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on Business Economics |
| By: | Alex Chernoff (Bank of Canada); Allen Head (Queen's University); Beverly Lapham |
| Abstract: | We study the determination of market power at the firm and industry levels when heterogeneous firms compete for sales to ex ante homogeneous buyers in a market with both directed and random search and free entry of firms that differ in productivity. Search and the distribution of productivity across active firms generate distributions of equilibrium prices and markups that we relate to variation in the elasticity of demand at the firm level. With directed search at the outset, a shock that raises the matching rate for buyers improves conditions for them and tends to lower markups. Random matching follows sequentially, and the same shock can lower the productivity threshold for operation, pushing up prices and markups for all firms. The net effect on market power can be ambiguous depending on the forces driving matching rates. The distributions of prices and markups respond in equilibrium to changes in common and firm-specific costs, consumption utility, and fixed costs of both entry and operation. We characterize the differential pass-through of these changes to prices and markups at both the firm and market levels. |
| Keywords: | Market power, Drected Search, Random matching, Productivity heterogeneity, Markups, Pass-through |
| JEL: | D21 D43 E31 L11 |
| Date: | 2025–01 |
| URL: | https://d.repec.org/n?u=RePEc:qed:wpaper:1525 |
| By: | Hutschenreiter, Dennis; Liu, Qianshuo |
| Abstract: | Institutional common ownership of firm pairs in the same industry increases the likelihood of a preexisting social connection among their CEOs. We establish this relationship using a quasi-natural experiment that exploits institutional mergers combined with firms' hiring events and detailed information on CEO biographies. In addition, for peer firms, gaining a CEO connection from a hiring firm's CEO appointment correlates with higher returns on assets, stock market returns, and decreasing product similarity between companies. We find evidence consistent with common owners allocating CEO connections to shape managerial decision-making and increase portfolio firms' performance. |
| Keywords: | CEO appointments, CEO connections, common ownership, firm performance, product similarity |
| JEL: | G23 G32 G34 L21 L22 |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:zbw:iwhdps:319068 |
| By: | Katrin Hussinger (DEM, Université du Luxembourg); Issah Wunnam (University of Leicester, UK) |
| Abstract: | We investigate whether family ownership is associated with a preference for patents or trade secrets. Using a sample of S&P 500 firms, we show that family ownership is negatively associated with patenting and positively associated with the usage of trade secrets. We further show that both relationships are moderated by firm performance below the aspiration level, i.e. the performance benchmark level that an organization sets. These results can be explained with a mixed gambles behavioral agency framework. When family firms perform below their aspiration level, prospective financial gains become relatively more important as compared to current socio emotional wealth so that patents become more and trade secrets less attractive. |
| Keywords: | Family firms, patents, trade secrets, mixed gambles, aspiration gap. |
| JEL: | O34 O32 G32 M14 |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:luc:wpaper:25-11 |
| By: | Xiao Ma (Peking University); Alejandro Nakab (Universidad Torcuato Di Tella); Daniela Vidart (University of Connecticut) |
| Abstract: | We investigate how on-the-job training varies with firm characteristics and how this informs the distribution of training costs between firms and workers. Using data from over 100 countries, we document that smaller firms consistently offer fewer training opportunities to their workers. Drawing on administrative data from China and Mexico, we identify differences in labor share and productivity levels as key factors explaining this pattern. We then build a general equilibrium model with various training costsharing schemes and show that only those in which firms bear a substantial share of training costs after hiring align with the empirical evidence. A quantitative version of the model calibrated to the US reveals significant inefficiencies in training provision, particularly among smaller firms, and suggests that (1) optimal training subsidies are higher for smaller firms, though even a uniform subsidy can raise net output by 7%; and (2) increasing the labor market share of larger firms can signifcantly impact on-the-job human capital formation. |
| Keywords: | On-the-job training; Human capital accumulation; Firm heterogeneity |
| JEL: | E24 J24 M53 |
| Date: | 2025–04 |
| URL: | https://d.repec.org/n?u=RePEc:uct:uconnp:2025-05 |
| By: | Bachmann, Federico; Kataishi, Rodrigo |
| Abstract: | This study conducts a comprehensive meta-regression analysis to examine the relationship between firm size and innovative performance, utilizing 95 empirical studies published between 1993 and 2017. By incorporating 655 econometric estimations from these studies, we aim to identify key factors contributing to the heterogeneity observed in the empirical literature. Our findings confirm a positive average effect of firm size on innovative performance, reinforcing the theoretical expectation that larger firms tend to be more innovative due to economies of scale and greater resource availability. However, this relationship is moderated by various contextual and methodological factors that affect results, such as the measures used for firm size and innovation, the type of innovation considered (product or process), and the geographic context (developed or developing countries). This study contributes to the literature by presenting one of the most comprehensive meta-analyses on this topic to date, introducing new moderator variables, and offering deeper insights into the sources of heterogeneity. The results not only reinforce the most common hypotheses on the size-innovation relationship but also provide a nuanced understanding of the variations in empirical results. By highlighting the importance of measurement choices and firm characteristics in understanding the firm size-innovation nexus, this study offers valuable guidance for future research, enabling a more refined approach to investigating this complex relationship. |
| Keywords: | Tamaño de la Empresa; Innovación; Análisis de Regresión; Investigación y Desarrollo; 1993-2017; |
| Date: | 2025–05–09 |
| URL: | https://d.repec.org/n?u=RePEc:nmp:nuland:4327 |
| By: | David Card (University of California, Berkeley); Francesco Devicienti (University of Torino and Collegio Carlo Alberto); Mariacristina Rossi (COVIP); Andrea Weber (Central European University) |
| Abstract: | The gender wage gap rises with experience. To what extent do firm policies mediate this rise? We use administrative data from Italy to identify workers’ first jobs and compute wage growth over the next 5 years. We then decompose the contribution of first employers to the rise in the gender wage gap, taking account of maternity events affecting a third of female entrants. We find that idiosyncratic firm effects explain 20% of the variation in early career wage growth, and that the sorting of women to slower-growth firms accounts for a fifth of the gender growth gap. Women who have a child within 5 years of entering work have particularly slow wage growth, reflecting a maternity effect that is magnified by the excess sorting of mothers-to-be to slower-growth firms. Many entrants change jobs within their first 5 years and we find that the male-female difference in early career wage growth arises from gaps for both movers and stayers. The firm components in wage growth for stayers and movers are highly correlated, and contribute similar sorting penalties for women who stay or leave. |
| Keywords: | Gender gaps; Firm effects; Maternity; Matched Employer-Employee Data |
| JEL: | J00 J23 J24 J31 J38 J58 L13 |
| Date: | 2025–04 |
| URL: | https://d.repec.org/n?u=RePEc:crm:wpaper:2510 |
| By: | Elena Simintzi; Sheng-Jun Xu; Ting Xu |
| Abstract: | We study the effects of government-subsidized childcare on women's careers and firm outcomes using linked tax filing data. Exploiting cohort-level variation in childcare access based on a Quebec universal childcare reform, we show that earlier access to childcare not only increases new mothers' employment and earnings, but also prompts them to reallocate careers to firms previously unattractive to new mothers. These firms subsequently benefited from the reform, drawing more young, productive female workers and experiencing better performance. Our results suggest that childcare frictions hamper women's career progression and the allocation of human capital in the labor market. |
| JEL: | G30 G38 J13 J16 J2 J6 M5 |
| Date: | 2025–05 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:33835 |