nep-bec New Economics Papers
on Business Economics
Issue of 2024‒03‒11
eight papers chosen by
Vasileios Bougioukos, London South Bank University

  1. Family ties and firm performance empirical evidence from East Asia By Christophe J. Godlewski; Hong Nhung Le
  2. Superstar Firms and Aggregate Fluctuations By Qazi Haque; Oscar Pavlov; Mark Weder
  3. Productivity, markups, and reallocation: Evidence from French manufacturing firms from 1994 to 2016 By De Monte, Enrico
  4. Virtual collaboration technology and international business coaching: examining the impact on marketing strategies and sales By Anderson, Stephen J.; Chintagunta, Pradeep; Vilcassim, Naufel J.
  5. Earnings Dynamics and Firm-Level Shocks By Benjamin Friedrich; Lisa Laun; Costas Meghir; Luigi Pistaferri
  6. Gravity Trade Model with Firm Heterogeneity and Horizontal FDI By Luckstead, Jeff; Devadoss, Stephen; Zhao, Xin
  7. De-routinization in the fourth industrial revolution: Firm-level evidence By Arntz, Melanie; Genz, Sabrina; Gregory, Terry; Lehmer, Florian; Zierahn-Weilage, Ulrich
  8. Evidence on the Adoption of Artificial Intelligence: The Role of Skills Shortage By Paolo Carioli; Dirk Czarnitzki; Gastón P Fernández Barros

