Inter-firm trust in buyer–supplier relations: Are knowledge spillovers and geographical proximity relevant?

This paper empirically examines the impact of knowledge spillovers and geographical proximity on inter-firm trust in buyer–supplier relations. In particular, the effects of incoming knowledge spillovers from vertically related firms and firms’ appropriability problems are analyzed. The results suggest that there is a positive relationship between incoming knowledge spillovers from business partners and the level of inter-firm trust. Firms’ appropriability problems, however, lead to a decrease in inter-firm trust. Firms that cannot protect their technical knowledge have a greater perception of customer (supplier) opportunism. Furthermore, estimation results indicate that inter-firm trust between geographically close partners exceeds inter-firm trust between distant partners.     

Join hands or walk alone? Evidence on lobbying for trade policy in India

Using primary evidence for 146 Indian manufacturing firms, I examine single and dual lobbying strategies for trade policy influence, and the factors driving firm's choice of these strategies. Firms can adopt a single strategy, by lobbying collectively as a group (Join Hands), or lobbying individually as a firm (Walk Alone). Firms can also adopt a dual strategy, that is, a combination of collective and individual lobbying. The choice of strategy is affected by sector concentration and by tradeoffs between lobbying intensity for sector‐wide and firm‐specific outcomes. The following findings are new for India: First, majority of Indian firms (more than 64% in the sample) use a dual strategy, suggesting the importance to better understand what drives dual strategies. Second, the likelihood of adopting a dual lobbying is higher in sectors that are characterized by low concentration (dispersion is higher), indicating a strong competition effect over free‐riding. Third, relative to the single strategy of collective lobbying, Indian manufacturing firms are likely to join hands while walking alone when targeting firm‐specific outcomes, but prefer to walk alone (single strategy of individual lobbying) when there are tradeoffs between different outcomes, to react quickly. Finally, the availability of resources and firm's perceived effectiveness of its lobbying are significant drivers for the strategy choice.     

SUNK COSTS OF CAPITAL AND THE FORM OF ENTERPRISE: INVESTOR‐OWNED FIRMS AND WORKER‐OWNED FIRMS*

ABSTRACT ** : This paper examines implications of sunk costs of capital for efficient forms of enterprise. It is assumed that firm owners and outside traders are asymmetrically informed of venture risks, and that there are sunk costs associated with investment in physical and human capital. We then make an efficiency comparison between investor‐owned and worker‐owned firms. We find that the firm is efficient when it is owned by the input supplier (the investor or worker) who incurs large sunk costs. This is because such an input supplier can credibly signal to the other input supplier that he in fact has a safe project. An empirical study based on the Japanese manufacturing industry seems to support the theoretical result.     

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     

Asset Specificity,R&D Financing,And The Signalling Properties of The Firm's Financial Structure

Equity financing is the optimal strategy for innovating firms, which can use their financial structure as a signalling device to attract outside investors. This situation is likely to arise when the firm undertakes a specific purpose R&D project aimed at developing a certain product innovation. Typically, innovations of this kind draw on the firm's cumulative. idiosyncratic knowledge base and, accordingly, the innovation process involves an high degree of asset specificity. Under such circumstances, the terms of debt financing will be adjusted adversely, and equity financing will represent the most economically efficient solution.

These arguments are developed in standard static principal-agent models dealing with New Technology Based Firms and publicly held large firms undertaking an aggressive R&D strategy. In the case of NTBFs, two kinds of optimal venture capital contracts are considered, which render the sharing rules independent (a) of the agent's action and (b) of both the agent's action and the specific assets involved in the transaction. Regarding innovating large firms, it is argued that in this case, too, equity represents the optimal financing strategy, and that top executives use their equity share to signal the firm's expected return stream and value to outside investors.     

