nep-hme New Economics Papers
on Heterodox Microeconomics
Issue of 2012‒07‒14
fifteen papers chosen by
Frederic S. Lee
University of Missouri-Kansas City

  1. Entry Time Effects and Follow-on Drugs Competition By Luiz Flavio Andrade
  2. Do cooperative enterprises create social trust? By Sabatini, Fabio; Modena, Francesca; Tortia, Ermanno
  3. Labor Cost Adjustment: Evidence From a Survey of Slovak Firms By Marianna Cervena
  4. Peer Salaries and Employee Satisfaction in the Workplace By Mumford, Karen A.; Smith, Peter N.
  5. Contract linkages and resource use in grain production : the argentina pradera pampeana. By Marcos Gallacher
  6. Déni du travail et tyrannie des normes-Denial of work and tyranny of norms By Damien Collard
  7. Does Multimarket Contact Facilitate Tacit Collusion? Inference on Conduct Parameters in the Airline Industry. By Ciliberto, Federico; Williams, Jonathan W
  8. Base Wage Rigidities: Evidence From a Survey of Slovak Firms By Marianna Cervena
  9. Corporate Social Responsibility: Transparency, Ethics and Governance in Emerging Markets By Stephanie Jones; Taghreed Badawoud; Mohammad Reza
  10. The Price of Media Capture and the Looting of Newspapers in Interwar France By Bignon, Vincent; Flandreau, Marc
  11. Company heterogeneity and mark-up variability By Saara Tamminen; Chang Han-Hsin
  12. Firm Dynamics: Employment Dynamics Arising from Firm Growth and Contraction in Canada, 2001 to 2009 By Rollin, Anne-Marie
  13. Constraints to the Growth of Small Firms in Northern Myanmar By Bah, El-hadj M.; Cooper, Geoff
  14. Family Firm Internationalization: Influence of Familiness on the Spanish Firm Export Activity By Fernando Merino, Joaquín Monreal-Pérez, Gregorio Sánchez-Marín
  15. Cooperation behaviour and innovation performance in the Nigerian manufacturing industry By Abiodun A. Egbetokun

  1. By: Luiz Flavio Andrade (Gate-Groupe d'analyse théorique et économique)
    Abstract: Pharmaceutical firms have been criticized for concentrating their efforts of R&D on the so called “me-too” or “follow-on” drugs. There have been many comments against and favourable to the dissemination of these incremental innovations but few papers have broached the subject from an empirical point of view, possibly because identification of “me-too” is not so obvious. This paper focuses on the impact of entry order on “follow-on” drugs competition in the French market between years 2001 and 2007. More precisely, this study examines the effects on market share of first entrants in the follow-on drug market and how this possible competitive advantage changes over time. Our results are coherent with theoretical microeconomic issues concerning the importance of being first. We find evidence that first movers in the follow on drug market have the ability to capture and maintain greater market share for a long period of time. The hierarchical market position of follow on drugs does not seem to be affected by generic drugs emergence. From a dynamic perspective, our analysis shows that market share is positively correlated with the ability of follow on drugs to set prices higher than the average follow-on drug price in a specific therapeutic class (ATC) which means that market power remains considerably important for first movers. Finally we found that the optimum level of innovation to maximize market share is the highest one.
    Keywords: Incremental innovation; Follow-on drugs; Entry timing; Market share.
    JEL: I18 I12 L65 L51
    Date: 2012–06
  2. By: Sabatini, Fabio; Modena, Francesca; Tortia, Ermanno
    Abstract: This paper contributes to the literature by carrying out the first empirical investigation into the role of different types of enterprises in the creation of social trust. Drawing on a unique dataset collected through the administration of a questionnaire to a representative sample of the population of the Italian Province of Trento in March 2011, we find that cooperatives are the only type of enterprise where the work environment fosters the social trust of workers.
