nep-hme New Economics Papers
on Heterodox Microeconomics
Issue of 2013‒03‒02
thirteen papers chosen by
Frederic S. Lee
University of Missouri-Kansas City

  1. Institutions and the allocation of entrepreneurship across new and established organizations By Niels Bosma; Sander Wennekers; Erik Stam
  2. Competition, Industrial structure and Economic Growth By J.W. Fedderke
  3. Cooperation Events, Ego-Network Characteristics and Firm Innovativeness – Empirical Evidence from the German Laser Industry By Muhamed Kudic; Katja Guhr
  4. Maintaining an Institution: the institutional work of Michelin in haute cuisine around the world By Bouty, Isabelle; Gomez, Marie-Léandre; Drucker-Godard, Carole
  5. Who wants the contrat de travail unique ? Social support for labour market flexibilisation in France By Bruno Amable
  6. Properties of knowledge base and firm survival: Evidence from a sample of French manufacturing firms By Alessandra Colombelli; Jackie Krafft; Francesco Quatraro
  7. Industrial composition, methods of compensation, and real earnings in the Great Depression By Hart, Robert A; Roberts, J Elizabeth
  8. Imperfect Information and Inflation Expectations: Evidence from Microdata By Lena Dräger; Michael Lamla
  9. Large buyers, preferential treatment and cartel stability By Manel Antelo; Lluis Bru
  10. Corporate governance, value and performance of firms: New empirical results on convergence from a large international database By Jackie Krafft; Yiping Qu; Francesco Quatraro; Jacques-Laurent Ravix
  11. Why Does the Minimum Wage Have No Discernible Effect on Employment? By John Schmitt
  12. What does variation in survey design reveal about the nature of measurement errors in household consumption ? By Gibson, John; Beegle, Kathleen; De Weerdt, Joachim; Friedman, Jed
  13. On the economics of labels : a review of the theoretical literature By Bonroy, O.; Constantatos, C.

  1. By: Niels Bosma; Sander Wennekers; Erik Stam
    Abstract: In this paper, we argue that institutions affect the allocation of entrepreneurship across new and established organizations. This is confirmed by empirical analysis of the Global Entrepreneurship Monitor (GEM) data on early-stage (independent) entrepreneurial activity and entrepreneurial employee behavior. Most comparative international research on entrepreneurship has focused on independent new ventures and has ignored the pursuit of entrepreneurial opportunities within established organizations (intrapreneurship). However, in developed economies the prevalence of entrepreneurial employee behavior is on average found to be in the same order of magnitude as that of independent entrepreneurial activity. At the same time prevalence rates of these two types of entrepreneurship vary substantially between countries. We analyze the allocation of entrepreneurial activity across early-stage independent entrepreneurial activity (entrepreneurship in new organizations) and entrepreneurial employee activity (entrepreneurship in established organizations) in 36 countries, taking into account effects of the level of economic development as well as the formal and informal institutional setting. We find that labor market institutions and the extent to which societies value autonomy affect the allocation of entrepreneurship across new and established organizations.
    Date: 2013–02–11
  2. By: J.W. Fedderke
    Abstract: This paper takes as its starting point established findings on industrial conduct as measured by pricing power in South African industry. The South African findings are contrasted with recent results derived from firm-level data from China and India. A stark contrast emerges between China, with low mark-ups of price over marginal cost of production, and South Africa and India with high mark-ups. Given the impact of pricing power on productivity growth, we show that lack of competitive pressure in the manufacturing sector, contributes one important explanation of why China has a relatively large, while South Africa and India have a relatively small manufacturing sector. We also provide an estimate of foregone employment opportunities due to the presence of pricing power has carried for South Africa. We provide a framework in terms of which the impact of success of potential policy intervention in the labour market can be assessed, given the findings on industrial structure. Returning to Chinese firm level data, we also examine whether there is a case to be made for differential policy treatment of established, new entrant, and struggling firms - and find that there is little evidence to support such a claim. For China we find that state intervention in the manufacturing sector has primarily served to suppress pricing power. We conclude with reflections on competitive pressures in other sectors of the economy, as well as final inferences on desirable policy interventions designed to stimulate growth and employment creation.
    Keywords: Competition, Industrial Structure, Economic Growth, South Africa, India, Industry
    Date: 2013
  3. By: Muhamed Kudic; Katja Guhr
    Abstract: We study how firm innovativeness is related to individual cooperation events and the structure and dynamics of firms’ ego-networks employing a unique panel dataset for the full population of 233 German laser source manufactures between 1990 and 2010. Firm innovativeness is measured by yearly patent applications as well as patent grants with a two year time-lag. Network measures are calculated on the basis of 570 knowledge-related publicly funded R&D alliances. Estimation results from a panel data count model with fixed effects are suggestive of direct innovation effects due to individual cooperation events, but only as long as structural ego-network characteristics are neglected. Innovativeness is robustly related to ego-network size and ego-network brokerage whereas ego-network density reveals some surprising results.
