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on Business Economics |
| By: | Mohammad H. Sepahvand; Sankar Placide Some; Annika Lindskog; Ann-Sofie Isaksson; Heather Congdon Fors |
| Abstract: | This study analyzes how violent conflict influences taxation in a poor, conflict-affected country, Burkina Faso. We use a unique, large, and representative panel dataset on tax collection of firms between 2015 and 2022 and geographically match these data with indicators of violent conflict at the municipal level. We find that firms pay a lower amount of tax in areas affected by violence. We also find that both turnover and firm survival decrease in areas as they become more insecure. |
| Keywords: | Violent conflict, Business tax, Firms, Burkina Faso |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:unu:wpaper:wp-2025-115 |
| By: | Iacovone, Leonardo; McKenzie, David; Maloney, William F. |
| Abstract: | A randomized experiment tested the effectiveness of individual and small group–based consulting services on firms in the Colombian auto parts industry, finding improvements in management and firm performance over three to four years. This paper uses administrative data to track these firms for up to a decade. Firms in the group consulting intervention are more likely to survive, have higher employment, and have increased sales and profits by approximately 50 percent. This longer-term growth appears to in part come through increased exporting as well as persistent management improvements. The more expensive individual consulting has smaller and not statistically significant long-run impacts. |
| Date: | 2026–01–07 |
| URL: | https://d.repec.org/n?u=RePEc:wbk:wbrwps:11278 |
| By: | Yuji HONJO; Arito ONO; Daisuke TSURUTA |
| Abstract: | This study examines how regional financial development influences new firm creation and growth in Japan. Using prefecture–year panel data from 2007 to 2023, we distinguish between regional equity and debt capital, proxied by the number of investment limited partnerships and bank branches, respectively. We find that regions with greater equity capital have more newly founded firms and initial public offerings, and provide suggestive evidence of stronger sales growth among young firms (firms within five years of establishment), whereas regional debt capital has no significant effect. Moreover, regional equity capital is associated with higher employment shares of medium- and large-sized young firms and lower shares of small ones, implying that regional equity capital promotes a compositional shift in new firm creation toward larger entrants. These findings are robust to potential endogeneity concerns and to alternative measures of financial development. |
| Date: | 2026–01 |
| URL: | https://d.repec.org/n?u=RePEc:eti:dpaper:26005 |
| By: | Matěj BAJGAR; Keiko ITO; Jonathan TIMMIS |
| Abstract: | We study how R&D spillovers propagate through buyer–supplier networks. The R&D tax credit for large firms in Japan—originally based on incremental increases in R&D expenditures—was revised in 2003 to cover total R&D expenditures. This reduced the cost of marginal R&D outlays for large firms below the ceiling on R&D expenditure, but not for large firms above the ceiling or for SMEs. In a difference-in-differences setting, we find that the reform increased R&D expenditure, innovative output and sales of the treated firms. We further present evidence of positive forward spillovers to downstream firms: the reform led to productivity increases among firms that had a greater share of suppliers treated by the reform. Conversely, we do not find any evidence of backward spillovers to upstream firms. We also do not find any robust effects of the reform on the R&D expenditure and economic performance of Japanese firms' overseas affiliates. |
| Date: | 2025–12 |
| URL: | https://d.repec.org/n?u=RePEc:eti:dpaper:25127 |
| By: | Artunç, Cihan; Saleh, Mohamed |
| Abstract: | We use a newly assembled dataset covering all Egyptian corporations, their founders, and political officeholders, to demonstrate the differential impact of political connections on firm performance across two distinctive political and economic contexts. Before Egypt’s independence in 1922, political connections reduced firm profitability, as connected firms were perceived to be aligned with the anti-colonial, nationalist movement, unsettling investors. After independence, connections improved firm outcomes by granting preferential access to incorporation and shielding connected companies from competition. These dynamics reflect the shift from a laissez-faire colonial regime to a nationalist industrial policy that selectively favored politically connected firms. |
| Keywords: | political connections; firm dynamics; colonialism; industrial policy |
| JEL: | F54 G38 N45 |
| Date: | 2026–03–31 |
| URL: | https://d.repec.org/n?u=RePEc:ehl:lserod:130454 |
| By: | Kala, Namrata (MIT Sloan School of Management); Haseeb, Muhammad (University of Bristol); Fenske, James (University of Warwick) |
