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on Economics of Strategic Management |
| By: | Peter Rowland |
| Abstract: | The study presented here looks at the Colombian corporate sector broken down by city. In particular, it studies the eight main cities of the country. It is an initial study, maybe the first of its kind, and it aims to act as a foundation for future research in the area. A database obtained from the Superintendencia de Sociedades is used for the analysis. Structural differences between the cities in 2003 are studied, as well as the development of the cities between 1996 and 2003. The study shows that the 100 largest firms in the country are almost exclusively located in the country’s four largest cities. Rather more surprisingly, it shows that small and medium-sized enterprises (SMEs) are generally concentrated to the country’s larger cities, and particularly to Bogotá, while many medium-sized and smaller cities completely lack SMEs. The study also shows that, in terms of aggregate sales, the cities have developed very differently. |
| URL: | http://d.repec.org/n?u=RePEc:bdr:borrec:373&r=cse |
| By: | Gine, Xavier; Love, Inessa |
| Abstract: | The authors study the effect of reorganization costs on the efficiency of bankruptcy laws. They develop a simple model that predicts that in a regime with high costs, the law fails to achieve the efficient outcome of liquidating unviable businesses and reorganizing viable ones. The authors test the model using the Colombian bankruptcy reform of 1999. Using data from 1,924 firms filing for bankruptcy between 1996 and 2003, they find that the pre-reform reorganization proceeding was so inefficient that it failed to separate economically viable firms from inefficient ones. In contrast, by substantially lowering reorganization costs, the reform improved the selection of viable firms into reorganization. In this sense, the new law increased the efficiency of the bankruptcy system in Colombia. |
| Keywords: | Banks & Banking Reform,Corporate Law,Small Scale Enterprise,Microfinance,Economic Theory & Research |
| Date: | 2006–07–01 |
| URL: | http://d.repec.org/n?u=RePEc:wbk:wbrwps:3970&r=cse |
| By: | Sophie Claeys (Department of Financial Economics and CERISE, Ghent University, W. Wilsonplein 5D, B-9000 Ghent, Belgium.); Christa Hainz (Department of Economics, University of Munich, Akademiestr. 1/III, 80799 Munich, Germany.) |
| Abstract: | Policy makers often decide to liberalize foreign bank entry but at the same time restrict the mode of entry. We study how different entry modes affect the interest rate for loans in a model in which domestic banks possess private information about their incumbent clients but foreign banks have better screening skills. Our model predicts that competition is stronger if market entry occurs through a greenfield investment and therefore domestic banks' interest rates are lower. We find empirical support for our results for a sample of banks from 10 transition countries of Eastern Europe for the period 1995-2003. JEL Classification: G21, D4, L31. |
| Keywords: | Banking, Foreign Entry, Mode of Entry, Interest Rate, Asymmetric Information. |
| Date: | 2006–07 |
| URL: | http://d.repec.org/n?u=RePEc:ecb:ecbwps:20060653&r=cse |
| By: | Paul Klemperer (Nuffield College, University of Oxford); Joseph Farrell (University of California) |
| Abstract: | Switching costs and network effects bind customers to vendors if products are incompatible, locking customers or even markets in to early choices. Lock-in hinders customers from changing suppliers in response to (predictable or unpredictable) changes in effciency, and gives vendors lucrative ex post market power-over the same buyer in the case of switching costs (or brand loyalty), or over others with network effects. Firms compete ex ante for this ex post power, using penetration pricing, introductory offers, and price wars. Such "competition for the market" or "life-cycle competition" can adequately replace ordinary compatible competition, and can even be fiercer than compatible competition by weakening differentiation. More often, however, incompatible competition not only involves direct effciency losses but also softens competition and magnifies incumbency advantages. With network effects, established firms have little incentive to offer better deals when buyers’ and complementors’ expectations hinge on non-effciency factors (especially history such as past market shares), and although competition between incompatible networks is initially unstable and sensitive to competitive offers and random events, it later "tips" to monopoly, after which entry is hard, often even too hard given incompatibility. And while switching costs can encourage small-scale entry, they discourage sellers from raiding one another’s existing customers, and s also discourage more aggressive entry. Because of these competitive effects, even ineffcient incompatible competition is often more profitable than compatible competition, especially for dominant rms with installed-base or expectational advantages. Thus firms probably seek incompatibility too often. We therefore favor thoughtfully pro-compatibility public policy. |
| Date: | 2006–07–01 |
| URL: | http://d.repec.org/n?u=RePEc:nuf:econwp:0607&r=cse |
| By: | Irena Grosfeld |
