Reorganization Of Firms Research Articles

Is there a secular decline in disruptive patents? Correcting for measurement bias

Despite tremendous growth in the volume of new scientific and technological knowledge, the popular press has recently raised concerns that disruptive innovation is slowing. These dire prognoses were driven in part by Park et al. (2023), a Nature publication that uses decades of data and millions of observations coupled with a novel quantitative metric (the CD index) that characterizes innovation in science and technology as either consolidating or disruptive. We challenge the (Park et al., 2023) patent findings, principally around concerns of truncation bias and exclusion bias. We show that 88 percent of the decrease in the average CD index over 1980–2010 reported by the authors can be explained by their truncation of all backward patent citations before 1976. We also show that this truncation bias varies by technology class. We further account for a change in U.S. patent law that allows for citations to patent applications in addition to patent grants—something ignored by the authors in their analysis—and update the analysis to 2016. We show that the number of highly disruptive patents has increased since 1980—particularly since 2008. Our results suggest caution in using the (Park et al., 2023) patent findings and conclusions as a basis for research and decision-making in public policy, industry restructuring or firm reorganization aimed at altering the current innovation landscape.

What Determines AI Adoption?

Over the recent years, firms have showed an increased demand for leveraging the performance potential of Artificial Intelligence (AI) technologies. However, the general applicability of AI to many settings raises important managerial questions about whether aspects such as potential for in-house versus external AI development, the presence of complementary technological resources (e.g. access to cloud computing), or even the specific use of AI (e.g. product/service development, operational management) would guide firm-level decisions underlying AI adoption. While recent research has provided some insight on worker-level decisions about using AI, knowledge about firm-level AI adoption, as well as heterogeneities in adoption, remains scant. To address this empirical gap, this preliminary paper provides one of the first comprehensive assessments of firm-level determinants of AI adoption while accounting for the heterogeneous sources, applications, and complementary technological resources of AI in organizations. Specifically, this paper reports the first results of a novel firm-level AI adoption survey deployed to a representative sample of South Korean firms from 2017 and 2018. Econometric assessments identified that firm size and use of existing intangible assets are important for AI adoption. However, while these characteristics are significant for AI adoption regardless of whether the technology was produced in-house or obtained from a vendor, analyses suggest that there may be heterogeneities on the determinants of AI adoption depending on the operational application of AI. Furthermore, AI adoption also ensues in tandem with the adoption of other digital technologies (e.g. big data, cloud computing, and the Internet of Things) and with contemporaneous firm reorganization.

Information technology and the spatial reorganization of firms

AbstractThis study investigates how the adoption of an enterprise resource planning (ERP) system affects firms' spatial organization. We first provide a conceptual framework that explains how a firm reallocates different types of labor across establishments in different locations by adopting an ERP system, to lower internal coordination costs. Guided by this framework, we empirically find that ERP adopters increase production activities in non‐headquarter (HQ) establishments, while they decrease these activities in their HQ. An ERP system also enhances both HQ and retail/wholesale activities in an HQ. Additional tests confirm the robustness of these results.

Entry deregulation, firm organization, and wage inequality

This paper identifies a causal link between changes in product market competition, firm reorganization and within-firm wage inequality. We exploit a unique episode of comprehensive firm entry deregulation as a quasi-natural experiment and use exceptionally detailed linked employer-employee data for the universe of private sector firms and workers in Portugal. Following deregulation affected firms flatten their hierarchies: the number of layers is reduced and managers’ span of control increased. Dropping a hierarchy layer is accompanied by a significant reduction in wage inequality within the firm, by 8% for the average pay ratio between the top and the bottom layer and 4.4% for the 90-50 percentile wage ratio, showing that there are real changes arising from firm reorganization. Overall wage dispersion, measured by the standard deviation of hourly pay, is also reduced. We discuss mechanisms and interpretations for these changes.

Is there really synergy creation after M&A? Evidence from Brazil under the life cycle approach

Theoretical models predict that M&A results in synergy creation, and the empirical literature suggests that mature firms are consistently less risky and then more likely to succeed on such activities. We then investigate the life cycle stage’s role in the synergy creation after a Merger and Acquisition (M&A) activity in the Brazilian capital market. We use data from non-financial firms listed at the Brazilian capital market between 2010 and 2017. Data on M&A negotiations were extracted from the ANBIMA’s database, while financial accounting information was collected on the Comdinheiro ® database. Using the Propensity Score Matching to develop a control group, we estimate a linear regression model to capture the diff-in-diff effects on synergy creation for each stage, but focusing on mature firms, after the M&A activity. After several robustness checks, we firstly document a decrease on average in performance measures after the M&A. Moreover, we found no statistical differences for maturity neither for other stages. These results give rise to questions about the proper conditions for the bidder before engaging in such a firm reorganization and claims for future research on synergy creation and motives for M&As.