| Abstract: | Effective regulatory design requires an understanding of how regulatory burden affects regulated entities. Using novel data on all applications for environmental permits in five Indian states and a natural experiment, we estimate how regulatory burden of environmental permitting affects firms. Difference-in-difference estimates show that deregulation induces smaller firms to enter and increases entry. Standard data sources would miss these substantial effects, underscoring the importance of collecting data across the firm size distribution. We also use full texts of permit certificates to create novel measures of regulatory burden. Firms in industries with reduced regulations face fewer, less stringent, permit conditions. |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:wrk:warwec:1593 |
| By: | Alejandra Martinez; Dennis Novy; Carlo Perroni |
| Abstract: | A large literature has documented transitivity as a key feature of social networks: individuals are more likely connected with each other if they share common connections with other individuals. We take this idea to trading relationships between firms: firms are more likely to trade with each other if they share common trading partners. Transitivity leads to a clustered pattern of relationship formation and break-up. It is therefore important for understanding how firms meet and how shocks propagate through firm networks. We describe a method for detecting and quantifying transitivity in firm-to-firm transactions, based on systematic deviations from conditional independence across firm-to-firm relationships. We apply the method to Colombia-U.S. exporter-importer data and show in counterfactuals that transitivity is a significant and economically meaningful factor in how firm networks adjust to cost shocks. |
| Date: | 2025–12 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2512.18893 |
| By: | Banri ITO; Eiichi TOMIURA |
| Abstract: | This paper examines the effect of initiating cross-border data flows on firm productivity, using original survey data from Japanese manufacturing and service firms collected in 2019 and 2021, merged with annual productivity measures over 2019–2022. The survey identifies new entrants into cross-border data transfers, enabling a difference-in-differences design that compares “switchers†to firms that either do not collect data or collect data only domestically. We estimate the average treatment effect on the treated using regression-adjustment, inverse probability weighting, and doubly robust AIPW DID estimators, controlling for exporter status, multinational affiliation, R&D intensity, and ICT cost intensity. The results show that firms with higher initial productivity are more likely to start transferring data internationally, which is consistent with self-selection patterns documented in the export- and FDI-related literature. Entry into cross-border data flows is associated with significant productivity gains, which become particularly pronounced in the year after entry. These findings provide rare firm-level evidence from Japan, while also offering broader insights for data-governance debates by highlighting the potential productivity costs of overly restrictive cross-border data regulations. |
| Date: | 2025–12 |
| URL: | https://d.repec.org/n?u=RePEc:eti:dpaper:25125 |
| By: | Rexer, Jonah Matthew; Sharma, Siddharth |
| Abstract: | How do climate shocks shape resource allocation across firms? Rising temperatures might worsen allocative efficiency if large, productive firms face constraints in adapting. This paper assesses this question in India, an economy characterized by informality, misallocation, and extreme heat. The paper uses census data on 42 million non-farm establishments from 1990 to 2013 linked to granular climate histories to estimate the impact of heat on the firm size distribution. A 1 degree Celsius temperature shock reduces firm size by 11.6 percent, with losses concentrated among large, formal firms. Displaced workers reallocate to smaller, informal firms, generating allocative efficiency losses of up to 4.3 percent. In long difference estimates spanning several decades, the relationship reverses: large firms adapt and absorb labor, while small firms contract. This adaptation offsets nearly 60 percent of the short-run labor demand shock. These results highlight a general mechanism of climate adjustment: in the short run, shocks exacerbate misallocation by pushing labor into low-productivity firms, but in the long run, adaptation by larger firms restores efficiency. |
| Date: | 2026–01–08 |
| URL: | https://d.repec.org/n?u=RePEc:wbk:wbrwps:11284 |
| By: | Kyoji FUKAO; Tetsushi HORIE; Tomohiko INUI; Takafumi KAWAKUBO; Young Gak KIM; Hyeog Ug KWON; Hongyong ZHANG |
