Innovation and productivity in family firms: evidence from a sample of European firms

ABSTRACT

Using firm-level data, we estimate the returns to R&D investments for a sample of European manufacturing firms over the period 2007–2009. Results confirm that R&D efforts are positively related to productivity regardless of firm type (family or nonfamily firms). Additionally, we find that family firms invested more in R&D than nonfamily firms, but the returns to their R&D investments are low, emphasizing that they have a lower capacity to translate R&D investments into economic gains.     

Economic volatility and financial markets: The case of mortgage‐backed securities

The volatility of aggregate economic activity in the United States decreased markedly in the mid‐eighties. The decrease involved several components of GDP and has been linked to a more stable economic environment, identified by smaller shocks, more effective policy, and a diverse set of innovations in technology as well as financial markets. We study one such financial innovation, and document a negative relation between the rapid growth of mortgage‐backed securities and the volatility of GDP and some of its components from the mid‐1970s to the late 1990s. We also document that this relation changed sign, from negative to positive, in the early 2000s.     

Looking at the determinants of efficiency in banking: evidence from Italian mutual-cooperatives

Italy has experienced a restructuring and consolidation process in the banking industry since the 1990s that is expected to foster efficiency and competition. Despite the reforms, a peculiarity of the industry is the persistence of small mutual-cooperative banks (Banche di Credito Cooperativo, BCCs) active in narrow markets. The scope of this paper is to analyze the determinants of BCCs’ efficiency in the 2006–2011 period. In the first step of the study, a stochastic cost frontier is used to yield bank efficiency. Then the cost efficiency becomes the dependent variable of fixed and random effect models. The reference market of BCCs is the province (NUTS3). We find that BCC cost efficiency is positively affected by market concentration and demand density and inversely related to branching. Importantly, these results are robust to any sample restriction anchored to the distribution of efficiency. While the evidence regarding the credit quality is inconclusive for all BCCs, the sensitivity analysis shows that the risk in local markets is a source of BCC cost inefficiency.     

UNIQUE MARKOV EQUILIBRIUM UNDER LIMITED COMMITMENT

I develop a recursive method for the characterization of competitive equilibrium under limited commitment with not-too-tight solvency constraints. The reputational mechanism is fragile, as it sustains constrained efficiency as well as a large set of constrained inefficient equilibria. However, I establish that the only strongly ergodic Markov equilibrium with trade is constrained efficient. The method relies on a planning program along with the theory of monotone concave operators. It is suitable for other applications to macroeconomics and dynamic contracts.     

Be productive or face decline. On the sources and determinants of output growth in Italian manufacturing firms

This article investigates the sources and determinants of output growth of Italian manufacturing firms. Applying stochastic frontier techniques, we decompose output growth into factor accumulation and TFP growth for the period 1998–2003. TFP growth is further decomposed into technological change, efficiency change and scale effects. Two key results emerge from the analysis. After confirming that both input accumulation and TFP growth are important in explaining output growth, we show that efficiency change (technological catch-up) is the most significant component of TFP growth in explaining output growth distribution. Furthermore, using a specific model of the asymmetric error component, we find that R&D spillovers, banking efficiency and public infrastructures have statistically significant and economically relevant effects on technological catch-up.     

A remark on the fiscal theory of price determination

The fiscal theory of price determination asserts that the price level is determined by the ratio of nominal public debt to the present value of real primary surpluses. To show its fragility, we describe a simple monetary economy with an infinitely lived real productive asset. Under the hypotheses of the fiscal theory, speculative bubbles occur at equilibrium, thus leading to an indeterminate price level.     

A Poverty Trap of Crime and Unemployment

We present an overlapping generation growth model with an imperfect labor market where the links among crime, growth and unemployment are jointly considered, both in an endogenous and exogenous set‐up. We test the major implications of our theory and verify the two model specifications through the Italian regional data, using the Pooled Mean Group estimator proposed by Pesaran, Shin and Smith (1999 ). The empirical results are in favor of the exogenous version of the model and suggest that crime and unemployment have long‐run income level effects.     

Customer Attitude and Dispositions Towards Customized Products: The Interaction Between Customization Model and Brand

Despite increasing interest in customization-related topics, little is known about the relation between customization and brand. The authors identify two main archetypes of product customization based on the degrees of freedom given to the customer in the design process: Combination-based Customization (CbC), which is the selection of product modules provided by the company, and Integration-based Customization (IbC), which is product customization by means of signs and symbols provided by the customer. The authors propose that customer attitude and dispositions towards CbC and IbC depend on the presence/absence of a mass brand logo upon the product. Results of three studies, based on web toolkits for t-shirt and trolley bag customization, demonstrate that in the presence of a mass brand logo CbC shows higher customer attitude and dispositions than IbC. In the absence of a mass brand logo, the opposite pattern holds. Additional findings show, however, that the advantage of CbC over IbC for branded products disappears when there is high congruence between the customer self and the brand, and when creative brands are considered.     

Capital accumulation and real exchange rate behavior in a small open economy with credit market frictions

Summary. We consider the nature of the relationship between the real exchange rate and capital formation. We present a model of a small open economy that produces and consumes two goods, one tradable and one not. Domestic residents can borrow and lend abroad, and costly state verification (CSV) is a source of frictions in domestic credit markets. The real exchange rate matters for capital accumulation because it affects the␣potential for investors to provide internal finance, which mitigates the CSV problem. We demonstrate that the real exchange rate must monotonically approach its steady state level. However, capital accumulation need not be monotonic and real exchange rate appreciation can be associated with either a rising or a falling capital stock. The relationship between world financial market conditions and the real exchange rate is also investigated. Received: October 3, 1997; revised version: October 23, 1997