nep-cse New Economics Papers
on Economics of Strategic Management
Issue of 2016‒05‒14
23 papers chosen by
João José de Matos Ferreira
Universidade da Beira Interior

  1. Determinants of R&D University-Frim Collaboration and Its Impact on Innovation: a Perspective from the Italian Food and Drink Industry By Maietta, Ornella Wanda
  2. Productivité, innovation et politique sectorielle des industries de transformation au Maroc (1985-2013) : Fondements théoriques et proposition d’une méthodologie By Benabdelkader, Mohamed
  3. Concentration on the few? R&D and innovation in German firms between 2001 and 2013 By Rammer, Christian; Schubert, Torben
  4. Knowledge-based economy By Michal Wilinski
  5. Strategic Alliances: An Introductory Framework By Link, Albert N.; Antonelli, Cristiano
  6. Does innovation foster or mitigate the corruption obstacle? Firm-level evidence from Tunisia By Sdiri, Hanen; Ayadi, Mohamed
  8. Global firms By Andrew B. Bernard; J. Bradford Jensen; Stephen J. Redding; Peter K. Schott
  9. Employability and Job Performance as Links in the Relationship Between Mentoring Receipt and Career Success. A Study in SMEs By Nikos Bozionelos; Konstantinos Kostopoulos; Beatrice Van Der Heijden; Denise M. Rousseau; Giorgos Bozionelos; Thomas Hoyland; Izabela Marzec; Piotr Jędrzejowicz; Olga Epitropaki; Aslaug Mikkelsen; Dora Scholarios; Claudia Van Der Heijde
  10. Are in-house and outsourcing innovation strategies interlinked? Evidence from the European agri-food sector By Materia, Valentina; Pascucci, Stefano; Dries, Liesbeth
  11. Network Structure and Industrial Clustering Dynamics in the Aerospace Industry By Ekaterina Turkina; Ari Van Assche; Raja Kali
  12. Benefit or Damage? The Productivity Effects of FDI in Chinese Food Industry By Jin, Shaosheng; Guo, Haiyue; Delgado, Michael; Wang, H.
  13. An analysis of Joseph Schumpeter's life, concept of innovation, and application for Estonia By Putthiwanit, Chutinon
  14. Information Matters: A Theoretical Comparison of Some Cross-Border Trade Barriers By Wilson, Chris M.
  15. Governance, efficiency and risk taking in Chinese banking By Dong, Yizhe; Girardone, Claudia; Kuo, Jing-Ming
  16. Social infrastructure and productivity of manufacturing firms: Evidence from Pakistan By Ahmed, Riaz
  17. Networked by design: Can policy requirements influence organisations’ networking behaviour? By Rossi, Federica; Caloffi, Annalisa; Russo, Margherita
  18. EU Structural Funds and Regional Income Convergence - A Sobering Experience By Breidenbach, Philipp; Mitze, Timo; Schmidt, Christoph M
  19. Allocating Effort and Talent in Professional Labor Markets By Barlevy, Gadi; Neal, Derek
  20. Marketing Mix Strategies and Entrepreneurial Competence: Evidence from Micro Restaurants in Calabar Metropolis, Cross River State, Nigeria. By Umeze, Gerald E.; Ohen, Susan B.
  21. Management practices, workforce selection and productivity By Stefan Bender; Nicholas Bloom; David Card; John Van Reenen; Stefanie Wolter
  22. Effects of FDI on Entrepreneurial Activity: Evidence from Right-to-Work and Non-Right-to-Work States By Ozkan Eren; Masayuki Onda; Bulent Unel
  23. Relational knowledge transfers By Luis Garicano; Luis Rayo

  1. By: Maietta, Ornella Wanda
    Abstract: The objective of this paper is to examine R&D collaboration between firms, on the one hand, and universities or public research labs, on the other, with particular attention to the role such collaboration plays among the determinants of product and process innovation in the Italian food and drink industry. The firm data are sourced from four waves of the Capitalia survey. The approach is a multivariate probit analysis in which the dependent variables are intra muros R&D investment, R&D collaboration with universities, public labs and private firms, process and product innovation. The independent variables consist of firm, territory and university characteristics. The results of the analysis demonstrate that R&D university–firm collaboration determines process innovation and, to a lesser extent, product innovation. A firm’s product innovation is positively affected by its geographical proximity to a university but negatively affected by the amount of its codified knowledge production.