| Abstract: | The initial view of the advantages of ownership concentration in joint stock companies was determined by the concern about the opportunistic managerial behavior. The growing importance of knowledge and human capital in the operation of firms shifts the focus of concern: excessive ownership concentration may stifle managerial initiative. This may be particularly true, and the results obtained in this paper support this hypothesis, in firms with high share of knowledge related activities. I explore the determinants of ownership concentration and the relationship between ownership structure and firm value in the context of a transition economy, i.e. an economy undergoing important changes in its legal and regulatory framework, in macroeconomic policy and most of all, in its property rights allocation. I focus on all non-financial companies traded on the Warsaw Stock Exchange since its inception in 1991 and up to 2003. We can observe that ownership of companies becomes more dispersed with the number of years of listing. The results reported in this paper suggest that firm adjust their ownership structure to firm specific characteristics and that firms belonging to the sector of high technology tend to have lower ownership concentration. The positive impact of ownership concentration on firm value detected in OLS regressions becomes even stronger when we control for the endogeneity of ownership. |
| Date: | 2006 |
| URL: | http://d.repec.org/n?u=RePEc:pse:psecon:2006-18&r=cse |
| By: | Martin Valdivia (Grupo de Analisis para el Dessarrollo); Dean Karlan (Economic Growth Center, Yale University) |
| Abstract: | Can one teach entrepreneurship, or is it a fixed personal characteristic? Most academic and policy discussion on microentrepreneurs in developing countries focuses on their access to credit, and assumes their human capital to be fixed. However, a growing number of microfinance organizations are attempting to build the human capital of micro-entrepreneurs in order to improve the livelihood of their clients and help further their mission of poverty alleviation. Using a randomized control trial, we measure the marginal impact of adding business training to a Peruvian village banking program for female microentrepreneurs. Treatment groups received thirty to sixty minute entrepreneurship training sessions during their normal weekly or monthly banking meeting over a period of one to two years. Control groups remained as they were before, meeting at the same frequency but solely for making loan and savings payments. We find that the treatment led to improved business knowledge, practices and revenues. The microfinance institution also had direct benefits through higher repayment and client retention rates. Larger effects found for those that expressed less interest in training in a baseline survey have important implications for implementing similar market-based interventions with a goal of recovering costs. |
| Keywords: | entrepreneurship, microfinance, business training, business skills, adult education |
| JEL: | C93 D12 D13 D21 I21 J24 O12 |
| URL: | http://d.repec.org/n?u=RePEc:egc:wpaper:941&r=cse |
| By: | Morten Bennedsen; Kasper M. Nielsen; Francisco Pérez-González; Daniel Wolfenzon |
| Abstract: | This paper uses a unique dataset from Denmark to investigate the impact of family characteristics in corporate decision making and the consequences of these decisions on firm performance. We focus on the decision to appoint either a family or external chief executive officer (CEO). The paper uses variation in CEO succession decisions that result from the gender of a departing CEO’s firstborn child. This is a plausible instrumental variable (IV), as male first-child firms are more likely to pass on control to a family CEO than are female first-child firms, but the gender of the first child is unlikely to affect firms’ outcomes. We find that family successions have a large negative causal impact on firm performance: operating profitability on assets falls by at least four percentage points around CEO transitions. Our IV estimates are significantly larger than those obtained using ordinary least squares. Furthermore, we show that family-CEO underperformance is particularly large in fast-growing industries, industries with highly skilled labor force and relatively large firms. Overall, our empirical results demonstrate that professional, non-family CEOs provide extremely valuable services to the organizations they head. |
| JEL: | G32 G34 M13 |
| Date: | 2006–07 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:12356&r=cse |
| By: | Waymond Rodgers; Susana Gago |
| Abstract: | This article highlights moral harassment at the workplace as a form of corruption in organizations. This form of corruption has cost organizations billions of dollars each year. A theoretical model is presented in this paper, which explains the main factors that affect bullying processes impact on organizations. Suggestions are provided in this paper, as tools to eliminate bullying within the workplace. |
| Date: | 2006–07 |
| URL: | http://d.repec.org/n?u=RePEc:cte:wbrepe:wb064213&r=cse |
| By: | Marvin Kraus (Boston College) |
| Keywords: | Networks, congestion, returns to scale, congestion pricing |
| Date: | 2006–07–19 |
| URL: | http://d.repec.org/n?u=RePEc:boc:bocoec:644&r=cse |