nep-bec New Economics Papers
on Business Economics
Issue of 2024‒04‒01
seven papers chosen by
Vasileios Bougioukos, London South Bank University

  1. Local networks and new business formation By Füner, Lena; Berger, Marius; Bersch, Johannes; Hottenrott, Hanna
  2. Women director interlocks and firm performance: Evidence from India By Shreya Biswas; Jayati Sarkar; Ekta Selarka
  3. Firms and Unions By Sezer, Ayse Hazal; Uras, Burak
  4. Innovation: The Bright Side of Common Ownership? By Miguel Antón; Florian Ederer; Mireia Giné; Martin C. Schmalz
  5. The great divergence(s) By Berlingieri, Giuseppe; Blanchenay, Patrick; Criscuolo, Chiara
  6. Cross-ownership in duopoly: Are there any incentives to divest? By Rupayan Pal; Emmanuel Petrakis
  7. Air pollution and firm-level human capital, knowledge and innovation By Tiago Cavalcanti; Kamiar Mohaddes; Hongyu Nian; Haitao Yin

  1. By: Füner, Lena; Berger, Marius; Bersch, Johannes; Hottenrott, Hanna
    Abstract: New business formation is a key driver of regional transformation and development. While we know that a region's attractiveness for new businesses depends on its resources, infrastructure, and human capital, we know little about the role of local business networks in promoting or impeding the birth of new firms. We construct local business networks connecting more than 350 million nodes consisting of managers, owners and firms using administrative data on all German businesses from 2002 to 2020. Differentiating between serial and de-novo entrepreneurs, we show a positive but decreasing relation between a region's connectedness and firm entry of serial entrepreneurs. Networks are, moreover, positively linked to firm survival. Relating our findings to a measure of ownership concentration, we show that networks provide additional explanations for regional variation in new business formations. These patterns are robust to synthetic instrumental variable estimations
    Keywords: New Firm Formation, Business Networks, Serial Entrepreneurship, RegionalDynamics, Ownership Concentration
    JEL: L14 L26 M13 O31
    Date: 2023
  2. By: Shreya Biswas (Birla Institute of Technology and Science, Pilani, Hyderabad Campus); Jayati Sarkar (Indira Gandhi Institute of Development Research); Ekta Selarka (Madras School of Economics)
    Abstract: This paper empirically examines the impact of network ties of women directors on firm value and sheds light on the unaddressed issue of whether such ties can serve as one of the channels through which women on board affect firm performance. In doing so, the study also seeks to provide a gendered perspective of the performance effects of interlocking directorates on which empirical evidence is scant. Using a panel of listed firms in India for the period 2010-2020 covering periods of pre and post institution of gender quota on company boards, our study finds that women director connectedness, as captured in select network centrality measures, has a positive and robust effect on firm value. We further find evidence that the positive relationship with firm value is driven by the information advantage and influence of women director networks. Finally, based on a director level analysis, we find that more connected women directors, including those who are independent, contribute to corporate governance through higher meeting attendance, and through their memberships in important committees. The findings of the paper highlight the unique role of women director interlocks in firm governance and performance.
    Keywords: Interlocking directors, Firm value, Woman directors, Network centrality, India, Emerging markets
    JEL: G32 G34 G38
    Date: 2023–12
  3. By: Sezer, Ayse Hazal (Tilburg University, Center For Economic Research); Uras, Burak (Tilburg University, Center For Economic Research)
    Keywords: Firm Size; Productivity; Wages; Scalability; Industry Dynamics; Automation; Unions
    Date: 2024
  4. By: Miguel Antón; Florian Ederer; Mireia Giné; Martin C. Schmalz
    Abstract: Firms have inefficiently low incentives to innovate when other firms benefit from their inventions and the innovating firm therefore does not capture the full surplus of its innovations. We show that common ownership of firms mitigates this impediment to corporate innovation. By contrast, without technological spillovers, innovation has the effect of stealing market share from rivals; in that case, more common ownership reduces innovation. Empirically, the association between common ownership and innovation inputs and outputs decreases with product market proximity and increases with technology proximity. The sign and magnitude of the overall relationship between common ownership and corporate innovation thus varies considerably across the universe of firms depending on their relative proximity in technology and product market space. These results persist if we use only variation from BlackRock's acquisition of BGI. Our results inform the debate about the welfare effects of increasing common ownership among U.S. corporations.
    JEL: G30 L20 L40 O31
    Date: 2024–03
  5. By: Berlingieri, Giuseppe; Blanchenay, Patrick; Criscuolo, Chiara
    Abstract: This paper provides new evidence on the increasing dispersion in wages and productivity using a unique micro-aggregated firm-level data source, representative for the full population of firms in 12 countries. First, we document an increase in wage and productivity dispersions, for both manufacturing and market services, and show that the increase is mainly driven by the bottom of the wage and productivity distributions. Second, we show that between-firm wage dispersion increased more in sectors that experienced an increase in productivity dispersion; the estimated elasticity is larger at the bottom than at the top of the wage/productivity distributions, consistent with a framework in which more productive firms charge higher mark-ups and/or larger wage mark-downs. Third, we find that both globalisation and digitalisation strengthen the link between productivity and wage dispersion. Our results suggest that policies designed to mitigate wage inequality must take into consideration gaps between firms of the same sectors, and how both globalisation and digitalisation affect these gaps.
    Keywords: digitalisation; dispersion; globalisation; productivity; wages
    JEL: J50
    Date: 2024–04–01
  6. By: Rupayan Pal (Indira Gandhi Institute of Development Research); Emmanuel Petrakis (Departamento de Econom¡a, Universidad Carlos III de Madrid)
    Abstract: This paper shows that in a duopoly a firm has no incentives to divest its passive shares in its rival when firms' strategies are strategic complements. This holds independently whether goods are substitutes or complements and whether firms engage in simultaneous or sequential move product market competition. However, if firms' strategies are strategic substitutes and are engaged in simultaneous move competition, it is optimal for both firms to fully divest their shares in their rivals under a private placement mechanism via independent intermediaries or under competitive bidding. Yet, in the sequential move game only the follower has such incentives. Notably, under a private placement mechanism via a common intermediary, there are circumstances under which there are partial or no firms' divestment incentives, highlighting that the divestment mechanism employed by firms may have a crucial role on their divestment incentives.
    Keywords: Cross-ownership, passive shares, strategic substitutes and complements, divestment incentives, market competition
    JEL: L13 L41 L2 D43
    Date: 2024–02
  7. By: Tiago Cavalcanti; Kamiar Mohaddes; Hongyu Nian; Haitao Yin
    Keywords: Pollution, human capital, knowledge, innovation, China
    JEL: O15 O30 O44 Q51 Q56
    Date: 2023–01

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