| Abstract: | This study examines the extent to which imported intermediate inputs lead to biased estimates of firm-level total factor productivity (TFP) growth, a phenomenon referred to as “offshoring bias.†To this end, we construct a novel firm-level dataset by linking the Japanese customs data with the financial information. We newly develop firm-specific import deflators at the granular Harmonized System 9-digit product level and use them to deflate import values. Comparing TFP estimates based on this approach with those based on commonly used industry-level deflators reveals that the conventional method tends to overestimate TFP growth. Moreover, our regression results indicate that the offshoring bias is more pronounced among firms with higher import shares. This suggests that conventional TFP estimation methods may systematically overestimate productivity growth for firms that rely to a greater extent on imported intermediate inputs. |
| Date: | 2025–12 |
| URL: | https://d.repec.org/n?u=RePEc:eti:dpaper:25129 |
| By: | Jian, Wenze; Lu, Hang; Yang, Zimo; Zhong, Ziqi |
| Abstract: | Using data on Chinese A-share listed firms and regions from 2011–2023, this paper employs a difference-in-differences (DID) framework to evaluate the productivity returns to artificial intelligence (AI) application from both firm-level and societal perspectives. The findings are as follows: First, AI intensity significantly increases firms' total factor productivity (TFP). Second, AI intensity significantly increases social TFP. Third, green financial innovation exerts a significant positive mediating effect on the pathway from AI intensity to firm TFP. Fourth, green financial innovation also partially mediates the pathway from AI intensity to social TFP. Substantively, the paper links micro-level firm transformation with macro-level regional performance, providing empirical evidence and policy implications for understanding the transmission mechanism from digitalization to greening to high-quality growth. |
| Keywords: | AI intensity; TFP; green financial innovation |
| JEL: | F3 G3 J50 |
| Date: | 2026–02–28 |
| URL: | https://d.repec.org/n?u=RePEc:ehl:lserod:130473 |
| By: | Mannarino Valentin |
| Abstract: | This paper applies machine learning techniques to predict which manufacturing firms in Colombia are likely to become exporters, using data from the Encuesta Anual Manufacturera (EAM) and Encuesta de Desarrollo e Innovación Tecnológica (EDIT) for the period 2015–2019. The objective is to estimate each firm’s “distance to export” through a probability score learned from the characteristics of existing exporters. Among the different algorithms tested, Logit with LASSO regularization delivers the best predictive performance, correctly identifying nearly three out of four actual exporters. Building on these predictions, the study introduces an exporting score, a probability measure that ranks firms by their proximity to the export margin. This score captures heterogeneity among non-exporters, anticipates entry and exit dynamics, and highlights sectoral and geographic clusters of latent export potential. In addition, the analysis shows that a set of firm level characteristics consistently emerge as the most relevant predictors across models: importer status, firm size, and combined spillovers, complemented by operational variables such as value added, inventories, and quality certification. The findings offer valuable insights for export promotion policies, enabling more targeted support for firms likely to enter international markets. |
| JEL: | F1 L2 |
| Date: | 2025–12 |
| URL: | https://d.repec.org/n?u=RePEc:aep:anales:4816 |
| By: | Manudeep Bhuller; Lukas Delgado-Prieto; Santiago Hermo; Linnea Lorentzen |
| Abstract: | This paper investigates how institutional wage-setting constraints, such as a national minimum wage or collectively bargained wages, affect firm responses to demand shocks. We develop a framework to interpret heterogeneous shock responses that depend on the constraints firms face, and provide empirical evidence on the relevance of these constraints in shaping firm behavior across three countries with different institutional settings: Portugal, Norway, and Colombia. We discuss the implications of our findings for conventional estimates of rent-sharing and employer wage-setting power. |
| Date: | 2025–12 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2512.19622 |
| By: | Jose Joaquin Lopez (University of Memphis); Ashantha Ranasinghe (University of Alberta) |
| Abstract: | We analyze micro-scale businesses in Mexico and find large gender gaps in sales, profit, and access to finance. Accounting for differences in education and entrepreneurial commitment, women-owned firms perform worse and receive less financing than comparable men-owned firms. We interpret these patterns in a model economy where individuals with different managerial abilities choose between wage work and entrepreneurship, while women face discrimination in labor and credit markets. The model replicates observed gender differences in occupations and capital use. Equalizing credit access sharply reduces gender gaps in entrepreneurial earnings, but implies only modest aggregate gains on productivity and output. Size-dependent taxes or income subsidies generate smaller impacts or far more costly gains. |
| Keywords: | informality; gender; micro-firms; misallocation; finance |
| JEL: | J16 O10 O40 O50 |
