|
on Business Economics |
| By: | Nawaf Almaskati (University of Waikato); Ron Bird (University of Waikato); Susanna Lu (University of Waikato) |
| Abstract: | We use a comprehensive set of country-level social and institutional measures to study the relationship between country-level factors and firm-level governance. We also examine the roles of the country’s financial development status and the firm’s external financing needs in influencing the firm’s governance framework. Using a sample of 43 countries and 3301 firms, we find that country-level factors explain a large part of the variation in firm-level governance across countries. We also find evidence that the relationship between country-level factors and firm-level mechanisms is best represented as a moderating relationship. The results also indicate the presence of a complementary relationship, albeit sometimes insignificant, between firm-level governance and all the country-level variables included in our study. When accounting for the effect of a country’s financial development status and a firm’s external financing needs, we find evidence of a positive relationship between firm-level governance and firm returns and value for firms with high financing needs which operate in countries with high financial development. |
| Keywords: | country-level governance; firm-level governance; complementary relationship; financial development; external financing needs |
| Date: | 2019–07–05 |
| URL: | http://d.repec.org/n?u=RePEc:wai:econwp:19/09&r=all |
| By: | David Altig; Jose Maria Barrero; Nicholas Bloom; Steven J. Davis; Brent H. Meyer; Nicholas Parker |
| Abstract: | We develop a new monthly panel survey of business executives and a new question design that elicits subjective probability distributions over own-firm outcomes at a one-year look-ahead horizon. Our Survey of Business Uncertainty (SBU) began in 2014 and now covers 1,500 firms drawn from all 50 states, every major industry in the nonfarm private sector, and a full range of firm sizes. We use SBU data to measure expected future outcomes for the growth of sales, employment, and investment for each firm and the uncertainty surrounding those expectations. Mean expectations are highly predictive of realized growth rates in the firm-level data, and subjective uncertainty is highly predictive of absolute forecast errors. We also use the SBU data to produce a Business Expectations Index (first moment) and a Business Uncertainty Index (second moment) for the U.S. economy. In Granger causality tests, the Business Expectations Index has statistically significant predictive power for a range of prominent business cycle indicators. The SBU also includes special questions that elicit additional information, including the perceived effects of specific government policy developments on the firm’s decisions and outcomes |
| JEL: | D20 E0 |
| Date: | 2019–06 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:25956&r=all |
| By: | Jaerim Choi (University of Hawaii at Manoa); Theresa Greaney (University of Hawaii at Manoa) |
| Abstract: | Do multinational enterprises (MNEs) from more gender-equal countries bring gender-equal employment practices with them or do they adopt the gender norms of a less gender-equal host country as part of their assimilation strategy? Using firm-level panel data for Korea, a country with low gender equality, we find suggestive evidence that MNEs from more gender-equal countries have higher female shares of employment and a higher likelihood of a female CEO of their Korean affiliate. Then, using difference-in-differences and nearest-neighbor matching techniques, we uncover causal evidence that MNEs bring their country of origin’s gender norms in employment with them. Firms that switch from Korean to foreign ownership report 2 to 12 percentage points higher female shares of permanent main-task workers at firm headquarters compared with firms that remain under domestic ownership. Lastly, we quantify that 1 to 7 percent of the increase in firm-level total factor productivity caused by foreign acquisition can be attributed to workforce reorganization that may reduce gender-based misallocations of talent. |
| Keywords: | Gender inequality, Foreign ownership |
| JEL: | J16 F23 |
| Date: | 2019–06 |
| URL: | http://d.repec.org/n?u=RePEc:hai:wpaper:201908&r=all |
| By: | Gloria Cuevas-Rodríguez (Department of Management and Marketing, Universidad Pablo de Olavide); Jaime Guerrero-Villegas (Department of Management and Marketing, Universidad Pablo de Olavide); Ramón Valle-Cabrera (Department of Management and Marketing, Universidad Pablo de Olavide) |