Does Goliath Help David? Anchor Firms and Startup Clusters

This paper investigates the effects of a large firm's geographical expansion (anchor firm) on local worker transitions into young firms through wage effects in industries economically proximate to the anchor firm. Using hand-collected data matched to administrative Census microdata, I exploit anchor firms' site selection processes to employ a difference-in-differences approach to compare workers in winning counties to those in counterfactual counties. The arrival of an anchor firm induces worker reallocation towards young firms in industries linked through input-output channels by a magnitude of 120 new businesses that account for approximately 2,300 jobs. Consistent with the literature in personnel and organizational economics, incumbent firms experiencing the fastest wage growth due to these shocks shed mid-layer employees who select into or start local young firms in connected and occupationally similar industries. These effects are strongest on workers employed in the most specialized and knowledge-intensive industries. Attracting an anchor firm to a county appears to have limited spillover effects in overall employment that are mainly driven by reorganization of incumbent firms in the anchor's input-output industries that face rising labor costs.

Statistical Analysis of Foreign Investments in the Republic of Macedonia 2010-2016

The aim of this paper is to examine the impact of foreign direct investments (FDI) on the economic growth and the reduction of unemployment, following an empirical research for the Republic of Macedonia. Moreover, the paper investigates the transfer of know-how technology, workforce improvement, integration into the world economy, enhancing the competition in the country’s development and the reorganization of domestic firms and difficulties in implementing economic policies. The theoretical and empirical literature suggests dividing opinions and conclusions on the impact of FDI on the economic growth, unemployment and exports. In order to fully understand the flow of FDI in the economic growth through transition countries and their potential economic growth, unemployment and export relations, we have prepared descriptive analyzes, elaborated by charts and tables. In this paper, we have developed empirical models for the Repbulic of Macedonia, a model of FDI impact on the economic growth and unemployment. The analysis uses data from 2012-2017. For the purpose of solving the patterns, the following techniques have been used: broken graphics and regression with the OLS method. The foremost conclusion is to show the relationship between FDI and the economic growth, as well as the relationship between FDI and unemployment in the Republic of Macedonia and FDI relations. Further recommendations will be addressed which aim to improve the country’s economic position in attracting foreign investors. Key words: gdp, unemloymend, fdi, export, regression

Measuring the Effectiveness of Bankruptcy Institutions: Filtering Failures in Slovenian Financial Reorganizations

We examine micro-level data on Slovenian court-supervised financial reorganizations in order to provide a rare empirical insight into the effectiveness of bankruptcy institutions at fulfilling their primary role: encouraging the liquidation of non-viable firms and promoting the restructuring of viable firms. Under the Slovenian simplified financial reorganization procedure, firms with rejected reorganization proposals are not legally mandated to liquidate. Because we are able to track the fate of all firms attempting this mode of reorganization, we observe both the liquidation or further reorganization of firms with accepted proposals and the survival of firms with rejected proposals. To estimate the occurrence of filtering errors, we draw on two complementary approaches proposed in the literature. Based on ex-post conceptualization of firm viability, we find that Type I errors (acceptances of plans by non-viable firms) are more likely than Type II errors (rejections of plans by viable firms) and that the incidence of filtering failure is 27 percent. Based on ex-ante conceptualization of firm viability, our results imply that for a given reduction in Type II errors Slovenian creditors are on average willing to accept three times as many Type I errors.

Organizing knowledge to compete: Impacts of capacity building programs on firm organization

A growing literature aiming at explaining differences in productivity and access to global export markets across firms has focused on the internal organization of firms. This paper contributes to this literature by evaluating the impact of a program that aims at enhancing competitiveness of small and medium enterprises in Brazil by providing coaching and consulting on management and production practices. Specifically, the paper tests whether the program induces treated firms to reorganize knowledge by adding more layers of different skills and competencies to their workforces. Using a unique firm-level data set, the number of layers of knowledge of the firms are compared before and after the program. The impact of the program is identified by relying on an instrumental variable approach, exploiting the quasi-experimental roll-out of its implementation, which was carried out at different times across Brazilian regions. The analysis finds that the program had an effect and that this effect is heterogeneous. The program is particularly effective in promoting the reorganization of small and medium firms. The results confirm another finding of the literature, namely that in re-organized firms wage inequality increases. Finally, these results are used to discuss how the change in firms' organization is positively correlated with export performance.