欧美跨国公司在华离岸研发的空间区位战略比较研究*——基于城市层面集群网络的视角

本文基于研发子公司空间分布的城市集群网络特征,构建了跨国公司离岸研发“集群寻求型”战略框架,并采用离散选择模型对这一理论视角进行实证检验。样本包含了1992-2012年期间在华275家美国研发子公司和207家欧洲研发子公司跨越27个城市的区位战略。实证结果揭示了欧美在华离岸研发的差异化空间区位战略：美国公司采用“知识集群寻求型”战略,即一个城市的知识资源和技术基础设施是重要的区位因素;欧洲公司则采用“工业集群寻求型”战略,例如,一个城市的制造业基础、产业专业化以及公司内部的前向关联显著地影响其区位选择。此外,母国公司规模和欧洲公司母国的异质性的影响也得到证实。     

家族企业的控制目标、盈利目标与研发投入

以2011—2016年中国沪深两市家族企业为样本,采用二手数据Tobit回归方法,研究了家族企业控制目标和盈利目标的实现与否对研发投入的影响。结果显示:供应商对家族企业的威胁越大,家族企业管理者为了实现控制目标越倾向于增加研发投入;家族企业管理者对盈利目标和控制目标的重视遵循注意力顺序理论,即当盈利目标未实现时,家族企业管理者更关注盈利状况,较少关注控制威胁,因此会减少研发投入;当盈利目标实现后,家族企业管理者才关注控制威胁、增加研发投入;家族企业的资源禀赋优势有助于控制目标的实现。     

Job Creation, Job Destruction, and the International Division of Labor

The authors incorporate equilibrium unemployment due to imperfect matching into a model of trade in intermediate inputs. Firms are assumed to be price‐takers and their size is given by technology. Firms enter the market as long as expected profits cover the search cost they incur initially; jobs are endogenously destroyed by random shocks that affect firms’ price–cost margins. Trade increases productivity in the final good and then demand for each intermediate input. Steady‐state unemployment is reduced after trade integration because the rate of job destruction is reduced, which in turn induces an indirect positive effect on job creation. A more volatile environment faced by firms does not necessarily increase unemployment. However, the rate of job destruction unambiguously rises, and rises more under free trade.     

Inventory investment,investment and employment with uncertain demand

In that paper, a model of the optimal behaviour of firms with respect to the determination of capacity employment, investment and inventories is presented and estimated. Firms face an infinite horizon and an uncertain expected demand. The optimality conditions are derived, linearized and integrated. After having defined the stable optimal paths, one can proceed to the estimation of the model and to various simulations.     

Quality of life,firm productivity,and the value of amenities across Canadian cities

We estimate quality‐of‐life and productivity differences across Canada's metropolitan areas in a hedonic general‐equilibrium framework. These are based on the estimated willingness‐to‐pay of heterogeneous households and firms to locate in various cities, which differ in their wage levels, housing costs, and land values. Using 2006 Canadian Census data, our metropolitan quality‐of‐life estimates are somewhat consistent with popular rankings, yet find Canadians care more about climate and culture. Quality of life is highest in Victoria for anglophones, Montreal for francophones, and Vancouver for allophones, and lowest in more remote cities. Toronto is Canada's most productive city; Vancouver is the overall most valuable city.     

The impact of foreign direct investment on innovation at domestic firms: Evidence from the deregulation of foreign investment in China

This paper studies the impact of foreign direct investment (FDI) on innovation by domestic firms in China. A difference-in-difference estimation strategy yields causal evidence by exploiting China's deregulation of FDI in 2002. Analysis of a matched firm–patent data set from 1998 to 2007 shows that both the quantity and quality of innovation by domestic firms benefited from the presence of FDI. Emphasizing the importance of knowledge spillover from FDI in similar technology domains, the authors examine the role of horizontal FDI and FDI in technologically close industries—those sharing similar technology domains. Findings show that the latter generates much more substantial positive spillover than the former. The paper also shows that knowledge spillover from FDI in similar technology domains is not driven by input–output linkages. In addition, the spillover effect is stronger in cities with higher human capital stock and firms with higher absorptive capacity.     

Sources of productivity differentials in manufacturing in post-transition urban South-East Europe

The paper analyses the effects of urbanization and localisation economies on manufacturing firms’ productivity across urban landscapes in post-transition South-East European (SEE) countries. Fixed-effects panel data estimations on a large sample of firms show that the factors accounting for productivity advantages of manufacturing firms in urban post-transition SEE are related to the firms and to the environment in which these firms operate. Firms located in diversified cities benefit from a productivity premium generated in this type of agglomeration, while no evidence was found that the relative specialization across industries has any effect on firm productivity levels.     

THE IMPACT OF MANUFACTURING FIRMS’ USE OF ACADEMIC WORKERS ON THEIR PRODUCTIVITY LEVEL

We examine how firms’ productivity level, measured by the total factor productivity (TFP), is affected by their use of academic workers. A panel dataset of Norwegian manufacturing firms is used. Firms’ production level is shown to be negatively affected by their share of academic workers, but we find no clear relationship between this share and the TFP. If we account for the fact that there is an interaction between the share of academic workers and the capital stock, we find that this share has a non‐significant effect on the production level.     

