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on Business Economics |
| By: | Yao Lu; Gordon M. Phillips; Jia Yang |
| Abstract: | We examine the rise of cloud computing and AI in China and their impacts on industry dynamics after the shock to the cost of Internet-based computing power and services. We find that cloud computing is associated with an increase in firm entry, exit and the likelihood of M&A in industries that depend more on cloud infrastructure. Conversely, AI adoption has no impact on entry but reduces the likelihood of exit and M&A. Firm size plays a crucial role in these dynamics: cloud computing increases exit rates across all firms, while larger firms benefit from AI, experiencing reduced exit rates. Cloud computing decreases industry concentration but AI increases concentration. On the financing side, firms exposed to cloud computing increase equity and venture capital financing, while only large firms increase equity financing when exposed to AI. |
| JEL: | D25 G3 G34 L20 L23 L25 |
| Date: | 2024–08 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:32811 |
| By: | Bíró, A.;; Elek, P.; |
| Abstract: | We provide evidence on the impact of firm productivity on the health maintenance of employees. Using linked employer-employee administrative panel data supplemented with healthcare records from Hungary, we analyze the dynamics of healthcare use before and after moving to a new firm. We show that moving to a more productive firm leads to higher consumption of drugs for cardiovascular conditions and more physician visits, without evidence of deteriorating physical health, and, among older workers, to lower consumption of medications for mental health conditions. The results suggest that more productive firms have a beneficial effect on the detection of previously undiagnosed chronic illnesses and on the mental health of their employees. Plausible mechanisms include the higher quality of occupational health check-ups and less stressful job conditions. |
| Keywords: | firm productivity; healthcare use; mover identification; preventive care; |
| JEL: | I10 J32 J62 |
| Date: | 2024–08 |
| URL: | https://d.repec.org/n?u=RePEc:yor:hectdg:24/13 |
| By: | Mawdsley, John (HEC Paris); Paolella, Lionel (University of Cambridge- Judge Business School); Durand, Rodolphe (HEC Paris) |
| Abstract: | We offer a rivalry-based perspective of gender diversity as a form of competitive action. We theorize that a firm adjusts its senior-level female representation when they identify business opportunities that may be seized by demonstrating alignment to gender parity expectations. Examining US corporate law firms and potential buyers of their services, we theorize and find that when the buyers of rivals of the focal firm increase their gender diversity, the focal firm responds by increasing its female partner representation. Reinforcing the strategic approach to managing gender diversity, we also show that a focal firm reduces its gender-related response to rivals’ buyers as the opportunity to attract those buyers decreases, and when the focal firm can use racial diversity as a credible substitute for gender diversity. |
| Keywords: | Gender diversity; Competitive positioning; Rivalry; Strategic human capital; Buyer-supplier relationships; Professional service firms |
| JEL: | M14 |
| Date: | 2022–10–24 |
| URL: | https://d.repec.org/n?u=RePEc:ebg:heccah:1460 |
| By: | Chuantao Cui (Bay Area International Business School, Beijing Normal University); Leona Shao-Zhi Li (University of Macau) |
| Abstract: | This study explores how local leaders’ career incentives influence entrepreneurial activity in China. We identify a positive relationship between high-incentive leaders and the entry rate of new manufacturing firms, facilitated by access to capital and land and the implementation of place-based policies. However, firms that enter the market under high-incentive leaders tend to experience lower productivity growth and lower survivability, highlighting a quantity–quality trade-off. This quality deficit is linked to a mismatch between the types of new entrants and local economic fundamentals. Additionally, the responsiveness of manufacturing exit rates, productivity growth of existing manufacturers, and service firm dynamics to leader incentives appears minimal. Overall, by illuminating both the advantages and limitations of second-best institutions through the lens of firm entry, our study provides new insights into the institutions–growth nexus and offers a cohesive framework for understanding the growth and slowdown of the Chinese economy. |