| Abstract: | Although privatization has been widely analyzed, most studies have adopted a macroeconomic or political perspective, while little attention has been paid to its organizational and managerial implications. In this research, we develop two-case studies to analyze how corporate governance and strategy of privatized firms are related to the use of management compensation systems. Our results suggest that variables traditionally associated with greater board independence in carrying out monitoring (e.g., leadership structure and outsider/insider ratio) do not always result in variation after privatization. We find that firm’s ownership change does not necessary imply differences in the way the firm is managed after privatization. The adoption of firm’s strategic orientation based on the analysis of both the market and industry conditions in privatized firms, and the design of compensation systems aligned with this firm’s strategy seems to be related to the fact that deregulation and competitiveness occur at the same time as privatization. Thus, we contribute to the current literature by providing a comprehensive framework to analyze management changes of privatized firms, and highlighting the key role that other contingent variables, not considered by agency theory, play on explaining this issue. |
| Keywords: | DSS, Entrepreneurship, Modelling, CIA-ISM, Validation, Information Systems, Simulation |
| Date: | 2018–10 |
| URL: | http://d.repec.org/n?u=RePEc:pab:wpboam:19.04&r=all |
| By: | Altig, David E. (Federal Reserve Bank of Atlanta); Barrero, Jose Maria (Stanford University); Bloom, Nicholas (Stanford University); Davis, Steven J. (University of Chicago); Meyer, Brent (Federal Reserve Bank of Atlanta); Parker, Nicholas B. (Federal Reserve Bank of Atlanta) |
| Abstract: | We develop a new monthly panel survey of business executives and a new question design that elicits subjective probability distributions over own-firm outcomes at a one-year lookahead horizon. Our Survey of Business Uncertainty (SBU) began in 2014 and now covers 1,500 firms drawn from all 50 states, every major industry in the nonfarm private sector, and a full range of firm sizes. We use SBU data to measure expected future outcomes for the growth of sales, employment, and investment for each firm and the uncertainty surrounding those expectations. Mean expectations are highly predictive of realized growth rates in the firm-level data, and subjective uncertainty is highly predictive of absolute forecast errors. We also use the SBU data to produce a Business Expectations Index (first moment) and a Business Uncertainty Index (second moment) for the U.S. economy. In Granger causality tests, the Business Expectations Index has statistically significant predictive power for a range of prominent business cycle indicators. The SBU also includes special questions that elicit additional information, including the perceived effects of specific government policy developments on the firm's decisions and outcomes. |
| Keywords: | business uncertainty; subjective forecast distributions; surveys |
| JEL: | L2 M2 O32 O33 |
| Date: | 2019–06–01 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fedawp:2019-13&r=all |
| By: | Gumpert, Anna (LMU Munich); Steimer, Henrike (Stanford GSB); Antoni, Manfred (Institut für Arbeitsmarkt- und Berufsforschung) |
| Abstract: | How do geographic frictions affect firm organization? We show theoretically and empirically that geographic frictions increase the use of middle managers in multi-establishment firms. In our model, we assume that a CEO\'s time is a resource in limited supply, shared across headquarters and establishments. Geographic frictions increase the costs of accessing the CEO. Hiring middle managers at one establishment substitutes for CEO time, which is reallocated across all establishments. Consequently, geographic frictions between the headquarters and one establishment affect the organization of all establishments of a firm. Our model is consistent with novel facts about multi-establishment firm organization that we document using administrative data from Germany. We exploit the opening of high-speed train routes to show that not only the establishments directly affected by faster travel times but also the other establishments of the firm adjust their organization. Our findings imply that local conditions propagate across space through firm organization. |
| Keywords: | firm organization; multi-establishment firm; knowledge hierarchy; geography; |
| JEL: | D21 D22 D24 |
| Date: | 2019–06–28 |
| URL: | http://d.repec.org/n?u=RePEc:rco:dpaper:163&r=all |
| By: | Zhou, Yiming; Xu, Hangtian |