    Keywords: cooperative enterprises; nonprofit organizations; trust; social capital; intrinsic motivations; inclusive governance; work organization
    JEL: P13 Z1 Z13 L31 L33
    Date: 2012–07–03
  3. By: Marianna Cervena (Building on a unique survey of how Slovak firms adjust wages and prices, this paper studies the reduction of labour costs in two forms: base wage cuts and alternative margins for labour cost reduction. Anecdotal evidence suggests that wage-cutting by firms occurs more frequently in Slovakia than in any other country and that the use of alternative margins for labour cost reduction is also quite prevalent in Slovakia. Regression results support the strong relationship between the use of alternative margins and wage rigidities. I find that the use of any alternative margin is on average 30% more likely in firms facing nominal wage rigidity that in firms with flexible wages.)
    Keywords: nominal and real wage rigidity, alternative margins for labour cost cutting, survey evidence
    JEL: J30 J50 E24 C81
    Date: 2012–06
  4. By: Mumford, Karen A. (University of York); Smith, Peter N. (University of York)
    Abstract: We explore the relationship between reported job satisfaction and own wage, relative wage and average comparison group wage; allowing for asymmetry in these responses across genders. We find that the choice of relevant comparison group is affected by gender in Britain; men display behaviour characteristic of competitiveness whilst women do not.
    Keywords: job satisfaction, earnings, gender, segregation, workplace
    JEL: J3 J7 J28
    Date: 2012–06
  5. By: Marcos Gallacher
    Abstract: This paper analyzes contractual arrangements in barley production in the Argentine pradera pampeana region. Barley constitutes an interesting case-study: its production and marketing conditions result in some degree of vertical contracting between primary producers and processors. Vertical coordination via contracting, however, is considerably less than that observed for example in poultry or some types of vegetable and fruit production. Barley is thus an intermediate case between coordination via impersonal market transactions and that resulting from different degrees of vertical integration. The objective of the paper is to determine the impacts of contracting on decisions such as input purchasing agreements, output marketing sharing, vertical integration, risk management and the use of technical know-how. The impact of contracting arrangements on input use and technology choice is also explored. Findings include the following. First, input purchase sharing, or output marketing sharing arrangements are infrequent amongst farmers. Some evidence exists, however, of barley farmers engaging in these arrangements more than farmers producing alternative crops. The (partial) “asset-specific” nature of the barley crop may explain these differences. Second, a higher proportion of barley farmers engage in different types of vertical arrangements with input suppliers or output purchasers. Third, farmers participating in the barley vertical chain are more likely to use formal insurance instruments than farmers producing other crops. Fourth, significant differences exist in input (fertilizer and ag chemical), and technical-know how between farmers that participate and those that do not participate in vertical arrangements with input suppliers and output purchasers. Formal contracting appears, in general, to have a positive impact on all these dimensions. The paper shows that contracts between barley producers and processors are relatively simple, relying for compliance on reputation and good-will more than on the formal “written word”. Possibly, relatively low benefits from non-compliance result in this type of arrangement working well. The paper also shows, however, that private arbitration, mediation and quality inspection institutions exist in order to reduce both the probability and costs of litigation. The Camara Arbitral (in existence since 1905) is an interesting example of this type of institution.
    Date: 2012–05
  6. By: Damien Collard (Université de Franche-Comté)
    Abstract: (VF)L’objet de cet article est d’explorer, dans une perspective clinique, les mécanismes organisationnels qui favorisent le déni du travail, à partir de l’exemple de deux démarches qualité qui ont été déployées à la SNCF dans le domaine de la relation de service. Les normes de service qui ont été définies dans le cadre de ces deux démarches ont contribué au déni du travail des agents en front office de la SNCF, essentiellement parce que le respect de ces normes est devenue une fin en soi. Cette situation a fait naître une activité « contrariée » (CLOT, 1999) chez les agents en front office, dans la mesure où ces normes ont été perçues comme une entrave à la réalisation d’un travail de qualité. Dans les deux cas étudiés, le déni a porté simultanément sur : - la réalité (dans laquelle le travail de ces agents devait s’exercer), - le travail réel (par opposition au travail prescrit), - et le « réel du travail » (au sens où l’entend la psychodynamique du travail).(VA)Based on the example of two quality processes deployed at the SNCF in the field of the service encounter, the aim of this article is to explore, from a clinical point of view, organizational mechanisms which encourage the denial of work. The norms of services previously defined contributed to the front office agents’ denial of work, essentially because the respect of these norms became an ultimate finality. This situation has induced an “annoyed activity” (CLOT, 2009) among the front office agents, owing to the fact that the norms have been perceived as a hindrance to the accomplishment of a high-grade work. In the two previous practical examples, the reality (of work), the real work (in opposition to the prescribed work) and the “real of work” (in the meaning of the psychodynamics of work) have been denied.
