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on Heterodox Microeconomics |
| By: | Vranceanu , Radu (ESSECBusiness School) |
| Abstract: | Economic profit is produced by entrepreneurs, those special individuals able to detect and seize as yet unexploited market opportunities. In general capitalist firms manage to deliver positive profits even in the most competitive environments. They can do so thanks to internal entrepreneurs, a subset of their employees able to drive change and develop innovation in the workplace. This paper argues that the goal of profit maximization is fully consistent with the corporation doing good for society. However, there is little justification for corporations to transfer the whole economic profit to shareholders. Economic agents entitled to receive the economic profit are precisely those who create this profit, namely the internal entrepreneurs. |
| Keywords: | Corporate Goal; Entrepreneurship Theory of the Firm; Internal Entrepreneurs; Profit; Social Role of Business; Virtue Ethics |
| JEL: | A11 A13 L26 M14 P20 |
| Date: | 2013–05 |
| URL: | http://d.repec.org/n?u=RePEc:ebg:essewp:dr-13008&r=hme |
| By: | Cavalieri, Duccio |
| Abstract: | This is a paper on the theory of capital. It deals with the role of capital in a cost-of-production theory of value in which both labour and capital are directly productive. The guidelines of an analytical method are proposed. Marx’s ‘monetary expression of abstract labour-value’ (MEV) is used as price-index. It is preferred to the ‘monetary expression of labour time’ (MELT), exclusively focused on living labour, suggested by some neo-Marxist scholars during the ’New Value Controversy’. The author, a critical Marxist, develops the trace provided by Marx in his Grundrisse ’Fragment on Machines’, where he pointed out the need to abandon the labour theory of value and to rely on a broader labour-and-capital monetary theoretical construction. Due attention is paid in this essay to the time and money dimensions of capital and to the roles of both real and financial capital. |
| Keywords: | capital, value, labour, Marx, MEV, MELT, profit accounting |
| JEL: | B12 B13 B22 B5 B51 E2 E4 E41 |
| Date: | 2013–05 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:47197&r=hme |
| By: | Colombelli Alessandra; Krafft.Jackie; Quatraro Francesco (University of Turin) |
| 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. |
| Date: | 2012–04 |
| URL: | http://d.repec.org/n?u=RePEc:uto:labeco:201209&r=hme |
| By: | Natália Pimenta Monteiro (Universidade do Minho - NIPE); Geoff Stewart (Economics Division, University of Southampton) |
| Abstract: | This paper draws on a comprehensive data set from Portugal to investigate the activities, internal characteristics and survival prospects of cooperatives and capitalist enterprises. Consistent with theory, high levels of market concentration and low entry costs were shown to be conducive to cooperatives. Cooperatives were found to be, on average, older and to operate with a larger, more highly educated and more productive labour forces than their capitalist counterparts. Finally, we show that cooperatives have a markedly higher probability of survival than capitalist enterprises, even after controlling for industry and fi rm characteristics. |
| Keywords: | Cooperatives; capitalist fi rms; firm ownership |
| JEL: | J54 P12 |
| Date: | 2013 |
| URL: | http://d.repec.org/n?u=RePEc:nip:nipewp:08/2013&r=hme |
| By: | Corradi, A.A. |
| Abstract: | This study investigates critical learning episodes as landmarks in the evolution of business start-ups. A framework that combines individual learning processes with the Penrosian resource-based theory of the firm, and the concepts of search and routines from evolutionary economics provides the theoretical ground on which this study is developed. Multilevel factors, ranging from entrepreneurial agency to the institutional setting of business development services, represent different levels of analysis. These levels are connected through critical learning episodes, which are triggered by endogenous or exogenous factors and culminate in the creation of new or in the change of current organizational routines. These episodes were narrated by 43 entrepreneurs-founders through semi-structured interviews. Their business start-ups were operating for an average of 4 years (s.d.=1,9) and were linked to business incubation programmes in the two most resource-rich regions in Brazil. These start-ups were in three sectors: a) manufacturing, b) information and communication, and c) professional, scientific and technical activities. The analysis of these narratives combined qualitative (i.e., grounded theory principles) and quantitative (i.e., social networks analysis) techniques. This paper focusses on the most common type of critical learning episode: entry and survival in the market (n=36 start-ups). Results show how micro-processes of learning influence access and creation of resources at the firm level. A temporal analysis of networks configurations shows how processes of embeddedness in market relations influence intra- and inter-organizational dynamics. It is argued that critical learning episodes, for combining multiple factors and levels of analysis, are a useful theoretical and analytical tool to better understand the evolution of these businesses. In addition to this, issues of path-breaking and innovation are discussed in light of institutionalized practices of business development services. |