| Abstract: | This study investigates how industries with different patterns of firm heterogeneity are distributed across countries by developing a three-sector general-equilibrium model. There are two manufacturing industries in our setting: one in which firm productivity is homogeneous and the other in which it is heterogeneous. The higher degree of firm heterogeneity in the latter reflects the larger difference in firm heterogeneity between industries. We show that the larger country is more specialized in the industry with heterogeneous (homogeneous) firms when trade costs are low (high) and that an increase in the inter-industry difference in firm heterogeneity fosters the larger country's degree of specialization in the industry with heterogeneous firms. We also disclose the trade patterns across countries and show how they respond to trade liberalization. Moreover, wages are found to be higher in the larger country, with an increase in the inter-industry difference in firm heterogeneity enlarging the wage inequality across countries. |
| Keywords: | Firm heterogeneity; Industrial specialization; Trade patterns |
| JEL: | F12 F22 R12 |
| Date: | 2019–06–28 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:94746&r=all |
| By: | Marco de Pinto; Laszlo Goerke |
| Abstract: | Trade unions are often argued to cause allocative inefficiencies and to lower welfare. We analyze whether this evaluation is also justified in a Cournot-oligopoly with free but costly entry. If input markets are competitive and output per firm declines with the number of firms (business stealing), there is excessive entry into such oligopoly. If trade unions raise wages above the competitive level, output and profits per firm decline, which could deter entry and thus improve welfare. We find that an increase in the union's bargaining power raises welfare if the (inverse) demand curve is (sufficiently) concave. We also show that collective bargaining loosens the linkage between business stealing and excessive entry. |
| Keywords: | endogenous entry, oligopoly, trade union, welfare |
| JEL: | D43 J51 L13 |
| Date: | 2019 |
| URL: | http://d.repec.org/n?u=RePEc:ces:ceswps:_7668&r=all |
| By: | Chang-Tai Hsieh; Esteban Rossi-Hansberg |
| Abstract: | The rise in national industry concentration in the US between 1977 and 2013 is driven by a new industrial revolution in three broad non-traded sectors: services, retail, and wholesale. Sectors where national concentration is rising have increased their share of employment, and the expansion is entirely driven by the number of local markets served by firms. Firm employment per market has either increased slightly at the MSA level, or decreased substantially at the county or establishment levels. In industries with increasing concentration, the expansion into more markets is more pronounced for the top 10% firms, but is present for the bottom 90% as well. These trends have not been accompanied by economy-wide concentration. Top U.S. firms are increasingly specialized in sectors with rising industry concentration, but their aggregate employment share has remained roughly stable. We argue that these facts are consistent with the availability of a new set of fixed-cost technologies that enable adopters to produce at lower marginal costs in all markets. We present a simple model of firm size and market entry to describe the menu of new technologies and trace its implications. |
| JEL: | E23 E24 L11 L22 L25 R11 R12 |
| Date: | 2019–06 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:25968&r=all |
| By: | Marco Bettiol (Department of Economics and Management, University of Padova); Mauro Capestro (Department of Economics and Management, University of Padova); Eleonora Di Maria (Department of Economics and Management, University of Padova); Andrea Furlan (Department of Economics and Management, University of Padova) |
| Abstract: | The adoption of industry 4.0 technologies is assumed to bring superior competitive advantage for adopting firms as drivers of efficiency, differentiation as well as support to innovation. However, no studies capture the impacts of industry 4.0 technologies on firm’s financial performance. The paper explores the relationship between investments in digital technologies and firm performances, by also examining which are the technologies more likely to be associated with superior performance and eventually the cumulative effect of technologies on performance. Based on unique data gathered in 2017 on a sample of 1,149 Italian firms, results show the positive impacts on adopters’ performance and the role of robotics and laser cutting in this relationship. No cumulative effect (i.e. adopting more than one or two technologies) is instead observed. |