    Keywords: déni du travail;"réel du travail";normes de service;relation de service;denial of work;“real of work”;norms of services;service encounter.
    JEL: M12 M14
    Date: 2012–06
  7. By: Ciliberto, Federico; Williams, Jonathan W
    Abstract: We show that multimarket contact facilitates tacit collusion in the US airline industry using two complementary approaches. First, we show that the more extensive is the overlap in the markets that the two firms serve, i) the more firms internalize the effect of their pricing decisions on the profit of their competitors by reducing the discrepancy in their prices, and ii) the greater the rigidity of prices over time. Next, we develop a flexible model of oligopolistic behavior, where conduct parameters are modeled as functions of multimarket contact. We find i) carriers with little multimarket contact do not cooperate in setting fares, while carriers serving many markets simultaneously sustain almost perfect coordination; ii) cross-price elasticities play a crucial role in determining the impact of multimarket contact on collusive behavior and equilibrium fares; iii) marginal changes in multimarket contact matter only at low or moderate levels of contact; iv) assuming that firms behave as Bertrand-Nash competitors leads to biased estimates of marginal costs.
    Keywords: Airline Industry; Airport Facilities; Collusion; Differentiated Products; Multi-Market Contact; Price Rigidity.; Screening Test
    JEL: L13
    Date: 2012–06
  8. By: Marianna Cervena (National Bank of Slovakia, Research Department)
    Abstract: Building on a unique survey of how Slovak firms adjust wages and prices, this paper studies the extent to which Slovak wages are rigid and the determinants for both nominal and real wage rigidity. Compared to other countries included in the survey, Slovakia has nominal base wage rigidity that is one of the highest and real base wage rigidity that is also relatively high. Apart from looking at the anecdotal evidence, I run multinomial logit regressions to capture the relationship between real wage rigidity, nominal wage rigidity, flexible wages and a number of firm-specific and institutional characteristics. Regression results suggest that the prevalent skill-level of the workforce matters: firms with mainly low-skilled blue-collar workers face lower probabilities of wage rigidities than firms with white-collar workers. Collective bargaining coverage is also a significant determinant. Firms covered by firm-level unions face higher probabilities of both types of wage rigidities compared to firms not covered by any level of collective bargaining. On the other hand, firms facing sectoral level unions have more flexible wages than those without any collective bargaining.