    Keywords: university–industry interaction, R&D collaborations, product and process innovation, academic research quality, geographical distance, university education, Agricultural and Food Policy, O3, D22, R1,
    Date: 2015
  2. By: Benabdelkader, Mohamed
    Abstract: The determinants of total factor productivity (TFP) of the manufacturing industries, in particular innovation and industrial policy, constituted the seminal contribution of Crépon, Duguet and Mairesse in the late 1990. This study aims to explain the TFP of the 5 branches composing the manufacturing industries in Morocco on the 1985-2013 period through its panel regression on innovation, trade openness and industrial policy variables, as well as their interactions, while testing the model assumptions in the light of the Moroccan reality. This study will also provide conclusions related to the relevance of the original model as well as extensions and implications for further research.
    Keywords: Crepon-Duguet-Mairesse model; industrial policy; innovation; panel data; total factor productivity
    JEL: C33 C51 L52 L6 O32 O47
    Date: 2016–04
  3. By: Rammer, Christian; Schubert, Torben
    Abstract: [Introduction] Innovation expenditures in Germany have increased at an impressive rate in the course of the last two decades. Between 1995 and 2013, businesses in Germany raised their spending for developing and introducing new products and new processes from €60.8bn to €144.6bn resulting in a compound annual growth rate of 4.9% (Rammer et al. 2015). While these numbers suggest that German firms have become ever more focused on innovation, they hide the fact that this rise has mainly been driven by large firms belonging to a few sectors. When we look at the above numbers by firm size we find that firms with fewer than 500 employees experienced only a very modest increase in their innovation expenditures (€25.7bn in 1995 vs. €34.5bn in 2013, i.e. 1.6% per year) whereas large firms with more than 500 employees increased their spending from €35.1bn in 1995 to €110.1bn in 2013 (6.6% per year). In line with these observations we also find a concentration of the activities on fewer firms. In particular, the share of innovators – firms that have introduced at least one product or process innovation during the preceding three years – has similarly declined since the late 1990s. Having reached a peak in 1999 at 55.5%, it dropped to 43.7% in 2007 and further declined to 37.1% in 2013. A look at the sector distribution conveys a similar concentration. In 1995, the R&D intensive manufacturing sectors (pharmaceuticals, chemicals, electronics, machinery & equipment, vehicles) spent €30.9bn on innovation and increased that figure to €92.6bn in 2013 (+6.3% per year). Low-tech manufacturing and service sectors expanded their innovation expenditure by an average annual rate of 3.1%. These developments would not be problematic if they were due to firms from high-tech sectors growing at an above-average rate. While some well-known examples of this phenomenon also exist in Germany, e.g. the software company SAP, the absolute numbers of such cases is very limited. Moreover, the share of value added of highly R&D-intensive sectors has remained fairly stable in Germany. This makes this explanation implausible. [...]
    Date: 2016
  4. By: Michal Wilinski (Nicolaus Copernicus University)
    Abstract: The purpose of this article is to present a model of knowledge-based economy in relation to the OECD or Organization for Economic Cooperation and Development. The work will be explained the difference between economic growth and economic development. This article aims is to show how the use of factors of knowledge and innovation by the economy affect its faster development. Model presented work shows the extent to which a variable that is known to be action - lovers expressing or measuring knowledge and innovation impact on the economy and the extent to which contributed to its growth, which will be expressed by the Gross Domestic Product.