| Date: | 2025–12–31 |
| URL: | https://d.repec.org/n?u=RePEc:ris:albaec:021996 |
| By: | Yueyuan Ma |
| Abstract: | Using firm-level data from the US Census Longitudinal Business Database (LBD), this paper exhibits novel evidence about a wave of specialization experienced by US firms in the 1980s and 1990s. Specifically: (i) Firms, especially innovating ones, decreased production scope, i.e., the number of industries in which they produce. (ii) Innovation and production separated, with small firms specializing in innovation and large firms in production. Higher patent trading efficiency and stronger patent protection are proposed to explain these phenomena. An endogenous growth model is developed with potential mismatches between innovation and production. Calibrating the model suggests that increased trading efficiency and better patent protection can explain 20% of the observed production scope decrease and 108% of the innovation and production separation. They result in a 0.64 percent point increase in the annual economic growth rate. Empirical analyses provide evidence of causality from pro-patent reforms in the 1980s to the two specialization patterns. |
| Keywords: | specialization, production scope, R&D, intellectual property rights, patent trade, endogenous growth |
| JEL: | E23 L22 O32 O34 |
| Date: | 2025–12 |
| URL: | https://d.repec.org/n?u=RePEc:cen:wpaper:25-77 |
| By: | Bao, Yangming; Götz, Martin |
| Abstract: | We examine peer effects in corporate finance by assessing how a firm's investment influences its neighboring peer firms' investment. To uncover the exogenous com- ponent of investment, we exploit time variation in the increases in state corporate income taxes across the United States and utilize heterogeneity in local peer firms' exposure to these tax increases to construct an instrumental variable. We identify a positive and robust causal effect of local peer firms' investment decisions on firm investment. Distinguishing between physical and intangible investment, we find that peer firms' investment in physical (intangible) capital only influences firm investment in the same type of capital, particularly when that capital is central to operations. Further evidence indicates that learning from peers is an important factor, as peer effects are more pronounced for firms with stronger learning motives. |
| Keywords: | Corporate Investment, Peer Firm Effects, Corporate Income Tax, Agglomeration |
| JEL: | G0 G31 G38 |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:zbw:bubdps:334531 |
| By: | Hoover, D. |
| Abstract: | This paper explores the profitability and impact of opaque selling in a monopolist market with endogenous product characteristics. Opaque selling is a strategy where a firm sells goods through a lottery mechanism that randomly rewards consumers with a product that is revealed after purchase. Using a standard two-good Hotelling model with endogenous product locations, I compare market equilibria for a monopolist under traditional selling and opaque selling. I find that opaque selling always earns the firm a higher profit when product locations are endogenous. Additionally, it generally induces the firm to select more extreme product varieties. Using an extension to the Salop circular city model, I also show that opaque selling results in the firm introducing fewer product varieties. In terms of welfare, opaque selling unambiguously increases producer surplus and reduces consumer surplus. Although consumption of the lottery good is welfare inefficient, opaque selling can potentially increase welfare by inducing the firm to serve more consumers than it would under traditional selling. These results suggest that opaque selling may be a more viable long-term strategy when firms are capable of adjusting their product mix. |
| Keywords: | Opaque Selling, Lottery Goods, Endogenous Products, Product Differentiation |
| JEL: | D42 L11 L12 |
| Date: | 2026–01–09 |
| URL: | https://d.repec.org/n?u=RePEc:cam:camdae:2601 |
| By: | Emek Basker; Fariha Kamal |
| Abstract: | This paper examines the impact of Russia's 2014 food-import ban on U.S. firms that exported banned products to Russia. Using confidential customs transaction data, we implement triple-difference and dosage-response approaches to identify how firms adjust to the sudden loss of a market. Following the ban, treated firms experienced a 30 percentage-point decrease in the probability of exporting banned food to Russia relative to control firms. However, there is substantial heterogeneity by pre-ban reliance on the Russian market: heavily reliant firms were significantly less likely to survive once the ban was in place, and survivors experienced large reductions in revenue (19%) and total export value (49%) for each standard deviation increase in Russian market exposure. We find evidence of export redirection to neighboring countries, though it is insufficient to offset losses. Any negative impacts on survivors dissipate by five years post-ban. |
| Keywords: | sanctions, import bans, U.S.-Russia trade |
