nep-bec New Economics Papers
on Business Economics
Issue of 2023‒01‒02
seven papers chosen by
Vasileios Bougioukos
London South Bank University

  1. Covid-19 pandemic, state aid and firm productivity By Bighelli, Tommaso; Lalinsky, Tibor; Vanhala, Juuso
  2. Management of Big data: An empirical investigation of the Too-Much-of-a-Good-Thing effect in medium and large firms By Claudio Vitari; Elisabetta Raguseo; Federico Pigni
  3. Supply Chain Resilience: Evidence from Indian Firms By Gaurav Khanna; Nicolas Morales; Nitya Pandalai-Nayar
  4. Skilled Immigration, Task Allocation and the Innovation of Firms By Anna Maria Mayda; Gianluca Orefice; Gianluca Santoni
  5. Dividend Decisions and Economic Value-Added of Firms in Kenya By Kasidi, Khamis; Riwegho, Saumu Amir; Omar, Ahmed Mohamed Mr; Kamau, Charles Guandaru
  6. Identifying and characterising AI adopters: A novel approach based on big data By Flavio Calvino; Lea Samek; Mariagrazia Squicciarini; Cody Morris
  7. Effects of Conferring Business Resource on Rivals By Ajit, Tejaswi Channagiri; Jamison, Mark A.

