nep-bec New Economics Papers
on Business Economics
Issue of 2024‒02‒26
ten papers chosen by
Vasileios Bougioukos, London South Bank University

  1. Firms in product space: Adoption, growth and competition By Luca Macedoni; John Morrow; Vladimir Tyazhelnikov
  2. The impact of Covid-19 on productivity By Bloom, Nicholas; Bunn, Philip; Mizen, Paul; Smietanka, Pawel; Thwaites, Gregory Douglas
  3. FDI and superstar spillovers: evidence from firm-to-firm transactions By Amiti, Mary; Duprez, Cedric; Konings, Jozef; Van Reenen, John
  4. Skilled Immigration Frictions as a Barrier for Young Firms By Federico S. Mandelman; Mehra Mishita; Hewei Shen
  5. Firm Level Expectations and Macroeconomic Conditions: Underpinnings and Disagreement By Monique Reid; Pierre Siklos
  6. Economic Growth through Basic Research by Firms: A science linkage approach By NIREI Makoto; OIKAWA Koki; OROKU Masahiro
  7. Business Restructuring and Corporate Governance: Evidence from survey data By TAKAHASHI Hidetomo; XU Peng
  8. Employment Protection Legislation and Job Reallocation across Sectors, Firms and Workers: A Survey By Cahuc, Pierre; Palladino, Marco G.
  9. Does subsidising business advice improve firm performance? Evidence from a large RCT By Gonzalo Nunez-Chaim; Henry G. Overman; Capucine Riom
  10. De-Routinization in the Fourth Industrial Revolution - Firm-Level Evidence By Arntz, Melanie; Genz, Sabrina; Gregory, Terry; Lehmer, Florian; Zierahn-Weilage, Ulrich