    Keywords: innovation; knowledge; economic development; OECD, KBE
    JEL: A11 D83 O43
    Date: 2016–05
  5. By: Link, Albert N.; Antonelli, Cristiano (University of Turin)
    Date: 2015–10
  6. By: Sdiri, Hanen; Ayadi, Mohamed
    Abstract: The aim of this paper is to analyze the extent to which Tunisian firms regard corruption as a major obstacle to their product and process innovation. Using firm-level data from the World Bank Enterprise Survey conducted in 2013, we empirically test how innovation accentuates or mitigates the corruption obstacle. We show that innovation has a negative and statistically significant effect on the corruption obstacle. Besides, we prove that competition and the obstacle to corruption are negatively related. This result teaches that the Tunisian firms face a rent-shifting corruption.
    Keywords: Innovation, Corruption obstacle, Rent-shifting.
    JEL: D73 L80 O31 O32
    Date: 2016–05–04
  7. By: Aliu, Armando; Cilginoglu, Hakki; Özkan, Ömer; Aliu, Dorian
    Abstract: This study aims to analyze inter-stakeholders’ interactions, destination governance, reverse innovation and the tasks of central government within Turkish medical tourism market. The investigation’s objective is to shed lights on scientists and practitioners regarding to what extent medical tourism is affected by stakeholders. Likewise, the originality of this investigation is that this study is the first attempt that links up reverse innovation and stakeholder approach as a holistic strategy and competitive advantage tool in medical tourism. The statistical evidences of Turkey also support the fact that the incline of medical tourism incomes and benefits is tightly bound on key inter-stakeholders’ collaborations, marketing tools, specific strategies, effective governance mechanism and cooperation with civil society organizations. This study is a thematic case that comprises particular research fields and formulates advanced arguments that are embedded in enriched relevant literature review and the highlights of the 7th International Health Tourism Congress.
    Abstract: Bu calismanin amaci; Türk medikal turizm piyasasinda merkezi yönetimin görevleri, tersine inovasyon, destinasyon yönetisimi ve paydaslar arasi etkilesimleri analiz etmektir. Arastırmanin hedefi; bilim insanlarina ve sektördeki profesyonellere / uygulayicilara medikal turizmin paydaslar tarafindan ne dereceye kadar etkilendigi hakkinda isik tutmaktir. Ayrica, bu arastirmanin özgünlügü medikal turizmde rekabet avantaji araci ve bütünsel strateji olarak paydas yaklasimi ile tersine inovasyon arasinda baglanti kuran ilk girisim olmasidir. Türkiye’nin istatistiksel verileri de medikal turizmdeki yükselis trendinin ve faydalarinin sivil toplum kuruluslari ile isbirligi, efektif yönetisim mekanizmasi, spesifik stratejiler, pazarlama araclari ve kilit paydaslar arasi isbirliklerine sikica bagli oldugunu desteklemektedir. Bu calisma tematik bir örnek olay olup, 7. Uluslararasi Saglik Turizmi Kongresi’nde vurgulanan hususlar ile iliskilendirilmis literatür taramasina dayali olarak formüle edilmis gelismis argümanlar ve spesifik arastirma alanlarini icermektedir.
    Keywords: Medical Tourism,Reverse Innovation,Stakeholders,Collaboration,Destination Governance
    JEL: F63 H51 I11 I15 I18 M38
    Date: 2016–05
  8. By: Andrew B. Bernard; J. Bradford Jensen; Stephen J. Redding; Peter K. Schott
    Abstract: Research in international trade has changed dramatically over the last twenty years, as attention has shifted from countries and industries towards the firms actually engaged in international trade. The now standard heterogeneous firm model posits a continuum of firms that compete under monopolistic competition (and hence are measure zero) and decide whether to export to foreign markets. However, much of international trade is dominated by a few “global firms,” which participate in the international economy along multiple margins and are large relative to the markets in which they operate. We outline a framework that allows firms to be of positive measure and to decide simultaneously on the set of production locations, export markets, input sources, products to export, and inputs to import. We use this framework to interpret features of U.S. firm and trade transactions data and highlight interdependencies across these margins of firm international participation. Global firms participate more intensively along each margin, magnifying the impact of underlying differences in firm characteristics, and explaining their dominance of aggregate international trade.
