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on Business Economics |
| By: | Guadalupe, Maria; Rappoport, Veronica; Salanie, Bernard; Thomas, Catherine |
| Abstract: | We interpret M&A deals in Western Europe during the 2010s as the equilibrium of a matching model. Merger surplus arises from complementarities between multiple firm pre-merger characteristics. Large, productive firms prefer to merge with similarly productive but smaller partners, suggesting positive complementarity in productivities and negative cross complementarity between productivity and scale. We use post-merger data to show that estimated complementarities are strong predictors of merged firm performance. Our results inform the empirical relevance of different theories of mergers. |
| JEL: | G34 |
| Date: | 2024–12–04 |
| URL: | https://d.repec.org/n?u=RePEc:ehl:lserod:126749 |
| By: | Seula Kim |
| Abstract: | This paper investigates how worker beliefs and job prospects impact the wages and growth of young firms, as well as the aggregate economy. Building a heterogeneous-firm directed search model where workers gradually learn about firm types, I find that learning generates endogenous wage differentials for young firms. High-performing young firms must pay higher wages than equally high-performing old firms, while low-performing young firms offer lower wages than equally low-performing old firms. Reduced uncertainty or labor market frictions lower the wage differentials, thereby enhancing young firm dynamics and aggregate productivity. The results are consistent with U.S. administrative employee-employer matched data. |
| Keywords: | wage differentials, firm dynamics, learning, search frictions, uncertainty |
| JEL: | E20 E24 J31 J41 J64 L25 L26 M13 M52 M55 |
| Date: | 2025–01 |
| URL: | https://d.repec.org/n?u=RePEc:cen:wpaper:25-09 |
| By: | Altomonte, Carlo; El-Mallakh, Nevine; Sonno, Tommaso |
| Abstract: | We build a novel worldwide database merging information on patent-citations of firms paired with information on firms' affiliation to Business Groups (BGs). We exploit these data to document how BGs appropriate knowledge through standalone firm acquisition. First, we confirm that innovative standalone firms have a higher probability of becoming part of a BG. Second, we document how BGs tend to acquire firms that are on an upward trend in patents and citations. We also show that innovating activity significantly deteriorates post-acquisition, particularly for firms with high-quality, cited patents. Third, we show that such a deterioration in innovation activity is driven by acquired firms patenting within the same technological classes of the acquiring BG, while the latter does not hold for acquired firms patenting in different technologies than the BG's. We also find that acquisitions occurring in environments characterized by higher market concentration and more mature leading firms are associated with a relatively more pronounced reduction in innovation. These results generalize the defensive acquisition narrative, suggesting that BGs leverage these transactions as a strategic manoeuvre to solidify their market position in the face of potential competition. |
| Keywords: | business groups; innovation |
| JEL: | O30 |
| Date: | 2024–04–30 |
| URL: | https://d.repec.org/n?u=RePEc:ehl:lserod:126757 |
| By: | Berlingieri, Giuseppe; Boeri, Filippo; Lashkari, Danial; Vogel, Jonathan |
| Abstract: | We study capital-skill complementarity in a multi-sector framework featuring firm-specific, multi-factor production functions and allowing for firm-specific factor-price wedges. We characterize the elasticity of the skill premium to the price of capital equipment in terms of firm-level elasticities of substitution across factors, elasticities of substitution across firms and sectors, and factor intensities. Using French data, we provide credible identification of these firm-level elasticities. Combining these elements we offer the first identification of aggregate capital-skill complementarity that allows for arbitrary trends in the unobservable skill-bias of productivity at the firm, industry, and aggregate levels. We find an economically and statistically significant degree of aggregate capital-skill complementarity, but this force alone is insufficient to generate the full increase in the relative demand for high-skilled workers observed in the data. There is a substantial role for skill-augmenting technical change not embodied in capital equipment. |
| Keywords: | capital-skill complementarity; capital equipment; income inequality; skill premium; cresh |
| JEL: | E10 E23 E25 J30 |
| Date: | 2024–09–25 |
| URL: | https://d.repec.org/n?u=RePEc:ehl:lserod:126751 |
| By: | Cirera, Xavier; Vargas Da Cruz, Marcio Jose; Soares Martins Neto, Antonio; Lee, Kyungmin; Gomes Nogueira, Caroline |
| Abstract: | This paper explores new firm-level data to examine the gender gap in technology adoption and the associated effect on firm performance. The data show a small difference in technology sophistication between firms managed by women and those managed by men, but there are larger differences in terms of labor productivity. Firms with female top managers are just as likely to adopt the most sophisticated technologies for general business functions that are common across all firms except for enterprise resource planning. However, firms managed by women adopt advanced technologies less frequently for sector-specific business functions. The study also finds that firms with higher technology sophistication tend to have higher productivity and the returns to the use of more sophisticated technologies are larger in businesses managed by women, which helps to narrow the productivity gap between firms managed by women and those managed by men. |
| Date: | 2024–05–15 |
| URL: | https://d.repec.org/n?u=RePEc:wbk:wbrwps:10771 |
| By: | Patino Pena, Fausto Andres; Ferro, Esteban |
| Abstract: | This paper examines the role of firm dynamics in aggregate total factor productivity, job flows, and wage inequality in Ecuador. Utilizing a comprehensive employer-employee dataset, the paper documents firm dynamics and job flow patterns that are consistent with the presence of market distortions. Also, the paper identifies factor misallocation as the main contributor to Ecuador's total factor productivity deceleration. Given these trends, the paper explores allocative inefficiency drivers through firm- and industry-level regressions. Firms in the top productivity quintile face distortive non-wage labor costs that are 3.7 times higher than the bottom quintile, after controlling for firm size and age. The findings also provide evidence of credit misallocation across firms. Additionally, industries with higher job mobility, credit access, and competition and lower non-wage labor costs, minimum wage incidence, and zombie firms demonstrate higher allocative efficiency. Moreover, worker-level regressions indicate that misallocation drivers explain up to 41 percent of wage inequality, with non-wage labor costs and product market frictions as distortions driving this inequality. |