  1. By: Luca Macedoni; John Morrow; Vladimir Tyazhelnikov
    Abstract: Which products are potentially produced together? When demand for a product increases, which firms will supply it? Using multi-product production patterns within and across firms, we recover a continuous cost based distance between firms and unproduced products. Higher product distance implies decreasing adoption frequency. When export demand induces domestic product adoption, closer firms provide this supply. Potential costs imply measures of Revenue and Competition Potential. These predict firm sales growth, scope growth and core focus. If all firms produced all products linked by co-production, consumer welfare would increase by 10-30%.
    Keywords: multi-product firms, firm capabilities, product classification, product space, growth paths
    Date: 2024–02–02
  2. By: Bloom, Nicholas; Bunn, Philip; Mizen, Paul; Smietanka, Pawel; Thwaites, Gregory Douglas
    Abstract: We analyse the impact of Covid-19 on productivity using data from an innovative monthly firm survey panel that asks for quantitative impacts of Covid on inputs and outputs. We find total factor productivity (TFP) fell by up to 5% during 2020-21. The overall impact combined large reductions in 'within-firm' productivity, with an offsetting positive 'between-firm' effects as less productive sectors, and less productive firms within them, contracted. Despite these large pandemic effects, firms' post-Covid forecasts imply surprisingly little lasting impact on aggregate TFP. We also see significant heterogeneity over firms and sectors, with the greatest impacts in those requiring extensive in-person activity. We also ask about unmeasured inflation in the form of deteriorating product quality, finding an additional 1.4% negative impact on TFP.
    Keywords: Covid-19; productivity; coronavirus
    JEL: D24 D84 E24 E32 O47
    Date: 2023–06–26
  3. By: Amiti, Mary; Duprez, Cedric; Konings, Jozef; Van Reenen, John
    Abstract: Using firm-to-firm transactions, we show that starting to supply a "superstar" firm (large domestic firms, exporters and multinationals) boosts productivity by 8% in the medium-run. Placebos on starting relationships with smaller firms and novel identification strategies support a causal interpretation of "superstar spillovers". Consistent with a model of technology transfer, we find falls in markups and bigger treatment effects from technology-intensive superstars. We also show that the increase in new buyers is particularly strong within the superstar firm's network, a "dating agency" effect. This suggests an important role for raising productivity through superstars' supply chains regardless of their multinational status.
    Keywords: productivity; FDI; spillovers; POID
    JEL: F23 O30 F21
    Date: 2023–04–21
  4. By: Federico S. Mandelman; Mehra Mishita; Hewei Shen
    Abstract: This paper studies the impact of skilled immigration policy frictions in the United States on technology-intensive firms by age cohorts. We use firm-level data and a general equilibrium model with endogenous firm entry and exit. The empirical results show that skilled immigration policy frictions directly influence young firm dynamics in technology-intensive sectors by affecting firm survival. Our general equilibrium model incorporates skilled foreign labor and immigration policy frictions that mimic the H-1B policy and matches the age distribution of firms in high-technology sectors, showing also that increased entry of younger firms leads to a greater exit of older firms.
    Keywords: skilled immigration; start-ups; high-technology firms; firm dynamics
    JEL: F22 M13
    Date: 2024–02–05
  5. By: Monique Reid; Pierre Siklos
    Abstract: Abundant evidence that the inflation expectations of financial analysts differ in economically important ways from those of non-financial specialists, has been followed by increasing demand for firm level data, in an attempt to more accurately capture the views of price setters. The unusually rich firm level survey data from South Africa allows us to explore some of the ways in which the expectations of firms differ from that those of other groups surveyed. We focus specifically on forecast disagreement, which can offer insights about the level of uncertainty reflected in the data, as well as the degree to which expectations are anchored. We find that divergence of inflation forecasts amongst respondents is partly explained by differences in how respondents believe the broader macroeconomy is evolving. We also consider the impact of different types of aggregation of the data. It is when we construct a new measure of macroeconomic disagreement that combines all the variables being forecast that we are able to see that forecasters responded sharply in early 2020 as the pandemic emerged.
    Keywords: forecast disagreement, firm level, labor, professional forecasts, Bureau of Economic Research, South African Reserve Bank
    JEL: E37 E31 E47 E32 E58
    Date: 2024–01
  6. By: NIREI Makoto; OIKAWA Koki; OROKU Masahiro
    Abstract: Patents applied by private firms occasionally cite scientific papers. We regard these citations as a signal that the research project of the applying firms involves basic research, and examine the relationship between basic research and firm performance. Firms conducting basic research are more likely to earn higher profit margins, while no monotonic relationship is observed between basic research and sales size. We then construct an endogenous growth model incorporating the basic research investment by heterogeneous firms. Firms' decisions regarding basic research depend on firm size, the necessity for basic research for developing their products, and the degree of knowledge spillover from external basic research results. Quantitative analysis using this model reveals how basic research spillover effects impact economic growth, and how declining R&D efficiency, which has been reported in the literature in recent years, leads to lower growth. Furthermore, we compare public basic research investment with basic research subsidies and demonstrate that the latter is more efficient as a growth policy.
    Date: 2024–02
  7. By: TAKAHASHI Hidetomo; XU Peng
    Abstract: Utilizing a unique questionnaire survey, we investigate difficulties in actual exit and organizational weaknesses in dealing with exit. Less profitable companies are more likely to answer that they have difficulties in making decisions related to downsizing and exit due to a lack of criteria. The higher the foreign investor ownership ratio and the higher the leverage, the less likely that firms answer that the internal procedures for deciding divestment lack clarity. Market-to-book ratio and the presence of a labor union increase problems associated with coordination with employees and with succession of employment after a sale. Interestingly, cash holdings per lifetime employee alleviate the labor problem concerning divestment. In terms of organization, small firms, high valuable firms, and cash rich firms are less likely to have criteria for evaluating divestment. Executive ownership significantly increases the likelihood of criteria but increasing size of board of directors decreases the existence of criteria. Likewise, small firms, high valuable firms, and cash rich firms tend not to have a process for evaluating divestment. Firms with high executive ownership or high foreign investors’ ownership are more likely to have procedures in place for evaluating downsizing and exit in response to such proposals. The effect of outside directors on the criteria and process for exit decision making as well as on issues involved in actual exit is insignificant.
    Date: 2024–01
  8. By: Cahuc, Pierre (Sciences Po, Paris); Palladino, Marco G. (Banque de France)
    Abstract: This paper provides a review of the existing literature on the effects of employment protection legislation (EPL) on job allocation across industries, firms, and workers, and its implications for innovation and economic growth. We analyze empirical studies to assess how EPL influences resource allocation, firm dynamics, and labor market segmentation. The review highlights the heterogeneous effects of EPL on different firms and workers' groups. Additionally, we discuss the channels identified in the structural literature through which EPL-induced job reallocation affects productivity, innovation, and overall growth. While existing evidence demonstrates the significant influence of EPL on all these outcomes, further quantification of these effects remains a research challenge.
    Keywords: job protection, job allocation, economic growth, productivity, innovation
    JEL: J23 O47
    Date: 2024–01
  9. By: Gonzalo Nunez-Chaim; Henry G. Overman; Capucine Riom
    Abstract: We evaluate the impact of the UK's Growth Vouchers Programme, which offered subsidised business advice to 15, 207 randomly selected small and medium size enterprises. Using administrative and survey data, we show that the programme increased turnover by 8.2% but only in the short-term and potentially at the expense of non-supported firms. We find that subsidised advice appears to improve firms' capabilities and practices in a way that is consistent with the increase in turnover. We also demonstrate that propensity score matching introduces a sizeable upward bias to estimated effects on turnover and employment and that this bias grows over time.
    Keywords: firm performance, enterprise growth, entrepreneurship
    Date: 2024–01–29
  10. By: Arntz, Melanie (ZEW Mannheim); Genz, Sabrina (Utrecht University); Gregory, Terry (LISER); Lehmer, Florian (Institute for Employment Research (IAB), Nuremberg); Zierahn-Weilage, Ulrich (Utrecht University)
    Abstract: This paper examines the extent to which aggregate-level de-routinization can be attributed to firm-level technology adoption during the most recent technological expansion. We use administrative data and a novel firm survey to distinguish frontier technologies from older technologies. We find that adopters of frontier technologies contribute substantially to deroutinization. However, this is driven only by a subset of these firms: large adopters replace routine jobs and less routine-intensive adopters experience faster growth. These scale and composition effects reflect firms' readiness to adopt and implement frontier technologies. Our results suggest that an acceleration of technology adoption would be associated with faster de-routinization and an increase in between-firm heterogeneity.
    Keywords: technology, automation, tasks, capital-labor substitution, decomposition
    JEL: J21 J23 J24 O33
    Date: 2024–01

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