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on Business Economics |
| By: | Bernardo Caldarola; Luca Fontanelli |
| Abstract: | Recent empirical evidence finds positive associations between digitalisation and industry concentration. However, ICT may not be all alike. We investigate the effect of the purchase of cloud services on the long run size growth rate of French firms. Our findings suggest that cloud services positively impact firm growth rates, with smaller firms experiencing more significant benefits compared to larger firms. This evidence suggests that the diffusion of cloud technologies may help mitigate concentration in the era of the digital transition by favouring the digitalisation and growth of smaller firms, especially when the cloud services provided are more advanced. |
| Keywords: | cloud, ICT, concentration, firm growth rate, firm performance |
| Date: | 2024–10–02 |
| URL: | https://d.repec.org/n?u=RePEc:ssa:lemwps:2024/25 |
| By: | Mathias Juust; Urmas Varblane |
| Abstract: | This paper investigates the resources and capabilities that determine firm-level adjustments after a sudden unexpected closure of a major export market. We focus on the effects of the 2014 Russian embargo on Western food exporters using the example of Estonian firms. The paper applies a novel multimethod approach consisting of Study I quantifying the embargo effect on the exports of all embargoed firms, and Study II conducting a multiple case study into three dairy exporters highly affected by the embargo. Study I employs a difference-in-difference model with matched embargoed firms as treatment. Study II builds on extensive document analysis that serves as input for interviews with the CEOs of the sample dairy firms. We find that pre-shock productivity is on average a good predictor of post-shock firm resilience (Study I), however, we specify that the key firm-level resources and capabilities necessary for successful post-shock adjustments might not be reflected in the standard quantitative productivity level measures (Study II). We conclude that key firm-level resources and capabilities for embargo-resilience are the quality of exporting experience, competitive product-market matching, absorptive capacity, and managerial vision and empowerment. |
| Keywords: | negative export shock, embargo, firm-level capabilities, trade barriers, trade diversion, trade policy |
| Date: | 2024 |
| URL: | https://d.repec.org/n?u=RePEc:mtk:febawb:145 |
| By: | Lamadon, Thibaut (University of Chicago); Lise, Jeremy (Cornell University); Meghir, Costas (Yale University); Robin, Jean-Marc (Sciences Po.) |
| Abstract: | This paper develops the nonparametric identification of models with production complementarities, worker-firm specific disutility of labor and search frictions. Mobility in the model is subject to preference shocks, and we assume that firms can write wage contracts. We develop a constructive proof for the nonparametric identification of the model primitives from matched employer-employee data. We use the estimated model to decompose the sources of wage dispersion into worker heterogeneity, compensating differentials, and search frictions that generate between-firm and within-firm dispersion. We find that compensating differentials are substantial on average, but the contribution differs greatly betweenthe lowest and highest types of workers. Finally, we use the model to provide an economic interpretation of several empirical regularities. |
| Keywords: | workfirm; labor; searchfrictions; |
| JEL: | A00 |
| Date: | 2024–09–06 |
| URL: | https://d.repec.org/n?u=RePEc:hhs:ifauwp:2024_013 |
| By: | Jan De Loecker (KU Leuven and CEPR); Catherine Fuss (National Bank of Belgium, Economics and Research Department); Nathan Quiller-Doust (KU Leuven); Leonard Treuren (KU Leuven) |
| Abstract: | We separately observe variable input expenditure and expenditure on fixed inputs in novel firm-level data covering the Belgian manufacturing sector over the last decades. This permits a deeper investigation of two potential drivers of the globally observed widening gap between firms’ revenue and variable input expenditure: technology and market power. Across the board, cost structures have become less reliant on variable input expenditure over time, while expenditure on fixed inputs or overhead costs has increased in prominence. We relate these changes in firms’ cost structures to performance measures and document that markups and gross profit rates increase substantially as the role of variable costs in production diminishes. Profit rates net of fixed input expenditure also increase, but by substantially less than gross profit rates. Our results suggest that technological change can explain a considerable portion of the widening gap between revenue and variable input expenditure, but that markups increase by more than necessary to break even, and that this phenomenon operates remarkably similarly across different firms and industries. |
| Keywords: | Intermediate goods and services; Fixed cost; Markups; Technology. |
| JEL: | D2 D4 L1 O14 |
| Date: | 2024–10 |
| URL: | https://d.repec.org/n?u=RePEc:nbb:reswpp:202410-459 |
| By: | Amaresh K Tiwari |
| Abstract: | Using the universe of firms in Estonia, we study the implications of imports-led and FDI- facilitated automation for productivity and factor shares of tasks and value-added. First, in contrast to the findings for developed economies, we find that the aggregate labour share of value-added for automation adopting firms is higher than that for non-adopters, and has grown, among others, through the reallocation of economic activities towards adopting firms. Second, the aggregate total factor productivity of the adopters concurrently grew faster than that of the non-adopters. Third, from the micro-level study, we find that the estimated labour share of tasks has declined over time among the adopting firms and is lowest in firms that automate frequently, where the frequency of automation provides rich information on firm automation characteristics. The study emphasizes international spillovers and the creation of productive new jobs by multinational adopters among the reasons for the increase in the labour share of value-added for adopters, even as their labour share of tasks declined. Fourth, the productivity impact of automation is heterogeneous: (a) firms that automate regularly, (b) multinational adopters, and (c) firms that realize complementarities between automation and innovative management practices are among the most productive adopters. The latter establishes that the innovative management practices instituted by adopters are those that help discover and facilitate complementarities be- tween automation and human labour. |
| Keywords: | Imports-Led Automation, Foreign Direct Investment (FDI), Productivity, Labour Share, Factor Task Content of Production, Complementarities |
| Date: | 2023 |
| URL: | https://d.repec.org/n?u=RePEc:mtk:febawb:144 |
| By: | Nollenberger, Jeremiah |
| Abstract: | The economic literature has remarked on the stability of the German labor market, despite the severe impact of the pandemic induced recession. So, what factors contributed to this stability? The literature stresses the use of internal flexibility on firm level - reducing working hours and productivity - as key to understand safeguarding of employment. This use of internal flexibility was, in addition, strongly aided by state policies, such as short-time work. In complementarity to these arguments, the family business literature contends that family firms offer higher job security from economic shocks (implicit labor contracts). Family corporate governance is thus argued to lead to more extensive use of internal flexibility measures. To assess this argument, we analyze the German Bundesbank-Online-Panel-Firms survey (BOP-F). The data show that family firms did indeed offer higher job security. The propensity-score-matched regression estimates show family firms reacted around 50-60% less to changes in sales in terms of employment than their nonfamily firm counterparts. Looking at the use of financial instruments and government support programs, we find that family firms were more likely to use private financial instruments, such as retained earnings and private loans, whereas they were just as likely to receive government aid. Zooming out, these findings speak to family firms playing a pivotal role in preserving highly asset-specific labor market matches in times of crisis deemed essential for coordinated market economies. They do this by managing private capital differently, while not showing greater independence from the state as commonly conceived. |
| Keywords: | family firms, implicit labor contracts, Corona Crisis, employment |
| JEL: | D22 G32 J21 J50 M51 |
| Date: | 2024 |
| URL: | https://d.repec.org/n?u=RePEc:zbw:ifsowp:303516 |