Does government paternalistic care promote entrepreneurship in China? Evidence from the China Employer-Employee Survey

ABSTRACT

This article examines whether government paternalistic care exerts positive effects on entrepreneurship in China, and the channels through which paternalistic care affects entrepreneurship, using data from the 2015 baseline of the China Employer-Employee Survey (CEES). The data suggests that over 70% of manufacturing firms received at least one type of government paternalistic care, though the distributions are different depending on the firm’s size, ownership, industry, firm and entrepreneur’s age. The empirical analysis indicates that government paternalistic care negatively affects entrepreneurship by diminishing innovation capability. Human capital and imported intermediate goods should be the driving forces for a firm’s development, but government paternalistic care has a counterproductive effect on those two factors, thereby impeding entrepreneurship. The results show that those good intentions have gone awry. The government should gradually terminate its paternalistic policies for firms, and firms need to promote their own solid innovation capability.

Abbreviations: CEES: China Employer-Employee Survey SOE: State-owned enterprise     

Quality-oriented growth: a new trend for Chinese firms

ABSTRACT

Based on data from the China Employer-Employee Survey (CEES), this study analyses the actual effect of quality-driven growth on firms’ performances in the economic transition of recent years. The results show positive and significant effects between the firms’ performance and quality-oriented growth, which is defined as a strategy that supports the spirit of greater entrepreneurial innovation, the advancement of input quality, and corporate governance improvement. Using a quality-driven growth mode, firms can effectively relieve the adverse effect of downward macroeconomic growth pressure on performance. This study proposes that China’s macroeconomic policy should shift from demand-oriented management to supply-oriented management, with a particular focus on quality development strategy. Moreover, firms should establish a quality-driven development strategy, facilitating a spirit of entrepreneurial innovation, advancing input quality, and improving corporate governance. This strategy will increase the firm’s performance, and effectively relieve the macroeconomic downward pressure.

Abbreviations: CEES: China Employer-Employee Survey, TFP: Total factor productivity     

Understanding the divergence of manufacturing enterprisesʼ profitability in China

ABSTRACT

The transition of the Chinese economy is placing increasing pressure on manufacturing enterprises to become more profitable. In this article, we first calculate and analyze the profitability of Chinese manufacturing enterprises based on data from the 2015 Chinese Enterprises–Employees Survey (CEES 2015), and find that there is an obvious profitability divergence tendency of manufacturing enterprises. We then analyze the different actions and strategies that may cause the profitability divergence and find that aggressive strategies in innovation, diversification, market development, and conservative strategies in production expansion tend to result in a good profitability, while the opposite strategies in each action lead a poor profitability. The different adoption of strategies in diverse actions may the possible causes of profitability divergence.

Abbreviations: CEES: China Employer-Employee Survey, PGR: Profit growth rate, SME: Small and medium-sized enterprise     

The challenge to china’s enterprises from increasing labor costs: the product quality perspective

ABSTRACT

Using China Employer–Employee Survey data, this paper investigates the possible heterogeneous results of increasing labor costs of different firms. The paper finds that, unskilled labors have a higher wage growth rate than the skilled labor. Firms with higher product quality employ more skilled labor, and thus are less affected by the increasing labor costs. On the other hand, firms with higher product quality have less elastic demand, which makes it possible for them to increase their prices without demand decreasing. The conclusions are well supported by the data. Therefore, we should treat the challenge of increasing labor cost in a new way. The real challenge of increasing labor cost is greater for low-quality firms. The empirical results suggest that some of the low-quality firms should upgrade their quality to a higher level to offset their labor cost increase.

Abbreviations: CEES: China Employer-Employee Survey LP: Labor productivity LTP: Lewis turing point TFP: Total factor productivity     

Introduction to the special issue on firm performance and worker heterogeneity using Chinese Employer-Employee Survey (CEES) dataset

ABSTRACT

The Chinese Employer-Employee Survey (CEES) is the first dataset that links firm performance with worker heterogeneity in China, and therefore is a precious data resource for various research topics. This note introduces the CEES dataset, as well as seven papers that serve as the initial step in applying the CEES dataset. The topics covered include interaction between firm-level behavior and worker-level features, for example, firm innovation, quality upgrading, government intervention, worker’s cognitive and non-cognitive abilities, and labor protection. The ample information documented by CEES dataset is worth exploring in the future research agenda.     

Determinants of innovation behaviour and investment estimates for west-german manufacturing firms

In this paper, the determinants of innovation behaviour and investment are explored with a large micro-data panel from West-German manufacturing firms. The estimates are discussed within a microeconomic model with monopolistic competition, demand uncertainty and a delayed adjustment of capacities and the production technology. The estimates reveal positive firm-size effects which hint towards scale economies associated with innovations. Market power promotes innovations but not investment, and exporters innovate more but exhibit less investment expenditures. Finally, excess demand promotes innovations. This indicates a complementarity of innovations and investment and hints towards permanent productivity effects of temporary demand shocks.     

