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on Business Economics |
| By: | Hattori, Masahiko; Tanaka, Yasuhito |
| Abstract: | When an outside innovating firm has a cost-reducing technology, it can sell licenses of its technology to incumbent firms, or enter the market and at the same time sell licenses, or enter the market without license. We examine the definitions of license fees in such situations under oligopoly with three firms, one outside innovating firm and two incumbent firms, considering threat by entry of the innovating firm using a two-step auction. |
| Keywords: | license; entry; oligopoly; innovating firm; two-step auction |
| JEL: | D43 L13 |
| Date: | 2017–05–07 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:78992&r=bec |
| By: | Hattori, Masahiko; Tanaka, Yasuhito |
| Abstract: | When an outside innovating firm has a technology to produce a higher quality good than the good produced at present, it can sell licenses of its technology to incumbent firms, or enter the market and at the same time sell licenses, or enter the market without license. We examine the definitions of license fee in such a situation in an oligopoly with three firms under vertical product differentiation, one outside innovating firm and two incumbent firms, considering threat by entry of the innovating firm using a two-step auction. Also we show that in the case of uniform distribution of consumers' taste parameter and zero cost when the quality improvement (the difference between the quality of the high-quality good and the quality of the low-quality good) is small (or large), the two-step auction is (or is not) credible. |
| Keywords: | license; entry; oligopoly; vertical differentiation; two-step auction |
| JEL: | D43 L13 |
| Date: | 2017–05–07 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:78987&r=bec |
| By: | Cristina Guillamón (Banco de España); Enrique Moral-Benito (Banco de España); Sergio Puente (Banco de España) |
| Abstract: | Using a panel of Spanish firms over the period 2002-2012, we investigate the interactions between high growth episodes in terms of size and productivity. We find that high growth in productivity (size) increases the likelihood of high growth in size (productivity). However, the effect from size to productivity is smaller than the effect from productivity to size. We also explore the potential role of firm-level financial constraints using information from the Central Credit Register (CIR) of Banco de España. Our results indicate that credit constraints hamper high growth episodes in terms of both size and productivity. |
| Keywords: | keyword, high-growth firms, high-impact firms, productivity, panel firm-level data |
| JEL: | L25 L11 D24 C23 |
| Date: | 2017–05 |
| URL: | http://d.repec.org/n?u=RePEc:bde:wpaper:1718&r=bec |
| By: | Hattori, Masahiko; Tanaka, Yasuhito |
| Abstract: | We consider a choice of options for a foreign innovating firm to license its new cost-reducing technology to a domestic incumbent firm or to enter the domestic market with or without license under convex cost functions. With convex cost functions the domestic market and the foreign market are not separated, and the results depend on the relative size of those markets. In a specific case with linear demand and quadratic cost, entry without license strategy is never the optimal strategy for the innovating firm; if the ratio of the size of the foreign market relatively to the domestic market is small, license with entry strategy is optimal; and if the ratio of the size of the foreign market relatively to the domestic market is not small, license without entry strategy is optimal. |
| Keywords: | license with or without entry, duopoly, foreign and domestic markets, foreign innovating firm |
| JEL: | D43 L13 |
| Date: | 2017–05–07 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:78996&r=bec |
| By: | MIYAKAWA Daisuke; MIYAUCHI Yuhei; Christian PEREZ |
| Abstract: | The goal of this paper is to forecast future firm performance with machine learning techniques. Using data on over one million Japanese firms with supply-chain linkage information provided by a credit reporting agency, we show high performance in the prediction of exit, sales growth, and profit growth. In particular, our constructed proxies far outperform the credit score assigned by the credit reporting agency based on a detailed survey and interviews of firms. Against such baseline score, our models are able to ex-ante identify 16% of exiting firms (baseline: 11%), 25% of firms experiencing growth in sales (baseline: 8%), and 22% of firms exhibiting positive profit growth (baseline: 13%). The proof of concept of this paper provides practical usage of machine learning methods in firm performance prediction. |
| Date: | 2017–05 |
| URL: | http://d.repec.org/n?u=RePEc:eti:dpaper:17068&r=bec |
| By: | Hattori, Masahiko; Tanaka, Yasuhito |
| Abstract: | We investigate a choice of options for a foreign innovating firm to license its technology for producing the high quality good to a domestic incumbent firm or to enter the domestic market with or without license under vertical differentiation with convex cost functions. If cost functions are non-linear, the domestic market and the foreign market are not separated, and the results depend on the relative size of those markets. We consider product innovation as quality improvement of goods not process innovation such as cost-reducing. If the size of the foreign market is small, the foreign innovating firm chooses license with entry strategy, and if the foreign market is not small, it chooses license without entry strategy. |
| Keywords: | license with or without entry; convex cost function; vertical differentiation |
| JEL: | D43 L13 |
| Date: | 2017–05–07 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:78995&r=bec |
| By: | Anders Frederiksen; Lisa B. Kahn; Fabian Lange |