DOWNSTREAM R&D RIVALRY WITH SPILLOVERS AND DISCRIMINATORY INPUT PRICING

This paper examines how discriminatory input pricing by the upstream monopolist affects the R&D choices of downstream duopolists in the presence of R&D spillovers. We show that the monopoly supplier can benefit from a precommitment to uniform pricing because under uniform pricing the downstream firms invest more in R&D, leading to larger output and thus benefiting the supplier. When R&D spillovers are sufficiently large, the downstream firms are also better off under uniform pricing. Moreover, social welfare is always higher under uniform pricing.     

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     

Monetary Transmission and Inventory: Evidence from Japanese Balance-Sheet Data by Firm Size

I analyse the response of inventories and short-term debts to monetary policy using disaggregated data on Japanese manufacturing firms classified by firm size. I find that monetary contraction decreases the inventories of large firms; however, inventories of small and medium firms increase considerably for the first several quarters. This implies that in a subcontracting system small and medium subcontractors serve as a buffer and alleviate the monetary shocks felt by their large parent firms. Moreover, inventory build-ups are financed by increases in accounts payable. I also find that for small firms land asset is important in easing credit conditions and increasing inventories.
JEL Classification Numbers: E22, E32, E44, E51.     

Assessing the relative efficiency of agricultural production units in the Blackland Prairie,Texas

The hypotheses that endogenous credit constraints based on fluctuating asset values and cash flow prolong and accentuate US cattle cycles; and that more diversified cow-calf firms are less affected by this phenomenon are tested. Breeding cattle inventories are an interesting example to study credit constraints because they are among the most cyclical of economic time-series, firms have heterogeneous diversification levels, and they avoid many of the problems with previous investment-cash flow sensitivities studies noted by Kaplan and Zingales. The results are consistent with earlier credit constraint studies, i.e. breeding cattle inventories are sensitive to shifting credit constraint regimes and cow-calf firms with higher diversification levels are less affected by credit constraints.     

Learning from processing trade: Firm evidence from China

Processing export plays a significant role in international trade. In this paper, focusing on firm-level dynamics, we show that firms learn from their processing export experience to improve their subsequent ordinary export outcomes. Using transaction-level trade data and firm-level production data, we show that firms’ ordinary export performance, at both extensive and intensive margins, is enhanced by their own processing experience. Firms also export products with improved quality after engaging in processing exports of similar products. Furthermore, we investigate potential channels through which firms learn from processing experience. We find that firms potentially learn from processing experience to enhance production efficiency, to better understand how to improve product appeal to cater to specific markets, and to gain better and easier access to inputs. Moreover, we find that exporters benefit more from processing experience for larger markets with fiercer competition. Similarly, stronger learning effects are also observed when processing experience is associated with products that embody less diffused knowledge and are more differentiated. Also, firms learn more from processing experience when they are more actively engaged in processing imports. Lastly, we verify the economic significance and quantify the importance of these potential channels.     

Inventories and Risk in African Manufacturing

Using a panel data set for Zimbabwe which includes firm-specific measures of contractual risk, we show that contractual risk has a major effect on the holding input stocks and, to a lesser extent, the constitution of cash reserves. This is consistent with inventories being a hedge against stockout risk. By contrast, firms facing more inter-annual market risk hold less inventories. This suggests that African manufacturers prefer adapting to long-term market fluctuations as they materialise rather than building up inventories. This interpretation is consistent with the finding that high market risk firms also have a low capacity utilisation rate.     

High-speed rail and inventory reduction: firm-level evidence from China

Using a balanced panel of manufacturing firms from China between 2007 and 2013, we estimate that being connected to a high-speed rail (HSR) system leads to 9.5% reduction in local firms’ input inventory spending. The effect is stronger for downstream industries and private enterprises. A back-of-envelope calculation suggests that each dollar of HSR investment reduces input inventory stock by 12 cents, which is significantly larger than the effects found in previous studies based on highway or road investment. Declines in transportation and communication cost, as well as agglomeration effect, are identified as plausible mechanisms. Our findings reveal a micro channel through which improved transport infrastructure brings about economic gains, and contribute to the cost-benefit assessment of HSR investment.