  1. By: Bighelli, Tommaso; Lalinsky, Tibor; Vanhala, Juuso
    Abstract: We study the consequences of the COVID-19 pandemic on productivity by matching firm performance outcomes with corresponding firm-level information on government support. Our cross-country evidence for five EU countries shows that the pandemic led to a significant short-term decline in productivity predominantly driven by the within-firm growth component. A thorough comparative analysis of the distribution of employment and overall direct subsidies, considering separately also relative firm-level support and the probability of being supported, reveals several common characteristics. In general, the pandemic support was distributed rather efficiently, i.e. towards "deserving" firms and only marginally towards "zombie" and non-viable firms. However, government subsidies appear to have had a limited effect on aggregate productivity developments.
    Keywords: Covid-19,productivity,firm-level data,government support,employment subsidies,cross-country analysis
    JEL: D22 H25 J38 L29
    Date: 2022
  2. By: Claudio Vitari (AMU - Aix Marseille Université, CERGAM - Centre d'Études et de Recherche en Gestion d'Aix-Marseille - AMU - Aix Marseille Université - UTLN - Université de Toulon); Elisabetta Raguseo (Polito - Politecnico di Torino = Polytechnic of Turin); Federico Pigni (EESC-GEM Grenoble Ecole de Management)
    Abstract: Firms adopt Big data solutions, but a body of evidence suggests that Big data in some cases may create more problems than benefits. We hypothesize that the problem may not be Big data in itself but rather too much of it. These kinds of effects echo the Too-Much-of-a-Good-Thing (TMGT) effect in the field of management. This theory also seems meaningful and applicable in management information systems. We contribute to assessments of the TMGT effect related to Big data by providing an answer to the following question: When does the extension of Big data lead to value erosion? We collected data from a sample of medium and large firms and established a set of regression models to test the relationship between Big data and value creation, considering firm size as a moderator. The data confirm the existence of both an inverted U-shaped curve and firm size moderation. These results extend the applicability of the TMGT effect theory and are useful for firms exploring investments in Big data.
    Keywords: Too-Much-of-a-Good-Thing effect,inverted U-shaped curve,Big data,business value,medium and large firms
    Date: 2022
  3. By: Gaurav Khanna; Nicolas Morales; Nitya Pandalai-Nayar
    Abstract: We characterize what features make supply chains more resilient. Using new data on the universe of firm-to-firm transactions from an Indian state, we identify firms with larger supplier risk following the Covid-19 lockdowns. Using an event-study design we find firms with suppliers in strict-lockdown districts experienced 4.5pp higher separation rates (a 15% increase relative to baseline). We study which characteristics increase supply-chain resilience. Firms that buy more complex products, with fewer available suppliers, are less likely to break links. We explore how firms change post-shock supplier composition. Firms with higher supplier risk form new links with larger and better-connected suppliers.
    JEL: F14 L14
    Date: 2022–11
  4. By: Anna Maria Mayda; Gianluca Orefice; Gianluca Santoni
    Abstract: This paper analyses the impact of skilled migrants on the innovation (patenting) activity of French firms between 1995 and 2010, and investigates the underlying mechanism. We present district-level and firm-level estimates and address endogeneity using a modified version of the shift-share instrument. Skilled migrants increase the number of patents at both the district and firm level. Large, high-productivity and capital-intensive firms benefit the most, in terms of innovation activ-ity, from skilled immigrant workers. Importantly, we provide evidence that one channel through which the effect works is task specialization (as in Peri and Sparber, 2009). The arrival of skilled immigrants drives French skilled workers towards language-intensive, managerial tasks while foreign skilled workers specialize in technical, research-oriented tasks. This mechanism manifests itself in the estimated increase in the share of foreign inventors in patenting teams as a consequence of skilled migration. Through this channel, greater innovation is the result of productivity gains from specialization.
    Keywords: skilled immigration, innovation, patents
    JEL: F22 J61
    Date: 2022
  5. By: Kasidi, Khamis; Riwegho, Saumu Amir; Omar, Ahmed Mohamed Mr; Kamau, Charles Guandaru (Technical University of Mombasa)
    Abstract: One of the company's key purposes is to maximize corporate value. Shareholders will benefit more as the firm's value rises. There is a substantial body of literature on dividend policy as a result of empirical and theoretical research. The research is divided into two main schools of thought: one holds that a company's dividend policy affects its value, while the other holds that it has no bearing on firm value. No consensus has been reached after many years of investigation, and academics do not even agree on the same empirical data. The possible impact of dividend decisions on a company's total wealth and performance has been the subject of numerous hypotheses that have developed over the years, with varying degrees of success. A number of financial theories and models were developed, and they were later used in the business sector. The effects of dividend decisions on the share price of the company and the overall wealth of shareholders remain unclear despite several studies. This study sought to examine the relationship between dividend policy decisions and firm value. Some studies have found a statistically significant positive association between dividend policy and return on equity. It means that improving dividend payments has a positive impact on the company's success. A large number of studies, however, show a markedly unfavorable relationship between firm profitability and dividend payout. Consequently, when corporations pay dividends, their retained earnings are impacted, which affects their internal profitability.
    Date: 2022–11–25
  6. By: Flavio Calvino; Lea Samek; Mariagrazia Squicciarini; Cody Morris
    Abstract: This work employs a novel approach to identify and characterise firms adopting Artificial Intelligence (AI), using different sources of large microdata. Focusing on the United Kingdom, the analysis combines data on Intellectual Property Rights, website information, online job postings, and firm-level financials for the first time. It shows that a significant share of AI adopters is active in Information and Communication Technologies and professional services, and is located in the South of the United Kingdom, particularly around London. Adopters tend to be highly productive and larger than other firms, while young adopters tend to hire AI workers more intensively. Human capital appears to play an important role, not only for AI adoption but also for firms’ productivity returns. Significant differences in the characteristics of AI adopters emerge when distinguishing between firms carrying out AI innovation, those with an AI core business, and those searching for AI talent.
    Keywords: artificial intelligence, productivity, technology adoption
    Date: 2022–12–19
  7. By: Ajit, Tejaswi Channagiri; Jamison, Mark A.
    Abstract: We examine how requiring platforms to give rivals resources, such as data, affects innovation. Using simulations in which an initial firm obtains a head start on rivals and uses that head start to build a valuable resource that subsequently gives it a competitive advantage over rivals when competing in the initial technology, we contrast scenarios in which the initial firm is or is not required by a government regulator to provide this resource to rivals. We develop pricing provisions that incentivize the initial firm to voluntarily provide the resource to rivals. We then contrast incentives to create substitutes for the initial technology.
    Keywords: platforms,innovation,competition
    JEL: L13 L15 L51
    Date: 2022

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