Networked liabilities: Transnational authority in a world of transnational business

The proliferation of production networks and cross-border contracting is frequently cited as empowering globally active corporations to skirt, and shape, national regulations. While scholars often focus on the political gains from these new forms of business organization, we shift the conversation to the potential political costs of global firm reorganization. The spread of corporate subsidiaries and global supply-chain networks leave firms vulnerable to a host of jurisdictional claims, and by targeting a domestically rooted affiliate, states can bring the global practices of the multinational corporation in line with their interests. In other words, states can take advantage of the transnationalization of the firm to transnationalize their authority beyond traditional jurisdictional boundaries. We label this process “networked liabilities.” Specifically, the combination of a firm’s sunk costs and the country’s jurisdictional substitutability determines the ability of governments to exert demands on multinational corporations. A key contribution of the article is to better specify the relationship between mobility and authority and to illustrate that networked liabilities can further empower a variety of states beyond traditional economic powers like the US or the European Union. We further highlight when firms may curtail the authority of great powers. The growing reach of the regulatory state domestically, coupled with the transnationalization of the firm, creates an increasing number of tools for certain governments to engage in economic statecraft beyond their borders. Our findings, then, contribute to debates on business–government relations in a globalized world, the changing nature of political risk, and the deterritorialization of state authority.

Productivity and Organization in Portuguese Firms

The productivity of firms is, at least partly, determined by a firm's actions and decisions. One of these decisions involves the organization of production in terms of the number of layers of management the firm decides to employ. Using detailed employer-employee matched data and firm production quantity and input data for Portuguese firms, we study the endogenous response of revenue-based and quantity-based productivity to a change in layers: a firm reorganization. We show that as a result of an exogenous demand or productivity shock that makes the firm reorganize and add a management layer, quantity based productivity increases by about 4%, while revenue-based productivity drops by more than 4%. Such a reorganization makes the firm more productive, but also increases the quantity produced to an extent that lowers the price charged by the firm and, as a result, its revenue-based productivity.

Why Reorganization of Firms Fails: Evidence From Estonia

Although most countries have firm reorganization option in legislation (either as a separate law or part of insolvency code), the practice of successful reorganizations has remained modest. Reorganization law was introduced in Estonia in late 2008, but only a few firms have been successfully reorganized since. Derived from previous the article studies, what are the reasons for firm reorganization failure? From a legal viewpoint, the main causes are found to be that firms under reorganization do not submit reorganization plans to court and the preconditions for reorganization lapse. The financial ratios for successful and unsuccessful reorganizations are not significantly different according to independent samples median test. Unsuccessfully reorganized firms perform worse than successful ones in the year before reorganization year, but the opposite phenomenon occurs two and three years before reorganization year.

Business Strategy and Firm Reorganization: Role of Changing Environmental Standards, Sustainable Business Initiatives and Global Market Conditions

AbstractMy study is framed against the backdrop of increasingly stringent environmental demands on the pulp and paper industry to reduce water and air pollution, and the changing global market conditions. I first present an observation‐based analysis conducted by visiting selected paper mills in Finland, the US, Germany and Sweden. Interesting differences and similarities emerge. Some of the observed differences lie in their focus on achieving incremental efficiency gains from better management of production processes, inventories, supply‐chain, product distribution and timing of modernization investments such as information technology. In the second part of the paper I present evidence on firms' productivity paths and the heterogeneity in productivity among relatively similar firms, and selected evidence of firms' investments in specific areas and how these affected productivity. My findings have implications for organizational behavior and business strategies employed by firms to improve their performance and productivity under changing environmental standards and market conditions. Copyright © 2013 John Wiley & Sons, Ltd and ERP Environment

Why reorganization of firms fails: evidence from Estonia. Summary: Saneerimismenetluse ebaõnnestumise põhjused Eestis

Although most countries have firm reorganization option in legislation (either as a separate law or part of insolvency code), the practice of successful reorganizations has remained modest. Reorganization law was introduced in Estonia in late 2008, but only a few firms have been successfully reorganized since. Derived from previous the article studies, what are the reasons for firm reorganization failure. From legal viewpoint, main causes are found to be that firms under reorganization do not submit reorganization plans to court and the preconditions for reorganization lapse. The financial ratios for successful and unsuccessful reorganizations are not significantly different according to independent samples median test. Unsuccessfully reorganized firms perform worse than successful ones in the year before reorganization year, but the opposite phenomenon occurs two and three years before reorganization year.

Demand or Productivity: What Determines Firms Growth?

We disentangle the contribution of unobserved heterogeneity in idiosyncratic demand and productivity to firm growth. We use a model of monopolistic competition with Cobb-Douglas production and a data set of Italian manufacturing firms containing unique information on firm-level prices to reach three main conclusions. First, demand shocks are at least as important as productivity shocks for firm growth. Second, firms respond to shocks less than a frictionless model would predict, suggesting the existence of adjustment frictions. Finally, the degreeof under-responseis much larger for TFP shocks. This implies the existence of frictions with differential effects according to the nature of the shock, unlike the typical frictions studied by the literature on factor misallocation. We consider hurdles to firm reorganization as one such friction and show that they hamper firms’ responses to TFP shocks but not to demand shocks.