| Date: | 2024–03–27 |
| URL: | https://d.repec.org/n?u=RePEc:wbk:wbrwps:10739 |
| By: | Kassa, Woubet; Woldemichael, Andinet |
| Abstract: | This study documents the impacts of climate change on firm-level productivity by matching a globally comparable and standardized survey of nonagricultural firms covering 154 countries with climate data. The findings show that the overall effects of rising temperatures on productivity are negative but nonlinear and uneven across climate zones. Firms in hotter zones experience steeper losses with increases in temperature. A 1 degree Celsius increase from the typical wet-bulb temperature levels in the hottest climate zone (25.7 degrees Celsius and above) results in a productivity decline of about 20.8 percent compared to firms in the coldest climate zone. The effects vary not only based on the temperature zones within which firms are located, but also on other factors such as firm size, industry classification, income group, and region. Large firms, firms in manufacturing, and those in low-income countries and hotter climate zones tend to experience the biggest productivity losses. The uneven impacts, with firms in already hotter regions and low-income countries experiencing steeper losses in productivity, suggest that climate change is reinforcing global income inequality. If the trends in global warming are not reversed over the coming decades, there is a heightened risk of widening inequality across countries. The implications are especially dire for the poorest countries in the hottest regions. |
| Date: | 2024–05–06 |
| URL: | https://d.repec.org/n?u=RePEc:wbk:wbrwps:10762 |
| By: | Sharmin Sazedj; José Tavares |
| Abstract: | This paper assesses the relevance of professional networks for the gender pay gap amongst top managers. Using data on the universe of firms in Portugal, we show that female top managersearn 25% less than their male counterparts, and that 20% of this gap is due to differences in networks. Using Gelbach’s decomposition, we find that the network effect can be ascribed to firm sorting, i.e. well-connected managers tend to be associated to higher paying firms. By examining the gender composition and the type of connections of top manager networks, we find that same gender connections are important. We conclude that connections between females can play an important role in the existing corporate framework where males areoverrepresented, and thus policies furthering female representation in leadership positions can have positive spillover effects for other women. |
| JEL: | J16 J30 J24 L14 |
| Date: | 2024 |
| URL: | https://d.repec.org/n?u=RePEc:ptu:wpaper:w202423 |
| By: | Norris Keiller, Agnes; Van Reenen, John |
| Abstract: | Climate change is making natural disasters more frequent, yet little is known about the capacity of firms to withstand such disasters and adapt to their increased frequency. We examine this issue using the latest wave of the World Management Survey (WMS) that includes new questions on firms' climate change perceptions and adaptation behaviour. Combining this with geocoded data on natural disasters and previous WMS waves, we create a panel spanning 8, 000 firms across 33 countries and three decades that shows exposure to disasters decreases growth inputs, outputs and firm survival. More importantly, firms with structured management practices are more resilient, suffering much smaller drops in jobs and capital. To understand the mechanisms behind this resilience, we use the new WMS climate questions to show better managed firms have more accurate perceptions of climate-related risks to their businesses. Such firms are also more likely to have implemented measures to adapt to climate change both overall and in response to their perceived climate risk. Other aspects of firm organisation, such as decentralisation, also help protect against disasters, but their adaptation behaviour is not well-targeted. These results show that improving management is one way to help protect economies from climate change shocks. |
| Keywords: | climate; natural disasters; management practices; firm performance |
| JEL: | Q54 M11 L25 H10 |
| Date: | 2024–06–13 |
| URL: | https://d.repec.org/n?u=RePEc:ehl:lserod:126782 |
| By: | Dauda, Seidu; Pop, Georgiana; Iootty De Paiva Dias, Mariana |
| Abstract: | This paper assesses the performance of Romanian state-owned enterprises with various degrees of ownership (minority owned with 10 to 24.9 percent stakes, minority owned with 25 to 49.9 percent stakes, and majority owned with at least 50 percent ownership stakes) and control levels (central versus local state-owned enterprises and directly versus indirectly owned state-owned enterprises) relative to privately owned enterprises. The paper uses the Romanian firm-level data from the Ministry of Finance covering enterprises of all sizes from 2011 to 2020, combined with the new World Bank Businesses of the State dataset, which tracks ownership of state business entities with at least 10 percent stake in Romania. The paper analyzes whether various degrees of state ownership and levels of control matter for state-owned enterprises’ performance. The paper also assesses whether Romanian state-owned enterprises were able to act as stabilizers during the early period of the COVID-19 pandemic, and how the presence of state-owned enterprises in markets correlates with market outcomes. The findings show that relative to private firms, Romanian state-owned enterprises, particularly those that are majority owned, directly owned, and local ones, employ more people, pay higher wages, but are less productive. In addition, Romanian state-owned enterprises cushioned the job and wage losses associated with the COVID-19 pandemic better than private firms, especially in competitive sectors. Finally, there is evidence that the presence of state-owned enterprises may limit private firm entry and allocative efficiency. |
| Date: | 2023–12–18 |
| URL: | https://d.repec.org/n?u=RePEc:wbk:wbrwps:10649 |