  1. By: Christophe J. Godlewski (LARGE - Laboratoire de Recherche en Gestion et Economie - UNISTRA - Université de Strasbourg); Hong Nhung Le (LARGE - Laboratoire de Recherche en Gestion et Economie - UNISTRA - Université de Strasbourg)
    Abstract: We investigate the impact of family ties on the performance of family firms in East Asia. To measure family ties, we used both objective and subjective indicators from the World Value Survey. Our findings indicate that family firms that are nurtured in a society with strong family ties tend to have better performance compared to family firms that operate in a culture with weak family ties. Furthermore, family firms that have strong familial relationships are more likely to gain a competitive advantage over nonfamily firms. Conversely, family firms with weak ties tend to underperform nonfamily firms. Our results are robust across various measures of firm performance, classifications of family firm, considerations of heteroskedasticity and endogeneity, and different econometric methods.
    Date: 2024–01–26
  2. By: Qazi Haque; Oscar Pavlov; Mark Weder
    Abstract: The rise of market power in the last decades is primarily driven by the largest firms. We propose a theory of these superstar firms in which their technology involves the ability to produce multiple products. Superstars interact with smaller competitors and market share reallocations and product creation generate heterogeneous markup dynamics across firms. Higher market shares of superstars increase the parameter space for macroeconomic indeterminacy. Bayesian estimation of the general equilibrium model suggests the importance of the endogenous amplification of the product creation channel and animal spirits play a non-trivial role in driving U.S. business cycles.
    Keywords: superstars, multi-product firms, business cycles, animal spirits, Bayesian estimation
    JEL: E32
    Date: 2024–02
  3. By: De Monte, Enrico
    Abstract: This paper investigates the evolution of aggregate productivity and markups among French manufacturing firms between 1994 and 2016, by focusing on the role of reallocation with respect to both aggregate measures. Firm-level productivity and markups are estimated based on a gross output translog production function using popular estimation methods. I find an aggregate productivity growth of about 34% over the whole period while aggregate markups are found to remain relatively stable. As a key finding the study shows that over time reallocation of sales shares affects differently aggregate productivity and markups: Before 2000 both aggregate productivity and markups are importantly driven by reallocation effects; Post-2000, instead, the contribution of reallocation to aggregate productivity becomes negligible, inducing a slowdown in aggregate productivity growth, while I measure persistent reallocation of sales shares from lower to higher markup firms. Policy relevant implications of these dynamics are discussed.
    Keywords: productivity decomposition, production function estimation, business dynamism, market power, entry and exit
    JEL: C13 D21 D24 L16 L60 O47
    Date: 2024
  4. By: Anderson, Stephen J.; Chintagunta, Pradeep; Vilcassim, Naufel J.
    Abstract: This paper studies the impact of international business coaching via virtual collaboration technology on the strategies and sales of emerging market entrepreneurs. It sheds light on three novel research questions: (1) What is the effect of virtual business coaching on firm sales? (2) What is the mechanism through which this effect occurs; specifically, does virtual coaching stimulate shifts in marketing strategy? (3) Do entrepreneurs benefit more from virtual coaching when they are less strategic in their decision-making? We conducted a randomized controlled field experiment with 930 entrepreneurs in Uganda to examine the impact of a virtual coaching intervention that connects management professionals in primarily advanced markets and entrepreneurs in emerging markets with the aim of improving business performance. The analysis finds a positive and significant main effect on firm sales – treatment entrepreneurs increase monthly sales by 27.6% on average. In addition, entrepreneurs who receive virtual coaching are 52.8% more likely to have shifted their marketing strategy in a new direction. Moreover, consistent with this mechanism of inducing strategic business changes, the results show that entrepreneurs who receive virtual coaching tend to do better when they (ex ante) lack strategic focus. These results have important implications for the development of marketing strategies by entrepreneurs and multinational managers, as well as for policymakers interested in improving the performance of small firms in emerging markets and beyond.
    Keywords: marketing strategy innovation; strategic shift; business model change; pivoting; international business coaching; virtual collaboration technology; Covid-19 and remote work; small firm growth; entrepreneurship; joint Growth Research Program; Marshall Institute
    JEL: J50
    Date: 2023–11–10
  5. By: Benjamin Friedrich (Northwestern University); Lisa Laun (The Institute for Evaluation of Labour Market and Education Policy (IFAU)); Costas Meghir (Yale University); Luigi Pistaferri (Stanford University)
    Abstract: We use matched employer-employee data from Sweden to study the role of the Þrm in affecting the stochastic properties of wages. Our model accounts for endogenous participation and mobility decisions. We find that firm-specific permanent productivity shocks transmit to individual wages, but the effect is mostly concentrated among the high- skilled workers. The pass-through of temporary shocks is smaller in magnitude and similar for high- and low-skilled workers. The updates to worker-Þrm specific match effects over the life of a Þrm-worker relationship are small. Substantial growth in earnings variance over the life cycle for high-skilled workers is driven by Þrms. In particular, cross-sectional wage variances by age 55 are roughly one- third higher relative to a scenario with no pass-through of Þrm shocks onto wages.
    Date: 2024–02
  6. By: Luckstead, Jeff; Devadoss, Stephen; Zhao, Xin
    Keywords: Agribusiness, Agricultural Finance, International Relations/Trade
    Date: 2023–12
  7. By: Arntz, Melanie; Genz, Sabrina; Gregory, Terry; Lehmer, Florian; Zierahn-Weilage, Ulrich
    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
  8. By: Paolo Carioli; Dirk Czarnitzki; Gastón P Fernández Barros
    Abstract: Artificial Intelligence (AI) is considered to be the next general-purpose technology, with the potential of performing tasks commonly requiring human capabilities. While it is commonly feared that AI replaces labor and disrupts jobs, we instead investigate the potential of AI for overcoming increasingly alarming skills shortages in firms. We exploit unique German survey data from the Mannheim Innovation Panel on both the adoption of AI and the extent to which firms experience scarcity of skills. We measure skills shortage by the number of job vacancies that could not be filled as planned by firms, distinguishing among different types of skills. To account for the potential endogeneity of skills shortage, we also implement instrumental variable estimators. Overall, we find a positive and significant effect of skills shortage on AI adoption, the breadth of AI methods, and the breadth of areas of application of AI. In addition, we find evidence that scarcity of labor with academic education relates to firms exploring and adopting AI.
    Keywords: Artificial Intelligence, CIS data, skills shortage
    Date: 2024–02–08

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