| Keywords: | Informal institution; career incentives; economic growth; firm dynamics; entrepreneurship |
| JEL: | H70 L26 O43 P35 |
| Date: | 2024–08 |
| URL: | https://d.repec.org/n?u=RePEc:boa:wpaper:202417 |
| By: | Erhardt, Katharina; Gupta, Apoorva |
| Abstract: | This paper aims to understand the pathways by which exporters become entities that sell multiple goods to multiple customers. To understand firms' export strategies, we analyse new trade flows - new seller-buyer-product combinations - of individual exporters. Our first finding highlights that these new trade flows are an important margin for firms of all size classes, accounting for approximately 62% of their overall trade flows. Classifying new trade flows into going-wide (introducing new products) and going-deep (reaching new buyers for existing products), we find that the dominant margin of export expansion depends on the size and life-cycle stage of exporters; smaller firms rely relatively more on going-wide and large firms more on going-deep. We also demonstrate that selling new products is different from selling existing products: Firms target new products to a single, often new, buyer. To rationalize these facts, we propose a conceptual framework where firms allocate scarce sales personnel between selling existing products to more buyers and matching with new buyers for introducing new products. We empirically test and confirm the model's key predictions. In particular, we use the 2015 Swiss exchange rate shock and show that going-deep is more pronounced as an export strategy when a firm's effective market size is relatively larger. The findings suggest varying scope and size for firms born in different phases of globalisation. |
| Keywords: | Export strategies, product introduction, customer accumulation, buyer-seller relationships, multi-product firms |
| JEL: | F10 F14 L25 O31 |
| Date: | 2024 |
| URL: | https://d.repec.org/n?u=RePEc:zbw:dicedp:301154 |
| By: | Mons Chan; Guangbin Hong; Joachim Hubmer; Serdar Ozkan; Sergio Salgado |
| Abstract: | Do larger firms have more productive technologies or are their technologies more scalable, or both? We use administrative data on Canadian and US firms to estimate flexible nonparametric production functions. Our estimation results in a joint distribution of output elasticities of capital, labor, and intermediate inputs---therefore, returns to scale (RTS)---along with total factor productivity (TFP). We find significant heterogeneity in both RTS and TFP across firms. Larger firms operate technologies with higher RTS, both across and within industries. Higher RTS for large firms are entirely driven by higher intermediate input elasticities. Descriptively, these align with higher intermediate input revenue shares. We then incorporate RTS heterogeneity into an otherwise standard incomplete markets model with endogenous entrepreneurship that matches the observed heterogeneity in TFP and RTS. In this model, we find that the efficiency losses of financial frictions are more than twice as large relative to the conventional calibration that loads all heterogeneity on TFP and imposes a common RTS parameter. |
| Keywords: | production function heterogeneity; returns to scale; misallocation |
| JEL: | E22 L11 |
| Date: | 2024–07–11 |
| URL: | https://d.repec.org/n?u=RePEc:fip:fedlwp:98702 |
| By: | Yotzov, Ivan (Bank of England); Bloom, Nicholas (Stanford University); Bunn, Philip (Bank of England); Mizen, Paul (King’s College London); Thwaites, Gregory (University of Nottingham) |
| Abstract: | This paper analyses the response of firms to monthly CPI inflation releases using high-frequency data from a large economy-wide business survey. CPI inflation perceptions respond very quickly, in a matter of hours after the release. We also find that firms’ expected own-price growth has a strong positive correlation with changes in CPI inflation, particularly for increases in inflation. This sensitivity is stronger when inflation is high. Firms are also more responsive when inflation coverage in the media is elevated and appear to have had a supply-side view of the economy since 2022: higher aggregate inflation leads to lower expected sales volume growth and higher expected cost growth. Firms also seem to anticipate the monetary policy response, as positive inflation changes are associated with higher expected borrowing rates. |
| Keywords: | Inflation; inflation expectations; survey data; firms |
| JEL: | C83 D22 D84 E31 |
| Date: | 2024–08–06 |
| URL: | https://d.repec.org/n?u=RePEc:boe:boeewp:1085 |