    Keywords: firm heterogeneity; international trade; multinationals; multi-product firms
    JEL: E21 E24 F53 O32 O47
    Date: 2016–04
  9. By: Nikos Bozionelos (Audencia Recherche - Audencia); Konstantinos Kostopoulos (University of Piraeus); Beatrice Van Der Heijden (Radboud university [Nijmegen]); Denise M. Rousseau (Carnegie Mellon University); Giorgos Bozionelos (General Hospital of Katerini - General Hospital of Katerini); Thomas Hoyland (HUBS - Hull University Business School - Hull University); Izabela Marzec (Katowice School of Economics); Piotr Jędrzejowicz (Gdynia Maritime University); Olga Epitropaki (ALBA Graduate Business School); Aslaug Mikkelsen (University of Stavanger - University of Stavanger); Dora Scholarios (University of Strathclyde - University of Strathclyde); Claudia Van Der Heijde (University of Twente [Netherlands])
    Abstract: This study developed and tested a model that posited employability and job performance as intervening variables in the relationship between receipt of mentoring and career success. Participants were 207 information technology (IT) professionals employed in small and medium-sized enterprises (SMEs) in three European countries. Mentoring receipt was related to both employability and job performance. Employability mediated the relationship of mentoring receipt with objective and subjective career success, as well as its relationship with job performance. The findings indicate that receipt of mentoring is connected to job performance, a link that has hitherto lacked empirical evidence. In addition, they suggest a pivotal role for employability in the relationship of mentoring receipt with job performance and career success. Overall, this study helps unveil the mechanism through which mentoring affects career outcomes. Moreover, it shows that the benefits of mentoring hold outside the context of large corporations.
    Keywords: IT professionals, Career success, Mediation, SMEs,Mentoring receipt, Employability, Job performance, Non-Anglo-Saxon
    Date: 2016
  10. By: Materia, Valentina; Pascucci, Stefano; Dries, Liesbeth
    Abstract: The paper investigates the determinants of innovation strategies in the agri-food sector and the potential complementarity of these strategies. Innovation strategies are distinguished as in-house and outsourcing. The choice between strategies is motivated by transaction cost minimization, property rights appropriation and optimization of firms’ resources and competences. A bivariate probit model is implemented using cross-section data on 1,393 agri-food firms in seven EU countries. Results show that: decisions to innovate in-house or to outsource are not interlinked; high quality human resources and the use of ICT influence both the decision to innovate in-house and outsourcing, while organizational aspects, especially those related to decision-making within the firm, are relevant only for in-house innovation. Finally, we also find that large and internationalized firms are more likely to innovate in-house.
    Keywords: Consumer/Household Economics, Food Consumption/Nutrition/Food Safety,
    Date: 2015
  11. By: Ekaterina Turkina; Ari Van Assche; Raja Kali
    Abstract: We use a new firm level dataset to study the network of formal firm linkages within and across 52 aerospace clusters in North America and Europe over the period 2002-2014. Applying community structure detection techniques, we find that the structure of the overall network has changed over time. We organize sub-networks by linkage type and find two important trends in their evolution. First, new linkages in the vertical buyer-supplier sub-network are generally formed in a hierarchical hub-and-spoke fashion, whereas new links in the horizontal partnership sub-network are generated in a more decentralized and cohesive manner. Second, the geographical scope of new linkages is different, with vertical buyer-supplier and investment linkages moving increasingly trans-local and partnership linkages becoming more localized. Taken together, our findings suggest that the overall network is evolving from a geographically partitioned community structure to a hierarchical community structure that is stratified along value chain stages.