| Keywords: | social networks;organizational learning;evolution of business start-ups;critical learning episodes;organizational routines;mixed methods |
| Date: | 2013–05–17 |
| URL: | http://d.repec.org/n?u=RePEc:dgr:euriss:559&r=hme |
| By: | Hanappi, Hardy |
| Abstract: | Traditional macroeconomics and agent-based simulation (ABS) seem to be two disjunctive worlds, two different sprachspiele in the sense of Wittgenstein. It is not just the fact that macroeconomics has a long and distinguished history that on top of more than 200 years of discourse has recently adopted a sophisticated dynamic mathematical framework, while ABS is still in its infancy and for outsiders looks more like an intellectual toy than a serious research tool. Both languages are tools and eventually both are aiming at the same object of investigation: political economy. Why they let their object appear differently certainly is due to the intrinsic properties of the two languages. As is the case with every tool, the properties of the tool are to some extent transferred to the results that can be achieved with the respective tool. What aggravates this split of work styles is the fact that two different large research communities are linked to the use of the two languages; and each member of such a community has built already a considerable human capital stock, which consists mainly of elements that belong to exactly one of the two languages. Any expedition into the use of the foreign language runs into danger to make a part of the own toolset look obsolete, and thus to lose hard earned human capital. The incentives for cooperation disappear. To ease the pains of disaggregated research, the aim of this paper is to improve mutual understanding, and to show how far evolutionary macroeconomic simulation can advance political economy by explaining traditional macroeconomics as a (sometimes implausible) special case of its own more general approach. On the other hand ABS researchers often are unaware of the rich interpretative and empirically oriented treasures that classical macroeconomics has in store. What at first sight looks to be easily transferred into an algorithm turns out to be a highly refined argument, which in turn challenges the skills of ABS modelers. The most promising route to follow in the future certainly will be to be versatile in both languages, to walk on both feet. This short paper should provide a modest first step towards this goal. |
| Keywords: | Macroeconomics, simulation, evolutionary economics |
| JEL: | E10 E11 E12 |
| Date: | 2013–03–31 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:47181&r=hme |
| By: | Richard N. Langlois (University of Connecticut) |
| Abstract: | This review essay discusses and appraises Douglas Allen’s The Institutional Revolution (2011) as a way of reflecting on the uses of the New Institutional Economics (NIE) in economic history. It praises and defends Allen’s method of asking “what economic problem were these institutions solving?” But it insists that such comparative-institutional analysis be imbedded within a deeper account of institutional change, one driven principally by changes – often endogenous changes – in the extent of the market and in relative scarcities. The essay supports its argument with a variety of examples of the NIE applied to economic history. |
| Keywords: | institutions, transaction costs, aristocracy, military history, factory system. |
| JEL: | C61 L25 D24 |
| Date: | 2013–02 |
| URL: | http://d.repec.org/n?u=RePEc:uct:uconnp:2013-11&r=hme |
| By: | Richard Adelstein (Department of Economics, Wesleyan University) |
| Abstract: | This essay asks whether business firms should be treated as moral or legal persons, capable of bearing rights and duties as distinct entities. Building on earlier work describing firms as relational contracts in performance (Adelstein 2010), it considers the nature of legal and moral personality, whether and when rights and duties can be assigned independently without a balancing symmetry, and what qualifies a subject for personhood, and thus for rights and duties. It argues for an asymmetric view of the rights and duties of firms. On the one hand, because the purposeful acts of firms typically cannot be reduced to the purposeful acts of any individual participant, there is a residual responsibility for the acts of the firm after the responsibility of each participant has been properly reckoned that can only be attributed to the firm. But on the other, while it may be convenient for participants and others that firms hold rights to ordinary property, because firms are never more than instruments created by living people for their own purposes, they have no right to life or liberty. In the absence of these rights, there is no basis for granting firms political rights to such things as free speech, free association or privacy. A concluding section considers the granting of constitutional rights to business corporations in the United States in light of these arguments. |
| Keywords: | theories of the firm, contracts in performance, Kantian personhood, collective rights and duties |
| JEL: | A12 B40 D23 K20 |
| Date: | 2013–05 |
| URL: | http://d.repec.org/n?u=RePEc:wes:weswpa:2013-003&r=hme |
| By: | Hanappi, Hardy |