HRM and the use of personnel services: an empirical analysis of German firms

PurposeThe purpose of this paper is to analyse how characteristics of the HR department and HR work, which relate to resource availability and resource needs, influence HR outsourcing. The study examines the subject of human resource (HR) outsourcing.Design/methodology/approachThe potential influence of firms' characteristics on HR outsourcing is analysed theoretically and empirically. The dataset (n=1,021) covers a broad spectrum of personnel services and is based on computer‐aided telephone interviews with chief executives and human resource managers of German firms.FindingsGenerally, we find that firm size and previous reorganization activities significantly raise the probability of an HR outsourcing. In contrast, there is no overall significant influence of central characteristics of HR work or the HR department on HR outsourcing in general.Originality/valueAlthough there is a trend toward the outsourcing of work, little research is being done on the relationship between the expected effects of outsourcing, the make‐or‐buy decision of decision makers, and the firm's characteristics themselves. This study sheds some more light on the relationship between HR outsourcing and firms' characteristics and finds some interesting relationships.

From Ethics to Regulation: The Re-Organization and Re-Professionalization of Large Law Firms in the 21st Century

The recent history of the legal profession is presented as one where the re-regulation of the profession, as epitomized in the Legal Services Act 2007, has placed the large law firm at the centre as a site of regulation in its own right. The legal profession has redefined its professional character from that of autonomous producers to employed lawyers who now exercise discretion within tightly constrained corporate limits. This is paralleled by the move away from individualistic codes of conduct towards entity-based regulation.This is Version 1 of this paper and has a different emphasis from Version 2 which also available at SSRN. It is for this reason I have left both versions on SSRN. This paper has been revised in September 2011 to take account of changes occurring in the UK legal services regulation.

Supply Chain and Network Performance: Metrics for Profitability, Productivity, and Efficiency

The architecture of the firm involves determination of a boundary that encompasses the functions managed by the firm. The past decade has seen substantial reorganization of firms where vertical or horizontal integration has been unbundled into weaker forms of collaborations including value chains and networks. This observation has forced a re-conceptualization of the boundaries of the firm to incorporate such collaborations. These collaborations are virtual and highly dynamic. They emerge and persist when two conditions are met. First, they must enable generation of greater value than might be attained through independent operation and anonymous transactions through markets. Second, the resulting growth must be shared with members in a way that retains their participation. Each of these conditions can be verified only if performance of the collaboration can be established. This paper recognizes the need for “metrics of performance” that are by necessity operationally feasible to measure. While conceptual approaches have been studied in the management literature, this paper considers from theoretic perspectives these issues and derives measures of the performance of the overall collaboration as well as of the participating enterprises. The paper presents a framework that can be applied to both vertical and horizontal collaborations as found in supply chains and networks. The paper offers suggestions on empirical methods for estimation of measures derived.

The financialization of large law firms: situated discourses and practices of reorganization

This article uses the case of the financialization of large law firms to develop debates about the process of the ‘capitalisation of everything’ whereby financial logics spread both geographically between countries and sectorally from one industry to another. Drawing on work that analyses how discourses of shareholder value have led to the re-organization of firms, the article argues that large law firms have undergone ‘surgery’ as part of attempts to make them appear more and more profitable when assessed using the metric profits per equity partner. The influence of geographical context—English regulation and institutions relating to the legal profession—on ‘surgery’ in the period 1993–2008 are also outlined as part of a situated analysis of the way regulations and institutions together prevent or enable the reproduction of financialized practices in different industries and places through the creation of conjunctural moments that help financial logics gain legitimacy.

Business Strategy and Firm Reorganization: Role of Changing Environmental Standards, Sustainable Business Initiatives, and Global Market Conditions

My study is framed against the backdrop of increasingly stringent environmental demands on the pulp and paper industry to reduce water and air pollution, and the changing global market conditions. I first present an observation-based analysis conducted by visiting selected paper mills in Finland, the U.S., Germany and Sweden. Interesting differences and similarities emerge. Some of the observed differences lie in their focus on achieving incremental efficiency gains from better management of production processes, inventories, supply-chain, product distribution, and timing of modernization investments such as Information Technology. In the second part of the paper I present evidence on firms’ productivity paths, the heterogeneity in productivity among relatively similar firms, and selected evidence of firms’ investments in specific areas and how these affected productivity. My findings have implications for organizational behavior and business strategies employed by firms to improve their performance and productivity under changing environmental standards and market conditions.