Globalization,recruitments, and job mobility

Previous research indicates that firms pay a premium to poach workers from exporting firms if experience working for an internationally engaged firm reduces trade costs. Because international experience is less valuable to non-exporters, we would expect to see differences in recruitments between firms that are internationally engaged and those that serve only the domestic market. Moreover, increased openness might lead to higher job-to-job mobility if more globalization raises both the share of exporters and the number of workers with skills that make them attractive for other exporters. Using linked Swedish employer–employee data for the period 1997 to 2013, we find systematic differences between the way exporters and non-exporters recruit workers: exporters have a relatively high share of recruitments from other exporters as hypothesized. We also find some suggestive evidence that increased openness correlates positively with upward mobility for occupations that play a major role in international commerce, such as professionals and managers.     

Effect of cognitive abilities and non-cognitive abilities on labor wages: empirical evidence from the Chinese Employer-Employee Survey

ABSTRACT

The existing literature suggests that worker’s cognitive and non-cognitive abilities have a significant impact on wages. However, presently there is little research in this area of ??China’s labor force, due to scanty data. To this end, this Paper conducted a CEES-based data research, which found that, the cognitive and non-cognitive abilities of male, skilled workers have a greater impact on their wages, as compared with those of the female, unskilled workers. The OLS regression based on the Mincer Wage Equation found that, the impact of non-cognitive abilities on wages is generally larger than that of the cognitive abilities. All cognitive abilities have a positive impact on wages, wherein English proficiency has the greatest elasticity of wages, which is 12.1%. Of all non-cognitive abilities, Conscientiousness has the highest wage elasticity, which is 13.6%, whereas Agreeableness has a negative wage elasticity of ?6.32%.

Abbreviations: CEES: Chinese Employer-Employee Survey OLS: Ordinary least squares     

Trade and productivity: Self-selection or learning-by-exporting in India

Recent literature tried to explain the Indian growth miracle in different ways, ranging from trade liberalization to industrial reforms. Using data on Indian manufacturing firms, this paper analyzes the relationship between firm's productivity and export market participation during 1991–2004. While it provides evidence of the self-selection hypothesis by showing that more productive firms become exporters, the results do not show that entry into export markets enhances productivity. The paper examines the explanation of self selection hypothesis for total factor productivity differences across 33,510 exporting and non-exporting firms. It uses propensity score matching to test the learning-by-exporting hypothesis. In line with the prediction of recent heterogeneous firm models of international trade, the main finding of the paper is: more productive firms become exporters but it is not the case that learning by exporting is a channel fuelling growth in Indian manufacturing.     

Appropriability mechanisms,innovation, and productivity: evidence from the UK

ABSTRACT

We use an extended version of the well-established Crepon, Duguet, and Mairesse model [1998. “Research, Innovation and Productivity: An Econometric Analysis at the Firm Level.” Economics of Innovation and New Technology 7 (2): 115–158] to model the relationship between appropriability mechanisms, innovation, and firm-level productivity. We enrich this model in three ways: (1) We compare estimates obtained using a broader definition of innovation spending to those that use R&D spending. (2) We assume that a firm simultaneously innovates and chooses among different appropriability methods to protect the innovation. (3) We estimate the impact of innovation output on firm productivity conditional on the choice of appropriability mechanism. We find that firms that innovate and rate formal methods for the protection of intellectual property highly are more productive than other firms, but that the same does not hold in the case of informal methods of protection, except possibly for large firms as opposed to SMEs. We also find that this result is strongest for firms in the services, trade, and utility sectors, and negative in the manufacturing sector.     

The influence of the regional context on firms’ innovation patterns: evidence from Ecuador*

ABSTRACT

Using data from the Ecuadorean Innovation Survey of 2015, this paper identifies the innovation patterns that can be found in Ecuador. In addition, we analyse the influence of the regional innovation systems in determining these patterns. The results show that there are six differentiated patterns of innovation, although they all are related to the adoption and imitation of technologies. Finally, we observe that different regional characteristics condition the way in which firms organise innovation.     

Productivity and Firms’ Sales Destination: Chinese Characteristics

In the trade literature, it is often assumed that there is little or no trade cost within a country's borders, but large trade costs across a country's borders. Thus, productive firms self‐select into exporters and the less productive firms can only serve domestic consumers. This paper presents a similar but different case in China, whose domestic markets are segmented by provincial borders mainly owing to the various (hidden) protective measures favoring local firms. These discriminative measures are de facto trade barriers. It applies the heterogeneous trade theory to examine the effects of firms’ productivity on their sales choices in both the international and domestic markets, in the presence of intra‐national and international trade costs. We find that productive firms not only self‐select into exporters, but also into sales in other provincial markets. This pattern is sensitive to firms’ locations and ownerships. For foreign direct investment (FDI)‐controlled firms, increases in productivity are associated with a higher probability of selling into other provincial markets, rather than into international ones. Productivity increases for firms operating in the inland area exhibit different patterns than those in the Eastern area.     