    Keywords: industrial clusters, local and trans-local linkages, community structure detection, small world analysis,
    JEL: L14 L62 F23
    Date: 2016–04–08
  12. By: Jin, Shaosheng; Guo, Haiyue; Delgado, Michael; Wang, H.
    Abstract: This paper systematically investigated the impact of foreign direct investment (FDI) on Chinese food firms’ total factor productivity (TFP) by using the firm-level census data between 1998 and 2007 (174,539 sample food firms). We tested for “own-plant” effects, intra-industry effects, regional effects and vertical effects. The results show that food firms’ foreign ownership has weakly positive or no impact on the productivity of invested firms. At the industry level, FDI generates adverse influences on domestic firms productivity in some sub food sectors. Further, mixed regional effects are observed in different sub food sectors and across investment with different origins. Finally, both positive backward and forward spillovers generated by FDI originating outside Hong Kong, Macaw and Taiwan (HMT) are observed, while HMT investment has negative vertical spillovers.
    Keywords: food industry, foreign direct investment (FDI), China, productivity, Food Consumption/Nutrition/Food Safety, Food Security and Poverty, Q13 Q17 Q18,
    Date: 2015
  13. By: Putthiwanit, Chutinon
    Abstract: This research studies a basic concept of Schumpeterian Theory by exploring the life of Joseph Schumpeter and the application for Estonia. The secondary data were taken from World Values Survey (WVS); a worldwide group of researchers observing global values and their effect on society as a whole with headquarters in Sweden. Author took the most recent data of WVS in wave six (year 2010-2014) with the total of 74,042 cases for analysis. An analysis was performed by multiple regressions and no multicollinearity problems were detected. The results show that the nature of tasks (both manual vs. intellectual and routine vs. creative) affects the importance of employees being creative. Further analysis was performed by an independent pair sample T-test and the result shows that there are differences in the nature of tasks (both manual vs. intellectual and routine vs. creative) of Estonian and global employees. Subsequently, the final analysis was performed to explore the difference in the nature of tasks in intellectual and creative Estonian and global employees. However, there is no difference in this aspect between them.
    Keywords: Innovation; Schumpeterian Theory; Secondary Data; Intellectual; Creative; Creativity; Workplace; Estonia
    JEL: L20 O30 O31
    Date: 2016–04–02
  14. By: Wilson, Chris M.
    Abstract: There is widespread evidence that geographical borders reduce trade. This paper presents a theoretical model capable of providing a succinct comparison of three broad forms of trade barriers involving i) trade costs, ii) localized tastes, and iii) information frictions. Despite being traditionally under-researched, it provides the stark finding that information frictions often provide the relatively more powerful marginal effect in reducing cross-border trade, and associated levels of welfare. This result remains robust under a number of extensions that further document the roles of product differentiation and alternative forms of trade costs.
    Keywords: Information Frictions,Search Costs,Trade Costs,Localized Tastes,Product Differentiation
    JEL: F10 L13
    Date: 2016–04–11
  15. By: Dong, Yizhe; Girardone, Claudia; Kuo, Jing-Ming
    Abstract: We employ a hand-collected unique dataset on banks operating in China between 2003 and 2011 to investigate the impact of board governance features (size, composition and functioning) on bank efficiency and risk taking. Our evidence suggests that board characteristics tend to have a greater influence on banks’ profit and cost efficiency than on loan quality. We find that the proportion of female directors on the board appears not only to be linked to higher profit and cost efficiency but also to lower traditional banking risk. Similarly, board independence is associated with higher profit efficiency of banks; while the opposite is found for executive directors and in the presence of dual leadership of the CEO/chairperson. Among the control variables, we found that liquidity negatively affects profit and cost efficiency, while positively affecting risk. Interestingly, we find some evidence of an incremental effect of specific board characteristics on efficiency for banks with more concentrated ownership structures and state-owned institutions; while for banks with CEO performance-related pay schemes the effect on efficiency when significant is usually negative. Our results offer useful insights to policy makers in China charged with the task of improving the governance mechanisms in banking institutions.