    Keywords: nominal and real wage rigidity, survey evidence
    JEL: J30 J50 E24 C81
    Date: 2012–06
  9. By: Stephanie Jones (Maastricht School of Management, Maastricht, The Netherlands); Taghreed Badawoud (Maastricht School of Management, Maastricht, The Netherlands); Mohammad Reza (Maastricht School of Management, Maastricht, The Netherlands)
    Abstract: In managing business in emerging markets, Corporate Social Responsibility [CSR] is an issue of growing worldwide concern. It adds to the complexity of the management task in this environment, contributing to risks faced in all business transactions – although it may not be seen in this precise terminology. Indeed, the concepts of CSR, Business Ethics and Corporate Governance – as discussed by Western governments, donor agencies and MBA students, for example – may be almost unknown in some of the countries where they pose a major problem. The way that businesses in emerging markets cope with these challenges – both effectively and ineffectively – reveal many of the “new dynamics of management” discussed in this conference. The damage caused by the many corporate scandals in the West – Watergate, Enron, WorldCom in the USA, Rupert Murdoch and News International, parliamentary expenses in the UK – has been well-publicised, and in many cases perpetrators are brought to justice. Corporate governance and transparency issues have increasingly moved to centre-stage. CSR abuses and business ethics transgressions in the BRICs and beyond may be more widespread and more tolerated, less obvious and more part of the ‘normal’ business scene – although the situation is impossible to quantify, especially within local regulatory frameworks and where there are few active and independent journalists. This situation may be changing, with globalisation and greater scrutiny of governance matters by investors... yet CSR issues remain one of the greatest concerns and major risks for the Western business person involved in globalizing their operations. Businesses from some Western countries such as the USA are particularly anxious to avoid prosecution at home when tempted to be more flexible in the BRICs and beyond, due to the Foreign Corrupt Practices Act and other legislation. Which particular CSR issues are of most interest and importance for Western executives trying to avoid compromise and possible business loss? Corruption, the abuse of human rights, a lack of data protection, financial fraud, copyright piracy, low levels of transparency and high levels of anonymity, workplace discrimination, oppressive economic colonization, an absence of fair competition, poor levels of corporate governance, no respect for intellectual property, the perpetration of monopolies and the tolerance of leaders of dubious accountability and respectability. The list is endless, and can include local practices unknown to the Western executive – although he or she will have their own personal experiences after first-hand exposure. Many relate to institutional voids – a lack of the kind of business infrastructure of which Westerners are usually familiar and expect. Corruption may be seen as one of the most important issues, and may be a way of life in countries with low salaries but powerful officials – and greedy business people. Human rights abuse is an ongoing issue, and is seen as especially negative by individualistic and freedom-enjoying Westerners, with their insistence on privacy and data protection issues. Financial scandals and fraud have been sending shock waves throughout the BRICs and beyond, with billions of dollars simply going missing. Copyright piracy is not unknown in the West, but the scale in some BRICs and beyond can be alarming, together with the issue of transparency and ease of doing business in entering several emerging economies, often related to governance. Prospects of equal opportunities for members of different races are an important issue for countries with a mixed population, such as South Africa – but it would seem that discrimination is still the norm. Economic dominance by some Western countries – and China – in many emerging countries is seen as an example of the economic colonization of one country by another, raising several CSR issues, including protection or the matter of unfairly excluding competition. The concept of corporate governance used to be a preserve of the West, but is gradually impacting developing countries, especially those trying to attract foreign investment, and is especially concerned with ensuring independent management control. Intellectual property or IP is another concern, and so are state-endorsed monopolies.
    Date: 2012–07
  10. By: Bignon, Vincent; Flandreau, Marc
    Abstract: This paper develops a new insight enabling the empirical study of media capture: minority shareholders of newspapers and readers face similar risks. Both are adversely affected when corrupt insiders use the newspaper for personal profit and receive invisible revenues. This means that relevant data on influence and exploitation of newspaper has been hiding in plain sight in stock exchange or over-the-counter prices, since stock transactions reflect the value of this capture. Empirical data is consistent with increasing levels of looting in France during the 1930s. We provide a comparison with Britain and argue that Britain managed to protect its newspapers better.
    Keywords: control premium; corruption; France; governance; Interwar; Media; minority shareholders
    JEL: D72 G34 L82 N24 N74
    Date: 2012–06
  11. By: Saara Tamminen; Chang Han-Hsin
    Abstract: Mark-ups are often assumed to be constant for all firms within a sector in theoretical models. This paper reflects empirically on the distributions of companies mark-ups in order to test this assumption. We use exhaustive, Finnish company level micro-data to calculate the mark-up for each firm. The dataset covers 70 sectors from both the manufacturing and services sectors for the years 2005 to 2009. The wide variation of mark-ups found in some sectors suggests that assuming a constant mark-up estimate for all firms in the same sector is inappropriate. Our results indicate 16 out of 28 manufacturing and 31 out of 42 services sectors to support the heterogeneous mark-up assumption. We compare explicitly the mark-up distributions between companies of different size and exporting status. We find that small companies place on average higher mark-ups than large companies and domestic companies place higher mark-ups than exporting companies. Last, we characterize the sectors in which the assumption of homogenous mark-ups is to some extent justified. The results suggest that mark-up heterogeneity is greater in sectors with a low capital-labour ratio and high number of companies. Overall, mark-up heterogeneity is not prevalent only in few specific types of sectors, but seems like a wider phenomenon.