Technological innovation and the demand for labor by firms in expansion and recession

ABSTRACT

With firm data from the Spanish Community Innovation Survey (CIS) for the period 2003–2014, we find a positive and significant effect of innovation in the demand for labor when firms introduce product and process innovations in the same time period. The effect of innovation on the demand for labor is countercyclical, higher in the recession, after 2008, than in the expansion, before 2008, but the probability that firms innovate in product and process is counter-cyclical, i.e. lower in the recession. Altogether, the elasticity of the demand for labor to the probability that firms introduce product and process innovations remains stable throughout the sample period, at around 0.035. Innovation contributes to stabilize average employment during the cycle, more so when the innovation is in product, alone or together with process, than when it is only in process. These results are broadly consistent with product and process innovations shifting firms’ demand and production functions upwards, but differentially in expansions (less product market competition) than in contractions (more competition).     

Integration,network and industrial innovation in technology sourcing overseas M&A: a comparison between China and South Korea

ABSTRACT

Appropriate integration in technology sourcing overseas M&A is effective for acquirers to improve their innovation network positions and to promote domestic industrial innovation. We use the technology sourcing overseas M&A of Chinese and South Korean manufacturing industries as samples for empirical analysis. The results show that post-merger integration strategy should match resource characteristics between acquiring and acquired firms to promote industrial innovation through innovation network position improvement. Specifically, high-degree integration should match high-resource-similarity / low-resource-complementarity acquired firms, low-degree integration should match low-resource-similarity / high-resource-complementarity acquired firms, and moderate-degree integration should match high-resource-similarity / high-resource-complementarity acquired firms. The acquirer’s home country institutional development enhances the effect of post-merger integration. This study provides guidance for promoting industrial innovation through post-merger integration.     

Innovation,productivity and exports: the case of Hungary

This paper estimates the relationship between innovation and firm performance by using Community Innovation Survey data for Hungary. It exploits the possibility of linking the innovation data to ownership and disaggregated trade data. Innovative firms are more productive, more likely to trade and export more products to more countries. We also test for differences in innovative behaviour in high- and low-tech industries, and study whether domestic and foreign firms differ in this respect.     

Trade liberalization and markups: Micro evidence from China

This paper presents evidence from highly disaggregated Chinese firm-product data that, given productivity, input tariff reductions induce an incumbent importer/exporter to increase product markups. We further investigate empirically the mechanisms underlying this trade liberalization effect, and find that input tariff reductions decrease marginal costs, and their effects on markup adjustments are more profound among firms with higher import dependence. Moreover, we exploit unique features of Chinese data by comparing results for two trade regimes: ordinary trade (wherein firms pay import tariffs to import) and processing trade (wherein firms are not subject to import tariffs). While the aforementioned trade liberalization effects and mechanisms only apply to ordinary trade, processing trade samples are used in a placebo test. The paper also shows that more productive firms charge higher markups for products. All these findings are robust to alternative markup measures including one estimate using physical-quantity output data, different production function specifications, a subsample consisting only of pure exporters, and estimations based on our theoretical derivations.     

Trade liberalization, heterogeneous firms and the soft budget constraint

We analyze the interaction between the soft budget constraint (SBC) and international trade by placing Segal’s (1998) SBC model within Melitz’s (2003) framework of international trade with heterogeneous monopolistically competitive firms. As in Segal’s model, SBC may result in moral hazard. The opening to international trade adds another sort of inefficiency. Some firms that would have become exporters in the absence of SBC choose to apply low effort and not export in order to extract a subsidy from the government. This effect takes place when the trade costs are sufficiently low. Overall, however, trade liberalization reduces inefficiencies generated by SBC. The number of firms subject to moral hazard SBC decreases, aggregate effort level increases and aggregate profits lost due to SBC-induced sub-optimal effort decline as trade costs decrease.     

Latin American Growth and Exports to China*

ABSTRACT

After 2001, the booming trade between China and Latin American and the Caribbean countries (LAC) has led to concerns about a potential ‘resource curse’ and losses in manufacturing due to rising import competition. Little attention was paid to potential gains to LAC from growing Chinese demand for commodities. I address this issue empirically adopting a difference-in-difference framework and find that China's demand did deliver significantly higher growth rates to LAC exporters over the last decade and a half.     

海外研发、贸易摩擦与创新绩效：来自中国高科技上市公司的经验证据

海外研发被视为后发国家实现技术赶超的有效路径,现有文献基于经贸自由化的前置条件证实了海外研发提升创新绩效的反哺作用。然而在全球贸易保护主义抬头的背景下,资源要素的自由流动愈发困难,海外研发能否发挥应有的作用尚不得而知。为此,基于中国高科技上市公司的数据,本文探索了中美贸易摩擦如何影响中国企业的海外研发绩效。研究发现,中美贸易摩擦非但没有侵蚀中国企业的海外研发绩效,反而产生倒逼效应,推动中国企业提升投资效率并积累国际投资经验,继而增强了海外研发的反哺作用。通过区分海外研发目的地,本文进一步发现倒逼效应在赴非美国家的样本中更显著。赴美研发受到贸易摩擦的冲击更为直接,稀释了提升投资效率和积累国际化经验所带来的收益。研究结论深化了国际商务理论关于贸易保护和壁垒如何影响跨国企业投资绩效的相关研究,为中国企业在高度不确定的投资环境下如何充分释放海外研发的潜能提供启示。