africa. Regulatory compliance has a positive and significant effect on firm innovativeness. Increased use of government non-financial support enhances the level of firm regulatory compliance and the effect of regulatory compliance on firm innovativeness. The study contributes to the literature on compliance and firm innovativeness in Africa by showing how the positive effect of regulatory compliance on firm innovativeness is stronger when firms benefit from government non-financial support.
    Keywords: Regulatory Compliance, Firm Innovativeness, government non-financial Support, and Sub Saharan Africa (SSA).
    Date: 2022–01
  9. By: Bastos,Paulo S. R.; Lovo,Stefania; Varela,Gonzalo J.; Hagemejer,Jan
    Abstract: This paper examines if and how deeper economic integration with high-income nations impactsindustrial performance. It exploits Poland’s accession to the European Union in 2004 as a source of variation in thedegree of market integration with Germany. Using data on Polish manufacturing firms over 1995–2013, the paper findsthat EU accession was followed by significant within-firm growth in output and productivity, notably in industries inwhich Germany was more specialized at the moment of accession. Increased flows of German investment to thesesectors played an important role in shaping these effects.
    Date: 2022–03–29
  10. By: Ihsaan Bassier
    Abstract: How important are firms for wage inequality in developing countries where structural unemployment is high? Research focused on contexts close to full employment has suggested a substantial role of firms in labor market inequality. Using matched employer-employee data from South Africa, I find that firms explain a larger share of wage variation than in richer countries. I consider drivers of this, documenting first a higher productivity dispersion as found for other developing countries. Secondly, I estimate the separations elasticity by instrumenting wages of matched workers with firm wages, and I find a low separations elasticity. This generates a high degree of monopsony, and the correspondingly high estimated rent-sharing elasticity helps explain the important role of firm wage policies in inequality. Monopsony may be driven by higher unemployment, and regional heterogeneity provides suggestive evidence for this. Such firm-level competitive dynamics may exacerbate inequality in developing countries more generally.
    Keywords: inequality, firm wage premia, unemployment, monopsony
    Date: 2022–10–07

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