| Abstract: | This paper combines several important arguments, which have puzzled economic theory for decades, to arrive at a more adequate description of the current global crisis. The main theoretical innovation is to view the long-run economic evolution as a stepwise evolution of money forms. Moreover, as already indicated in the title, this development of money forms is closely linked to the development of social institutions, in particular of state institutions. Capital, the most recent form of money, today has to be understood as an omnipresent algorithm, as a growth imperative implicit in social institutions and internalized models. The task of evolutionary political economy thus will be to provide an adequate theoretical counterpart to mirror these processes. This paper explores how far a careful reconsideration of received economic theory can contribute to this task. |
| Keywords: | Money, Credit, Capital, State |
| JEL: | B50 E02 P16 |
| Date: | 2013–02–11 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:47166&r=hme |
| By: | Guerzoni, Marco; Nuccio, Massimiliano (University of Turin) |
| Abstract: | This paper discusses the extent to which socio-demographic characteristics of consumers and their past consumption are less effective in explaining the decision of purchasing a cultural good than the characteristics of the product itself, which allow imitative behaviors and are at the basis of distinction. While the former approaches are well discussed in the literature, the latter refers to the Bourdieu’s idea of objectified cultural capital, which has been rarely explored in empirical works. Because the various explanatory effects interact with each others, the paper tests a theoretical model which matches individual characteristics of the consumer with the properties of the cultural product. Specifically, we discussed the emergence of a new version of a cultural good, which is able to broaden the dimension of the market by gaining quick success in the the audience. This diffusion pattern is a quite rare event, but disruptive for the market and extremely profitable for the producer. The authors label this occurrence disruptive cultural fad and try to understand the determinants of its adoption. The hypotheses of the model are tested on a unique dataset of micro-data of purchasing transactions in Milan in the early 19th century,when the music by Gioachino Rossini emerged as disruptive cultural fad at the dawn of the music industry |
| Date: | 2012–09 |
| URL: | http://d.repec.org/n?u=RePEc:uto:labeco:201217&r=hme |
| By: | Mario Mariniello |
| Abstract: | The issue: Anti-cartel enforcement is the least controversial of competition policy themes. Agreements to restrict competition such as price fixing or market sharing have obvious negative effects on welfare. Within the European Union, however, industry representatives have increasingly voiced concern that the European Commission applies a too-strict fining policy to enforce anti-cartel law, particularly since the introduction of new guidelines on fines in 2006. Fines are said to be too high, disproportionate and liable to introduce distortions into the market, ultimately leading to higher prices for consumers. It is often argued that more lenient approaches should be followed in crisis times. Policy challenge: High fines for cartel activity could entail costs for society and might be difficult to implement. Nevertheless, there is no case for reducing current levels of EU anti-cartel fines. Fine levels already take the economic crisis into account, and the net present value of fines might prove to be too low to discourage collusion. We estimate that fines might even be not high enough to offset the additional profits yielded by collusion. Fines should be complemented with other measures to increase deterrence, in particular personal sanctions targeting company officers who are responsible for leading the company to commit infringements. In the short term, pressure on decision makers could be increased by reducing the expected duration of investigations. |
| Date: | 2013–05 |
| URL: | http://d.repec.org/n?u=RePEc:bre:polbrf:780&r=hme |
| By: | Jon D. Wisman |
| Abstract: | Although the Great Depression and the financial crisis of 1929 that triggered it have been endlessly studied, there is little consensus and even much puzzlement as to why they occurred. This article claims that beneath the many causal factors that have been advanced lie deeper underlying determining forces that have received less notice: wage stagnation and the dramatic increase in inequality following World War I. Wage stagnation and rising inequality fueled three dynamics that set the stage for a financial crisis – the focus of this study -- and contributed to the duration of the depression that followed. The first is that consumption was constrained by the smaller share of total income accruing to workers, thereby restricting investment opportunities in the real economy. Flush with greater income and wealth, the elite flooded financial markets with credit, helping keep interest rates low and encouraging the creation of new credit instruments, some of which recycled the rich's surplus assets as debt to those less well off. The second dynamic is that greater inequality pressured households to find ways to consume more to maintain their relative social status. As a result, household saving rates declined, households took on greater debt, and may have worked longer hours. The third dynamic is that, as the rich took larger shares of income and wealth, they gained relatively more command over everything, including ideology. Reducing taxes on the rich, favoring business over labor, and failing to regulate newly evolving credit instruments flowed out of this ideology. |