    Keywords: Board governance; Bank efficiency; Asset quality; Bank ownership; Performance-related compensation; Chinese banking sector
    Date: 2016–05
  16. By: Ahmed, Riaz
    Abstract: Does investment in social infrastructure affect the productivity of manufacturing firms in developing countries? To test this question, I empirically investigate the impact of social infrastructure indicators at district level on firm productivity using firm level data from Pakistan. I split my sample into rural and urban regions to capture the effect of regional disparities in investment in social goods while controlling for a potential selection bias from firms' decision to locate in regions with better infrastructure equipment. My findings reveal that indicators of health and education are positively and significantly related to firm level productivity in manufacturing industries in Pakistan. However, these results hold for urban districts only. For rural regions, both health and education show a negative impact on firm productivity.
    Keywords: Firm Productivity,Social Infrastructure,Health and Education,Pakistan
    JEL: D24 H51 H52 I15 I25
    Date: 2016
  17. By: Rossi, Federica; Caloffi, Annalisa; Russo, Margherita
    Abstract: An important, but under-researched, question in relation to policies funding networks of innovators is: what kind of innovation networks should be supported, if the policy objective is not just to sponsor successful innovation projects, but also to encourage the participants to form networks with desirable characteristics? Focusing on a set of policy programmes implemented by the regional government of Tuscany, in Italy, between 2002 and 2008, aimed at funding networks of collaborating organisations, we investigate whether the imposition of requirements on the composition of the networks that would be eligible for funding – in particular, the demand that networks should comply with minimum size and heterogeneity thresholds – influenced the participants’ networking behaviour in the context of successive policy interventions. Our results show that these requirements immediately affected the size and composition of the project networks that applied for funding, although not always in the intended direction. However, these effects did not extend to the successive periods, when those requirements were no longer in force. This suggests that the imposition of policy requirements, per se, is unlikely to induce persistent changes in organizations’ networking behaviour. Other approaches such as implementing outreach actions in order to encourage new organisations to participate in existing innovation networks and to form new ones, and additional measures designed to foster learning opportunities for the participants, might be more effective tools to influence the networking behaviour of participating organisations.
    Keywords: Innovation networks, innovation policy, policy requirements, networking behaviour, behavioural effects of policy
    JEL: O31 R5
    Date: 2015
  18. By: Breidenbach, Philipp; Mitze, Timo; Schmidt, Christoph M
    Abstract: The European Structural and Investment Funds (ESIF) are the prime instrument of EU regional policy. European policy makers place considerable hope into their growth stimulating funding measures to overcome current economic stagnation. Consequently, there is a strong need for credible evidence regarding the programs' effectiveness. Based on an empirical identification strategy linked to modern growth theory, we find that the disbursement of EU structural funds is negatively correlated with regional growth. Incorporating spatial dynamics and decomposing this correlation into a direct and a spatially-indirect component, it is particularly the latter which determines this "sobering" finding. Regarding the economics behind these results, the obtained negative spatial effect may reflect the role played by policy-induced spatial competition among neighboring regions. It could also highlight the backwardness in technological endowment and economic structures of highly funded regions. In any case, EU structural funding does not seem to contribute effectively to foster income convergence across regions.
    Keywords: EU Regional Policy; Spatial Spillovers; Panel Data
    JEL: C21 R12 R58
    Date: 2016–04
  19. By: Barlevy, Gadi (Federal Reserve Bank of Chicago); Neal, Derek (University of Chicago)
    Abstract: In many professional service firms, new associates work long hours while competing in up-or-out promotion contests. Our model explores why these firms require young professionals to take on heavy work loads while simultaneously facing significant risks of dismissal. We argue that the productivity of skilled partners in professional service firms (e.g. law, consulting, investment banking and public accounting) is quite large relative to the productivity of their peers who are competent and experienced but not well-suited to the partner role. Therefore, these firms adopt personnel policies that facilitate the identification of new partners. In our model, both heavy work loads and up-or-out rules serve this purpose. Firms are able to identify more professionals who can function effectively as partners when they require new associates to perform more tasks. Further, when firms replace experienced associates with new less productive workers, they gain the opportunity to identify talented professionals who will have long careers as partners. Both of these personnel practices are costly. However, when the gains from increasing the number of talented partners exceed these costs, firms employ both practices in tandem. We present evidence on life-cycle patterns of hours and earnings among lawyers that support our claim that both heavy work loads and up-or-out rules are screening mechanisms.