    Keywords: R&D cooperation, ego-networks, firm innovativeness
    JEL: L25 O32 D85
    Date: 2013–02
  4. By: Bouty, Isabelle (Université Paris Ouest); Gomez, Marie-Léandre (ESSEC Business School); Drucker-Godard, Carole (Université Paris Ouest)
    Abstract: This paper aims at questioning how the maintenance of institutions is actually performed. Based on an institutional work perspective in order to better link field and actors relationships, we investigate how the Michelin Red guide went international and used its internationalization to secure its dominant position over the field of haute cuisine. Michelin followed similar trajectories, and combined various types of institutional work in geographic expansion, especially policing, valorizing and embedding that at the same time as it further assed its dominant position. Our research contributes to advancing the understanding of maintenance work, and in particular exemplifies that preserving a dominant position implies actively working towards imposing the symbolic and cognitive systems of rules
    Keywords: Institutional Work; Michelin Guide; Restaurants
    JEL: L20 L83 M00 M10
    Date: 2013–02–20
  5. By: Bruno Amable (CES - Centre d'économie de la Sorbonne - CNRS : UMR8174 - Université Paris I - Panthéon-Sorbonne, CEPREMAP - Centre pour la recherche économique et ses applications, IUF - Institut Universitaire de France - Ministère de l'Enseignement Supérieur et de la Recherche Scientifique)
    Abstract: A policy proposal is to abolish the distinction between regular open-end employment contracts and fixed-term contracts and substitute a unique labour contract with a degree of employment protection increasing with tenure. A question on the desirability of the "contrat unique" was included in the 2012 post-electoral survey. Using the answers to this question, this paper proposens an empirical analysis of the possible social basis for the contrat unique. Insider/outsider theories would predict that insiders would oppose such a reform whereas outsiders would welcome it. Beyond the theoretical and empirical problems associated with the definition and identification of insiders and outsiders, the results of the estimations do not bring an overwhelming support for the insider/outsider theories. The bulk of the social support for the CTU is made of "insiders". The social support for the contrat unique resembles the traditional social base of the Right with the addition of some "outsiders".
    Keywords: Contrat unique/single labour contract; insider/outsider; political economy
    Date: 2013–01
  6. By: Alessandra Colombelli (GREDEG - Groupe de Recherche en Droit, Economie et Gestion - Université Nice Sophia Antipolis (UNS) - CNRS : UMR6227); Jackie Krafft (GREDEG - Groupe de Recherche en Droit, Economie et Gestion - Université Nice Sophia Antipolis (UNS) - CNRS : UMR6227); Francesco Quatraro (GREDEG - Groupe de Recherche en Droit, Economie et Gestion - Université Nice Sophia Antipolis (UNS) - CNRS : UMR6227)
    Abstract: The paper analyzes the effects of the properties of firms' knowledge base on the survival likelihood of firms. Drawing upon the analysis of the patterns of co-occurrence of technological classes in patent applications, we derive the coherence, variety and cognitive distance indexes, accounting respectively for technological complementarity, differentiation and (dis)similarity in the firms' patent portfolios. The results of our analysis are in line with the previous literature, showing that innovation enhances the survival likelihood of firms. In addition, we show that the search strategies at work in the development of firms' knowledge base matter in reducing the likelihood of a failure event. Knowledge coherence and variety appear to be positively related to firms' survival, while cognitive distance exerts a negative effect. We conclude that firms able to exploit the accumulated technological competences have more chances to be successful in competing durably in the market arena, and derive some policy implications concerning the role of public intervention in the orientation of search efforts in local contexts.
    Keywords: Knowledge coherence; variety; cognitive distance; firms' survival
    Date: 2013–01–21
  7. By: Hart, Robert A; Roberts, J Elizabeth
    Abstract: In an extension of an earlier paper (Hart and Roberts, 2012), we investigate the pay and working time of blue-collar timeworkers and pieceworkers during the Great Depression within British engineering firms. We compare and contrast southern/midland engineering districts of Britain with northern districts. The south/midlands region was dominated by piece-rated workers and by modern sections of the industry, such as vehicle and aircraft manufacture. Time-rated work predominated in northern districts where older sections - for example, marine and textile engineering - were clustered. These contrasting industrial compositions and associated payment methods offer further insights into manufacturing real earnings responses to the Great Depression.