| Keywords: | inadequate demand, consumer externalities, social respectability, speculation, financial innovation, ideology |
| JEL: | E21 E44 G01 |
| Date: | 2013 |
| URL: | http://d.repec.org/n?u=RePEc:amu:wpaper:2013-07&r=hme |
| By: | Samuel Fosu |
| Abstract: | This paper investigates the relationship between capital structure and firm performance, paying particular attention to the degree of industry competition. The paper applies a novel measure of competition, the Boone indicator, to the leverage performance relationship. Using panel data consisting of 257 South African firms over the period 1998 to 2009, this paper examines the effect of capital structure on firm performance and investigates the extent to which the relationship depends on the level of product market competition. The results suggest that financial leverage has a positive and significant effect on firm performance. It is also found that product market competition enhances the performance effect of leverage. The results are robust to alternative measures of competition and leverage. |
| Keywords: | Capital structure; Product market competition; Firm performance |
| JEL: | G32 L11 L25 |
| Date: | 2013–05 |
| URL: | http://d.repec.org/n?u=RePEc:lec:leecon:13/11&r=hme |
| By: | Xavier Gabaix; Augustin Landier; Julien Sauvagnat |
| Abstract: | In the "size of stakes" view quantitatively formalized in Gabaix and Landier (2008), CEO compensation is determined in a competitive talent market, and reflects the size of firms affected by talent. This paper offers an empirical update on this view. The years 2004-2011, which include the recent crisis, were not part of the initial study and offer a laboratory to examine the theory as they include new positive and negative shocks to the size of large firms. Executive compensation at the top (ex ante) did closely track the evolution of average firm value during those years. During the crisis (2007 - 2009), average total firm value decreased by 17%, and CEO pay decreased by 28%. During 2009-2011, we observe a rebound of firm value by 19% and of CEO pay increased by 22%. These fairly proportional changes provide a validity check in favor of the "size of stakes" view. |
| JEL: | G3 J2 |
| Date: | 2013–05 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:19078&r=hme |
| By: | Alam, Niaz |
| Abstract: | A short cultural history of the impact of Ethical Investment and Consumers over the years. Primarily from a UK based perspective looking at the evoluton of ethical business issues and their contemporary impact. Topics covered include impacts in books, films and foreign policy. History of Influencing the market via international conventions and discussion of debates on the value of mainstreaming, political disputes (The human rights and wrongs of boycotts) and the 1990s take off for codes of conduct |
| Keywords: | Responsible Investment, SRI, Ethical consumers, Ethical Investment |
| JEL: | B00 B2 B29 B30 Z1 Z13 |
| Date: | 2013–04–28 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:47216&r=hme |
| By: | Fernando Borraz; Juan Dubra; Daniel Ferrés; Leandro Zipitría |
| Abstract: | We analyze the effect of supermarket entry on the exit of small stores in the food retailing sector in Montevideo between 1998 and 2007. We use detailed geographical information to identify the link between supermarket entry and the exit of nearby small stores. Entry of supermarkets using small- to medium-size formats creates a competitive threat for the existing small stores, decreasing their probability of survival. The result is robust to several model specifications and varying definitions of what constitutes a supermarket. The impact of supermarket entry is unequivocal for groceries, bakeries, fresh pasta shops, and butcher shops. |
| Keywords: | Supermarket entry; competition; small store attrition. |
| Date: | 2013 |
| URL: | http://d.repec.org/n?u=RePEc:mnt:wpaper:1303&r=hme |
| By: | Willem H. Boshoff (Department of Economics, University of Stellenbosch) |
| Abstract: | Competition policy investigations usually commence with a definition of the relevant product and geographic market. The relevant market provides a first evaluation of competitive conditions and allows for the calculation of market shares, which aids in the assessment of firms’ market power. Given its implications for assessing market power, the market definition in a competition case is frequently contested. Critics argue that market definition is often arbitrary and should be avoided. Instead, IO scholars argue that modern econometric methods are capable of directly estimating market power and competitive effects without the need for defining markets. We argue that market definition not only offers a valuable first screen for market power, but actually involves a substitution analysis that lies at the heart of any competition case. We argue that it is suboptimal to promote a single encompassing econometric model instead of the multi-faceted empirical approach underlying most market definition exercises in practice. In addition, we note that market definition involves much more than merely the estimation of price elasticities, which are in any event difficult to estimate in most competition cases. |
| Keywords: | market, market definition, market share, substitutability, price elasticity, antitrust, competition policy, mergers, monopolization |
| JEL: | L11 L40 L41 K21 |
| Date: | 2013 |
| URL: | http://d.repec.org/n?u=RePEc:sza:wpaper:wpapers186&r=hme |