nep-bec New Economics Papers
on Business Economics
Issue of 2023‒08‒28
eight papers chosen by
Vasileios Bougioukos, London South Bank University

  1. Firm Dynamics and Random Search over the Business Cycle By Richard Audoly
  2. Mobile technologies and firm formalization: Evidence from Uganda By Marina Dodlova; Krisztina Kis-Katos; Anna Kochanova; Olivia Wirth
  3. The contribution of firm profits to the recent rise in inflation By Panagiotis Bouras; Christian Bustamante; Xing Guo; Jacob Short
  4. Loan Recoveries and the Financing of Zombie Firms over the Business Cycle By Demirguc-Kunt, Asli; Horvath, Balint L.; Huizinga, Harry
  5. A Non-Parametric Estimation of Productivity with Idiosyncratic and Aggregate Shocks: The Role of Research and Development (R&D) and Corporate Tax By Bournakis, Ioannis; Tsionas, Mike G.
  6. Innovation in the creative industries: Linking the founder's creative and business orientation to innovation outcomes By Koch, Florian; Hoellen, Max; Konrad, Elmar D.; Kock, Alexander
  7. Fast and Furious: A High-Frequency Analysis of Robinhood Users' Trading Behavior By David Ardia; Cl\'ement Aymard; Tolga Cenesizoglu
  8. Exporting, Global Sourcing, and Multinational Activity: Theory and Evidence from the United States By Pol Antràs; Evgenii Fadeev; Teresa C. Fort; Felix Tintelnot