    Keywords: up-or-out; labor market; long hours; professional workers; screening
    JEL: J22 J44 M51
    Date: 2016–03–04
  20. By: Umeze, Gerald E.; Ohen, Susan B.
    Abstract: The paper assessed the utilization of marketing mix strategies and entrepreneurial competencies of micro restaurant owners in Calabar metropolis. Proportionate random sampling was used to select 132 restaurants which formed the sample of the study. Results showed that preparing quality/tasty meal was the most utilized marketing mix factor with mean value of 3.85. On entrepreneurial competence, relationship competence recorded the highest mean score of 3.92. A significant Chi Square (χ2) value of 10.739 indicated that there was an association between the use of marketing mix strategies and entrepreneurial competencies of the business owners. Kendall’s coefficient of concordance (w) value of 0.31 proved that there is a reasonable degree of agreement among the respondents regarding the ranking of the constraints facing their enterprises. The study recommended consistent application of 7Ps marketing mix strategies to eliminate most of the constraints identified by the operators and continuous capacity building on entrepreneurial skills.
    Keywords: Entrepreneurial Competence, Marketing Mix Strategies, Micro Enterprises, Restaurant., International Development, Marketing, Q13,
    Date: 2015
  21. By: Stefan Bender; Nicholas Bloom; David Card; John Van Reenen; Stefanie Wolter
    Abstract: Recent research suggests that much of the cross-firm variation in measured productivity is due to differences in use of advanced management practices. Many of these practices – including monitoring, goal setting, and the use of incentives – are mediated through employee decision-making and effort. To the extent that these practices are complementary with workers’ skills, better-managed firms will tend to recruit higher-ability workers and adopt pay practices to retain these employees. We use a unique data set that combines detailed survey data on the management practices of German manufacturing firms with longitudinal earnings records for their employees to study the relationship between productivity, management, worker ability, and pay. As documented by Bloom and Van Reenen (2007) there is a strong partial correlation between management practice scores and firm-level productivity in Germany. In our preferred TFP estimates only a small fraction of this correlation is explained by the higher human capital of the average employee at better-managed firms. A larger share (about 13%) is attributable to the human capital of the highest-paid workers, a group we interpret as representing the managers of the firm. And a similar amount is mediated through the pay premiums offered by better-managed firms. Looking at employee inflows and outflows, we confirm that better-managed firms systematically recruit and retain workers with higher average human capital. Overall, we conclude that workforce selection and positive pay premiums explain just under 30% of the measured impact of management practices on productivity in German manufacturing.
    Keywords: management practices; productivity; wages
    JEL: J1 J50
    Date: 2016–03
  22. By: Ozkan Eren; Masayuki Onda; Bulent Unel
    Abstract: This paper investigates the impact of Foreign Direct Investment (FDI) on entrepreneurial activity at the individual-owner level in U.S. states over 1996- 2008. Our results indicate that FDI has no effect on entrepreneurial activity in Right-to-Work (RTW) states. In non-RTW states, however, we find that an increase in FDI decreases the average monthly rate of business creation and destruction. Specifically, a 10-percent increase in FDI decreases the average monthly rate of business creation and destruction by roughly 4 and 2.5 percent (relative to sample mean), respectively.
  23. By: Luis Garicano; Luis Rayo
    Abstract: An expert with general knowledge trains a cash-constrained novice. Faster training increases the novice’s productivity and his ability to compensate the expert; it also shrinks the stock of knowledge yet to be transferred, reducing the expert’s ability to retain the novice. The profit-maximizing agreement is a multi-period apprenticeship in which knowledge is transferred gradually over time. The expert adopts a "1/e rule" whereby, at the beginning of the relationship, the novice is trained just enough to produce a fraction 1/e of the efficient output. This rule causes inefficiently lengthy relationships that grow longer the more patient the players. We discuss policy interventions.
    Keywords: general human capital; international joint ventures; relational contracts
    JEL: J24 M0
    Date: 2016–03

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