    Keywords: the Great Depression; real earnings; timework; piecework; Industrial c omposition
    Date: 2013–02
  8. By: Lena Dräger (Universität Hamburg (University of Hamburg)); Michael Lamla (KOF Swiss Economic Institute, ETH Zurich)
    Abstract: We investigate the updating behavior of individual consumers regarding their shortand long-run inflation expectations. Utilizing the University of Michigan Survey of Consumer’s rotating panel microstructure, we can identify whether individuals adjust their inflation expectations over a period of six months. We find evidence that the updating frequency has been underestimated. Furthermore, looking at the possible determinants of an update we find support for imperfect information models. Moreover, individual expectations are found to be more accurate after an update and forecast accuracy is affected by inflation volatility measures and news regarding inflation. Finally, the updating frequency is found to significantly move spreads in bond markets.
    Keywords: Rational Inattention, updating inflation expectations, microdata, news
    JEL: D84 E31
    Date: 2013–01
  9. By: Manel Antelo (Departmento de Fundamentos da Análise Económica, Universidade de Santiago de Compostela); Lluis Bru (Department d'Economia de l'Empresa, Universitat de les Illes Baleares)
    Abstract: Bilateral deals for large clients or key account management (henceforth KAM) is traditionally justified in terms of the importance of a long-term association between a firm and such clients. However, in this paper we offer a different rationale for a seller to apply KAM to its large buyers. When facing large buyers, a firm can use KAM to deal with such buyers but not to small individual buyers in order to segment the market, charge higher prices to non-KAM buyers, and increase its profits. Paradoxically, the implementation of KAM by the seller makes it advantageous for customers to belong to a buyer group, thereby eliminating the instability that would otherwise plague the creation of the group. The formation of a buyer group thus ultimately depends on the pressure it puts upon the seller to resort to KAM to segment the market.
    Keywords: Buyer group, key account management, cartel stability
    JEL: L20 L21
    Date: 2013–01
  10. By: Jackie Krafft (GREDEG - Groupe de Recherche en Droit, Economie et Gestion - CNRS : UMR7321 - Université Nice Sophia Antipolis (UNS)); Yiping Qu (GREDEG - Groupe de Recherche en Droit, Economie et Gestion - CNRS : UMR7321 - Université Nice Sophia Antipolis (UNS)); Francesco Quatraro (GREDEG - Groupe de Recherche en Droit, Economie et Gestion - CNRS : UMR7321 - Université Nice Sophia Antipolis (UNS)); Jacques-Laurent Ravix (GREDEG - Groupe de Recherche en Droit, Economie et Gestion - CNRS : UMR7321 - Université Nice Sophia Antipolis (UNS))
    Abstract: This paper aims to revisit the link between corporate governance, value, and firm performance by focusing on convergence, understood as the way that non-US firms are adopting US best practice in terms of corporate governance, and the implications of this adoption. We examine theoretical questions related to conventional models (agency theory, transaction cost economics, new property rights theory),which tend to suggest rational adoption of best practice, and contributions that alternatively consider country- and firm-level differences as possible barriers to convergence. We contribute to the empirical literature by using a large international database to show how non-US firms' adoption of US best practice is having an impact on performance.
    Keywords: Corporate governance; governance metrics, ratings, rankings and scoring; firm value; firm performance
    Date: 2013
  11. By: John Schmitt
    Abstract: The employment effect of the minimum wage is one of the most studied topics in all of economics. This report examines the most recent wave of this research – roughly since 2000 – to determine the best current estimates of the impact of increases in the minimum wage on the employment prospects of low-wage workers. The weight of that evidence points to little or no employment response to modest increases in the minimum wage.
    Keywords: minimum wage, labor, employment, inequality, poverty
    JEL: J J2 J3 J31 J38 J6 J8 D
    Date: 2013–02
  12. By: Gibson, John; Beegle, Kathleen; De Weerdt, Joachim; Friedman, Jed
    Abstract: This paper uses data from eight different consumption questionnaires randomly assigned to 4,000 households in Tanzania to obtain evidence on the nature of measurement errors in estimates of household consumption. While there are no validation data, the design of one questionnaire and the resources put into its implementation make it likely to be substantially more accurate than the others. Comparing regressions using data from this benchmark design with results from the other questionnaires shows that errors have a negative correlation with the true value of consumption, creating a non-classical measurement error problem for which conventional statistical corrections may be ineffective.
    Keywords: Food&Beverage Industry,Consumption,Inequality,Economic Theory&Research,Statistical&Mathematical Sciences
    Date: 2013–02–01
  13. By: Bonroy, O.; Constantatos, C.
    Abstract: Are labels good or bad for consumers and firms? In this essay we analyze the label's nature as information revealing mechanism and explore the theoretical literature on labeling with respect to the following issues: i) the effects of labels on market structure, ii) the distortions due to the certification process, and iii) the level at which different agencies wish the label to be set at. For each issue, we highlight the key economic mechanisms, their impact on market equilibrium and how they affect all actors' payoffs. The latter gives rise to the political economy of labels, i.e., lobbying activities in favor of, or resisting the imposition of labels, and/or trying to infl uence its level. We conclude by identifying issues for further research.
    JEL: L15 L50
    Date: 2013

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