| Abstract: | Supervisors occupy central roles in production and performance monitoring. We study how heterogeneity in performance evaluations across supervisors affects employee and supervisor careers and firm outcomes using data on the performance system of a Scandinavian service sector firm. We show that supervisors vary widely in how they rate subordinates of similar quality. To understand the nature of this heterogeneity, we propose a principal-agent model according to which supervisors can differ in their ability to elicit output from subordinates or in their taste for leniency when rating subordinates. The model also allows for variation in how informed firms are about this heterogeneity. Within the context of this model, we can discern the nature of the heterogeneity across supervisors and how informed firms are about this heterogeneity by relating observed supervisor heterogeneity in ratings to worker, supervisor, and firm outcomes. We find that subordinates are paid significantly more, and their pay is more closely aligned with performance, when they are matched to a high-rating supervisor. We also find that higher raters themselves are paid more and that the teams managed by higher raters perform better on objective performance measures. This evidence suggests that supervisor heterogeneity stems, at least in part, from real differences in managerial ability and that firms are at least partially informed about these differences. We conclude by quantifying how important heterogeneity in supervisor type is for workers' careers. For a typical worker, matching to a high rater (90th percentile) relative to a low rater (10th percentile) for just one year results in an increase in the present discounted value of earnings equivalent to 7-14% of an annual salary. |
| JEL: | J24 M5 |
| Date: | 2017–04 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:23351&r=bec |
| By: | HOSONO Kaoru; TAKIZAWA Miho; TSURU Kotaro |
| Abstract: | Governments in most countries regulate, tax, and subsidize firms depending on whether firm size is larger or smaller than some preset thresholds. Firms that remain below the thresholds can receive benefits from the government, but may incur costs or distortions that could arise from being below the optimal size without such policies. Such benefits and costs are likely to depend on firm and industry characteristics. Using the policy reform in Japan that raised the thresholds as a natural experiment, we examine (1) whether and to what extent the distribution of firm size is distorted due to the presence of the thresholds, (2) the characteristics of firms that grow beyond the thresholds, and (3) how firms that grow beyond the thresholds perform as compared to those that remain below the thresholds. We have obtained evidence for some, although not all, industries as follows. First, bunching and its shift can be found at the thresholds in the size distribution in terms of stated capital. Second, capital structure is distorted under the threshold of stated capital. Third, firms with lower productivity are more likely to be small and medium enterprises (SMEs) after the policy reform. Finally, while the ex-post research and development (R&D) intensity of firms that grew to large firms decreases as compared to those that remain as SMEs, the ex-post profitability and productivity of firms that grew to large firms increase. Overall, our results suggest that size-dependent policies in Japan cause distortions on firms' financial policy, R&D, and operating performance. However, the degree of such distortions greatly differs across industriess. |
| Date: | 2017–05 |
| URL: | http://d.repec.org/n?u=RePEc:eti:dpaper:17070&r=bec |
| By: | Raúl Serrano (University of Zaragoza); Isabel Acero-Fraile (University of Zaragoza); Natalia Dejo-Oricain (University of Zaragoza) |
| Abstract: | This paper examines if collaborative networks affect the export status and intensity in family firms. We suggest that the network effect is more relevant when the firm has low export intensity because when the firm is in the first stages of internationalization, networks are very useful to provide export resources and to solve common problems. However, this role becomes less relevant when firms show higher export intensity. For the empirical analysis, we use a dynamic Heckman-Probit model, using in the second stage a quantile regression model. |
| Keywords: | Family Firms; Networks; Internationalization; Export Intensity; Quantile regression |
| JEL: | F15 M21 N74 Q13 |
| Date: | 2017–04 |
| URL: | http://d.repec.org/n?u=RePEc:zar:wpaper:dt2017-04&r=bec |
| By: | Lionel Fontagné (PSE - Paris School of Economics, CES - Centre d'économie de la Sorbonne - UP1 - Université Panthéon-Sorbonne - CNRS - Centre National de la Recherche Scientifique, CEPII - Centre d'Etudes Prospectives et d'Informations Internationales - Centre d'analyse stratégique); Gianluca Orefice (Centre d'Etudes Prospectives et d'Informations Internationales); Roberta Piermartini (WTO); Nadia Rocha (WTO) |
| Abstract: | This paper considers the heterogenous trade effects of restrictive Sanitary and Phyto-Sanitary (SPS) measures on exporters of different sizes, and the channels via which aggregate exports fall: firm participation, export values and pricing strategies. We do so by matching a detailed panel of French firm exports to a new database of SPS regulatory measures that have been raised as of concern in the dedicated committees of the WTO. By using specific trade concerns to capture the restrictiveness of product standards, we focus only on standards that are perceived as trade barriers. We analyze their effects on three trade-related outcomes: (i) the probability to export and to exit the export market (the firm-product extensive margin), (ii) the value exported (the firm-product intensive margin), and (iii) export prices. We find that SPS concerns discourage the presence of exporters in SPS-imposing foreign markets. We also find a negative effect of SPS imposition on the intensive margins of trade. These negative effects SPS are attenuated in larger firms. |