| Keywords: | digital technologies, performance, strategy, industry 4.0 |
| Date: | 2019–06 |
| URL: | http://d.repec.org/n?u=RePEc:pad:wpaper:0233&r=all |
| By: | Corina Boar; Virgiliu Midrigan |
| Abstract: | We study the aggregate and distributional impact of product market interventions and profit taxes using a model of firm dynamics, credit constraints and incomplete markets. A key ingredient of our model is that markups are endogenous so that the markup a producer charges depends on the amount of competition it faces. We show that size-dependent subsidies that remove the distortions due to markup dispersion lead to sizable welfare gains and reduce inequality, even though they increase firm concentration and long-run misallocation. In contrast, policies that reduce concentration lead to large output, TFP and welfare losses and increase inequality. A tax on profits greatly depresses the incentives to create new firms, reducing labor demand, after-tax wages and welfare. |
| JEL: | D4 E2 L1 |
| Date: | 2019–06 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:25952&r=all |
| By: | Olsson, Maria (Department of Economics) |
| Abstract: | Where do business cycles originate? The traditional view is that a business cycle is the result of shocks correlated across sectors. This view is complemented by a recently emerging literature showing that idiosyncratic shocks to large or highly interconnected sectors contribute to aggregate variation. This paper addresses the relative empirical importance of these two channels of business cycle variation. Results indicate that up to one-third of the business cycle is driven by idiosyncratic productivity variation together with network amplifications. |
| Keywords: | Production Networks; Micro to Macro; Aggregate Volatility; Sectoral Distortions |
| JEL: | D52 D57 E32 L11 |
| Date: | 2019–02–14 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:uunewp:2019_006&r=all |
| By: | Parisa Pourkarmi (Department of Economics, Carleton University, Ottawa, ON); Gamal Atallah (Department of Economics, University of Ottawa, Ottawa, ON) |
| Abstract: | This paper studies the impact of cooperative R&D and advertising on innovation and welfare in a duopolistic industry. The model incorporates two symmetric firms producing differentiated products. Firms invest in R&D and advertising in the presence of R&D spillovers and advertising spillovers. Advertising spillovers may be positive or negative. Four cooperative structures are studied: no cooperation, R&D cooperation, advertising cooperation, R&D and advertising cooperation. R&D spillovers and advertising spillovers always increase innovation and welfare if products are highly differentiated and/or spillovers are sufficiently high. The ranking of cooperation settings in terms of R&D, profits and welfare depends on product differentiation, R&D spillovers and advertising externalities. Firms always prefer cooperation on both dimensions, which is socially beneficial only when advertising and R&D spillovers are sufficiently high. |
| Keywords: | R&D, Advertising, Cooperation, Spillovers, Product differentiation, Innovation, Marketing. |
| JEL: | D43 L13 O32 |
| Date: | 2019 |
| URL: | http://d.repec.org/n?u=RePEc:ott:wpaper:1902e&r=all |
| By: | Gregory Huffman (Vanderbilt University) |
| Abstract: | A dynamic model of offshoring is studied which permits the analysis of how offshoring can affect economic and welfare outcomes. Firm owners make location decisions based on the future returns from locating in either foreign or domestic markets, or ceasing operations altogether. It is shown that increased offshoring can raise growth and welfare in both the domestic and foreign economies. Imposing a tax on firms that relocate abroad can make firms delay this move, but at the cost of lowering both domestic and foreign welfare, as well as growth. A tax on domestic profits has an ambiguous impact on growth, while lowering domestic welfare. The effect that these policy or parameter changes have on domestic income inequality, and international wage inequality is also studied. In contrast to the view that the economic impact of outsourcing is equivalent to that of admitting more immigrants, the present model implies that these policies are nearly the opposite of each other. Immigration reduces growth, and lowers the welfare of both foreign and domestic agents. |
| Keywords: | Economic Growth, Offshoring, Innovation, Firm Exit, Tax Policy, Creative Destruction |
| JEL: | E0 O1 |
| Date: | 2019–06–24 |
| URL: | http://d.repec.org/n?u=RePEc:van:wpaper:vuecon-19-00011&r=all |