  1. By: Richard Audoly
    Abstract: I build a tractable random search model with firm dynamics, on-the-job search, and aggregate shocks. Multi-worker firms make recruitment decisions, choose whether to enter or exit the market, and design wage contracts. Tractability is obtained by showing that, under a set of assumptions on the recruitment technology, the decisions of workers and firms can be expressed in terms of the firms’ current productivity. I introduce a numerical solution method to accommodate aggregate shocks in this environment and show that the model can replicate salient features of both firm-level data on productivity and employment and aggregate time series describing the business cycle. I use this framework to quantify the drivers of worker reallocation over the recent business cycle in Britain.
    Keywords: firm dynamics; search; business cycle
    JEL: E3
    Date: 2023–08–01
  2. By: Marina Dodlova; Krisztina Kis-Katos; Anna Kochanova; Olivia Wirth
    Abstract: We investigate how the arrival and expansion of mobile network access in Uganda influences firm tax behaviour. Access to mobile technologies could broaden government revenues from corporate income tax through the extensive margin: by reducing the costs of formalization, it could increase the number of firms filing corporate income tax. If these newly formalizing firms are also economically successful, they will contribute to the expansion of the tax base. Moreover, mobile technologies could also enhance firm performance directly, resulting in further increases in the tax base.
    Keywords: Technology, Tax, Administrative data, Difference-in-differences, Firm performance, Uganda
    Date: 2023
  3. By: Panagiotis Bouras; Christian Bustamante; Xing Guo; Jacob Short
    Abstract: We measure the contribution to inflation from the growth in markups of Canadian firms. The dynamics of inflation and markups suggest that changes in markups could account for less than one-tenth of inflation in 2021. Further, they suggest that peak inflation was driven primarily by changes in the costs of firms.
    Keywords: Firm dynamics; Inflation and prices; Market structure and pricing
    JEL: D22 D4 E31 L11
    Date: 2023–08
  4. By: Demirguc-Kunt, Asli; Horvath, Balint L.; Huizinga, Harry (Tilburg University, School of Economics and Management)
    Date: 2023
  5. By: Bournakis, Ioannis; Tsionas, Mike G.
    Abstract: We developed a non-parametric technique to measure Total Factor Productivity (TFP). Our paper has two major novelties in estimating the production function. First, we propose a productivity modelling with both idiosyncratic firm factors and aggregate shocks within the same framework. Second, we apply Bayesian Markov Chain Monte Carlo (MCMC) estimation techniques to overcome restrictions associated with monotonicity between productivity and variable inputs and moment conditions in identifying input parameters. We implemented our methodology in a group of 4286 manufacturing firms from France, Germany, Italy, and the United Kingdom (2001-2014). The results show that: (i) aggregate shocks matter for firm TFP evolution. The global financial crisis of 2008 caused severe adverse effects on TFP albeit short in duration; (ii) there is substantial heterogeneity across countries in the way firms react to changes in R&D and taxation. German and U.K. firms are more sensitive to fiscal changes than R\&D, while Italian firms are the opposite. R\&D and taxation effects are symmetrical for French firms; (iii) the U.K. productivity handicap continued for years after the financial crisis; (iv) industrial clusters promote knowledge diffusion among German and Italian firms.
    Keywords: Total Factor Productivity (TFP), Control Function, Non-parametric Bayesian Estimation, Markov Chain Monte Carlo(MCMC), Research and Development (R\&D), Taxation, European firms
    JEL: C11 D24 H21 H25 Q55
    Date: 2023–07–21
  6. By: Koch, Florian; Hoellen, Max; Konrad, Elmar D.; Kock, Alexander
    Abstract: Creative industries contain paradoxes because conflicting tensions arise between the market and the arts. Entrepreneurs need to find and maintain a balance between those two sides to create innovation. This study tests the interaction between business and creative orientations of a founder in their influence on innovation in the context of creative entrepreneurial firms and provides recommendations for how creative agents can leverage and manage their innovations based on their creative visions. Determinants on the individual level, such as the founder's creative or business orientations, have a lasting impact on the practices and process of their venture. To trace the imprinting influence of the founder's orientation on innovation, the empirical setting is a time‐lagged study of German firm owners in the cultural and creative industries surveyed 5 years apart. The results show a significant relationship between creative orientation and innovation, whereas business orientation does not significantly relate to innovation. However, creative and business orientations reveal a negative interaction effect. This study contributes empirical evidence to the paradox theory and the interaction between the opposite poles. Our findings provide valuable insights about the relevance of creative orientation and its visionary impact on the firms' innovation process. Furthermore, the results shed new light on the tension between art and the market, as different compositions of the two orientation poles seem to have a varying impact on the degree of innovation. Thus, the study reveals the complexity of creative entrepreneurship and provides managerial guidance for other knowledge‐based industries.
    Date: 2023
  7. By: David Ardia; Cl\'ement Aymard; Tolga Cenesizoglu
    Abstract: We analyze Robinhood (RH) investors' trading reactions to intraday hourly and overnight price changes. Contrasting with recent studies focusing on daily behaviors, we find that RH users strongly favor big losers over big gainers. We also uncover that they react rapidly, typically within an hour, when acquiring stocks that exhibit extreme negative returns. Further analyses suggest greater (lower) attention to overnight (intraday) movements and exacerbated behaviors post-COVID-19 announcement. Moreover, trading attitudes significantly vary across firm size and industry, with a more contrarian strategy towards larger-cap firms and a heightened activity on energy and consumer discretionary stocks.
    Date: 2023–07
  8. By: Pol Antràs; Evgenii Fadeev; Teresa C. Fort; Felix Tintelnot
    Abstract: Multinational firms (MNEs) dominate trade flows, yet their global production decisions are often ignored in firm-level studies of exporting and importing. Using newly merged data on US firms' trade and multinational activity by country, we show that MNEs are more likely to trade not only with countries in which they have affiliates, but also with other countries within their affiliates' region. We rationalize these patterns with a new source of firm-level scale economies that arises when country-specific fixed costs to source from, or sell in, a market are shared across all the MNE's plants. These shared fixed costs create interdependencies between a firm's production and trade locations that generate third-market responses to bilateral trade policy changes.
    JEL: F1 F2
    Date: 2023–07

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