| Keywords: | non-tariff barriers *,International trade,firm heterogeneity,multi-product exporters |
| Date: | 2015–09 |
| URL: | http://d.repec.org/n?u=RePEc:hal:pseose:hal-01299757&r=bec |
| By: | Era Dabla-Norris; Florian Misch; Duncan Cleary; Munawer Khwaja |
| Abstract: | Tax compliance costs tend to be disproportionately higher for small and young businesses. This paper examines how the quality of tax administration affects firm performance for a large sample of firms in emerging market and developing economies. We construct a novel, internationally comparable, and multidimensional index of tax administration quality (the TAQI) using information from the Tax Administration Diagnostic Assessment Tool. We show that better tax administration attenuates the productivity gap of small and young firms relative to larger and older firms, a result that is robust to controlling for other aspects of tax policy and of economic governance, alternative definitions of small and young firms, and measures of the quality of tax administration. From a policy perspective, we provide evidence that countries can reap growth and productivity dividends from improvements in tax administration that lower compliance costs faced by firms. |
| Date: | 2017–04–14 |
| URL: | http://d.repec.org/n?u=RePEc:imf:imfwpa:17/95&r=bec |
| By: | Brixiova, Zuzana (University of Cape Town); Égert, Balázs (OECD) |
| Abstract: | This paper develops a model of costly firm creation in an economy with weak institutions, costly business environment as well as skill gaps where one of the equilibrium outcomes is a low-productivity trap. The paper tests the implications of the model using a cross-sectional dataset including about 100 countries. Both theoretical and empirical results suggest that to move the economy into a productive equilibrium, complementarity matters: reforms to improve the business environment tend to be more effective in creating productive firms when accompanied by narrowing skill gaps. Similarly, more conducive business regulations amplify the positive impact on firm creation of better education and reduced skill mismatches. To escape a low-productivity trap, policymakers should thus create a pro-business framework and a well-functioning education system. |
| Keywords: | model of start-ups and strategic complements, institutions, education, low-income countries, threshold regression |
| JEL: | L26 J24 J48 O17 |
| Date: | 2017–04 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp10704&r=bec |
| By: | Heyman, Fredrik (Research Institute of Industrial Economics (IFN)); Norbäck, Pehr-Johan (Research Institute of Industrial Economics (IFN)); Persson, Lars (Research Institute of Industrial Economics (IFN)) |
| Abstract: | We show that increasing the intensity of product market competition can reduce discrimination against female managers, even in an environment in which all employers have a preference for discrimination. The reason is that due to the glass ceiling effect, female managers will, on average, be more skilled than male managers and will therefore, on average, be more beneficial for the firm when product market competition is intense. Using detailed matched employee-employer data, we find that (i) more intense competition leads to relatively higher wages for female managers and (ii) the share of female managers is higher in firms in more competitive industries. |
| Keywords: | Discrimination; Management; Competition; Gender |
| JEL: | J70 L20 M50 |
| Date: | 2017–05–15 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:iuiwop:1169&r=bec |
| By: | Keller, Wolfgang; Olney, Will |
| Abstract: | This paper examines the role of globalization in the rapid increase in top incomes. Using a comprehensive data set of thousands of executives at major U.S. firms from 1993-2013, we find that exports, along with technology and firm size, have contributed to rising executive compensation. Isolating changes in exports that are unrelated to the executive's talent and actions, we show that globalization has affected executive pay not only through market channels but also through non-market channels. Furthermore, exogenous export shocks raise executive compensation mostly through bonus payments in poor-governance settings, in line with the hypothesis that globalization has enhanced the executive's rent capture opportunities. Overall, these results indicate that globalization has played a more central role in the rapid growth of executive compensation and U.S. inequality than previously thought, and that rent capture is an important part of this story. |
| Keywords: | corporate governance; Distributional Effects; Executive compensation; Globalization; inequality |
| JEL: | F14 F16 F66 J31 M12 |
| Date: | 2017–05 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:12026&r=bec |
| By: | Giuseppe Berlingieri; Patrick Blanchenay; Sara Calligaris; Chiara Criscuolo |
| Abstract: | This paper is a technical document, designed to serve as a reference document for subsequent papers arising out of MultiProd, a project of the Committee on Industry, Innovation and Entrepreneurship and the Working Party on Industry Analysis, aimed at studying productivity patterns across countries and over time. MultiProd provides harmonised micro-aggregated data of paramount importance for investigating the extent to which different policy frameworks can shape firm productivity and examining the way resources are allocated to more productive firms. The paper discusses the project’s main contributions in relation to the current literature, in particular how using micro-aggregated data can help policy-makers understand and measure the efficiency of resource allocation in the economy, the dependence of economic activity on a small number of large firms, and wage inequality. |
| Date: | 2017–05–16 |
| URL: | http://d.repec.org/n?u=RePEc:oec:stiaaa:2017/04-en&r=bec |