    Keywords: Mark-up, company heterogeneity, nonparametric methods
    JEL: F23 L11 C14
    Date: 2012–07–03
  12. By: Rollin, Anne-Marie
    Abstract: This paper looks at annual changes in Canadian business sector employment from 2001 to 2009. This period encompasses an expansionary phase (2001 to 2008), followed by a recession (2008/2009). Firm-level data are used to decompose yearly net employment change into gross employment creation and destruction, which makes it possible to measure the size of total annual employment reallocation. These measures of employment turnover are compared across industries and firm size classes.
    Keywords: Business performance and ownership, Business adaptation and adjustment, Entry, exit, mergers and growth, Small and medium-sized businesses
    Date: 2012–06–27
  13. By: Bah, El-hadj M.; Cooper, Geoff
    Abstract: This paper uses survey data collected from Kalaymyo, a small urban city in North West Myanmar, to characterize firms and analyze the constraints limiting their growth. The level of firm ownership is very high but most firms are small, informal, operated out of the home, earning low income and with no employees. The most binding constraints are related to financing constraints, especially lack of access to informal credit. This is followed by the high degree of competition as the majority of firms are small retailers selling non-differentiated goods. This lack of credit combined with an apparent aversion to debt, limits the ability of entrepreneurs to take advantage of the high returns available on investment. We find that firms that made a capital investment over the last three years are significantly more profitable than those that did not.
    Keywords: rural investment climate; enterprize development; poverty reduction; Myanmar
    JEL: O53 O10 L20
    Date: 2012–06
  14. By: Fernando Merino, Joaquín Monreal-Pérez, Gregorio Sánchez-Marín
    Abstract: This paper studies the determinants of the export activity of family SMEs, disentangling the three main dimensions that comprise the concept of familiness: power, experience, and culture. The results, using the F-PEC scale over a sample of 500 Spanish SMEs, show that this approach identifies the determinants that explain the export activity of family SMEs better than a simple dichotomous approach. Specifically, we find that the expertise transmitted from different generations and the family culture orientation to the firm positively affect the international activities of family SMEs; however, the composition of the firm control–management does not have any significant influence on internationalization
    Keywords: Family SMEs, export activity, Familiness, Spanish firms, F-PEC scale
    JEL: D22 M16
    Date: 2012–04
  15. By: Abiodun A. Egbetokun (Friedrich-Schiller University, Graduate College "Economics of Innovative Change", and National Centre for Technology Management (Federal Ministry of Science and Technology), Obafemi Awolowo University, Nigeria)
    Abstract: Analysing the relationship between firms' openness to external knowledge and their innovation performance is nothing new. What is new is studying how this relationship fares in latecomer economic contexts such as Nigeria, and that is the focus of this paper. Using unique micro-level innovation data, it is shown, as the existing literature suggests, that firms are more likely to innovate when they access external knowledge either through formal or through informal interactions. However, innovative firms that exploit external knowledge do not necessarily enjoy greater innovation benefits than those that do not. Thus, while openness to external knowledge might help firms to become better at innovating, it does not assist them in reaping the benefits derivable from their innovation efforts. Moreover, different innovation types are essentially the same with respect to the effect that network resources have on them. Thus, it makes little sense to engage network partners selectively for certain innovation types at the expense of others.
    Keywords: innovation, networking, openness, collaboration, external knowledge, Nigeria, manufacturing industry
    JEL: O31 L14 L60
    Date: 2012–07–09

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