| JEL: | F51 F13 F14 L66 |
| Date: | 2025–12 |
| URL: | https://d.repec.org/n?u=RePEc:cen:wpaper:25-79 |
| By: | Aguirre Horacio A.; Sangiacomo Máximo |
| Abstract: | We assess the impact of a drought on credit, risk and bank performance in Argentina, using credit registry data at the bank-firm level. We estimate difference-in- difference panel data models to measure whether the drought in 2022-23 had an impact on credit to firms and non-performing loans, controlling for banks and borrowers’ features. We identify borrowers exposed to the shock as companies carrying out activities that suffered most from the drought: producers and exporters of soybean, corn and wheat. Our findings suggest that credit to firms exposed to the drought was 5 p.p. y-o-y lower (when measured at the bank-firm level) and 8 p.p. y-o-y lower than to firms not exposed to the event (in real terms in both cases). Non-performing loans to exposed firms increased close to 6 p.p. more than to unaffected firms. When considering staggered impact of the drought across firms, credit growth was even lower, while NPL increase was comparable. Credit supply decreased more to firms in sectors affected by the drought (by around 2p.p.); it may have been influenced by regulation. But higher overall estimates suggest that factors other than regulation and those accounted for in firm and bank controls, individual and time fixed effects, were at play to reduce credit –namely the drought. We also look at bank performance following the drought, comparing banks which were more or less exposed to affected firms: their credit, liquidity, and non-performing loans. We find no significant differences for banks more exposed to the drought, weighted by credit size. Our results indicate that the drought had significant individual impacts on firms credit and their ex post risk, but no discernible systemic effect on banks. |
| JEL: | C23 G21 E44 |
| Date: | 2025–12 |
| URL: | https://d.repec.org/n?u=RePEc:aep:anales:4775 |
| By: | Saki Bigio; Esteban Méndez; Diana Van Patten |
| Abstract: | This paper introduces an endogenous network of payment chains into a business cycle model. Motivated by evidence of linked payments across firms in Costa Rica, we develop a framework where production orders form bilateral relations: some payments are executed immediately, while others---chained payments---are delayed until upstream payments are received. These chains capture real-world situations in which firms must wait to be paid before paying their own suppliers, leaving resources temporarily idle even when demand and capacity exist. In equilibrium, agents choose the amount of chained payments given interest rates and access to internal funds or credit lines. This choice determines the payment-chain network and aggregate total-factor productivity (TFP). The paper characterizes equilibrium dynamics and pecuniary externalities when agents internalize their own payment delays but not the delays imposed on others. |
| JEL: | E32 E42 G01 O16 |
| Date: | 2026–01 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:34631 |
| By: | Laura Chioda; Paul Gertler; David Contreras-Loya; Dana R. Carney |
| Abstract: | We study the medium and long term impacts of Skills for Effective Entrepreneurship Development (SEED), a 3-week entrepreneurship training program for secondary school students in Uganda. The mini-MBA, modeled after business school curricula, was implemented as a randomized field experiment with a nationally representative sample of 4, 402 youth. After four years, the training improved both hard and soft skills. SEED graduates became more effective negotiators and communicators and exhibited improved self-efficacy, stability, plasticity, and stress management. In the medium run, treated youth were more likely to start enterprises and more successful in ensuring their survival, thereby gaining greater entrepreneurial experience. Their ventures were also of higher quality: more likely to be formal, have employees, be in collaboration with other entrepreneurs, and use effective business management practices. With 52% of the sample still enrolled in post-secondary education, we find suggestive evidence that businesses led by the treatment groups performed better. After nine years, business ownership converged between treatment and control groups as control ownership rates doubled. However, SEED graduates maintained their edge in terms of business quality and operated firms with 20% higher revenues and 16% higher profits, without corresponding increases in capital or labor inputs, consistent with higher total factor productivity. Entrepreneurial success was achieved through the adoption of better business practices and experimentation, with soft skills related to entrepreneurial mindset playing a complementary role. SEED generated high returns on investment: the present discounted values of SEED-induced business and total earnings equal 20 and 27 times program costs, respectively. |
| JEL: | C93 I20 J23 J24 M13 M53 O15 |
| Date: | 2026–01 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:34637 |