Small Number Of Firms Research Articles

RESTRUCTURING MANUFACTURING IN SOUTH AFRICA'S LAGGING REGIONS: THE CASE OF THE FREE STATE

ABSTRACT The manufacturing economy of the Free State reflects both historical dependence on locally available raw materials and high-levels of state intervention, in terms of support for import substitution and Homeland development. In the contemporary era, deindustrialization, the uncertain future of the clothing/textile industries and limited growth over the last ten years, suggests that, in terms of manufacturing, the Free State is a ‘lagging’ region. While there has been significant expansion in the number of small firms, this is not matched by employment growth and does not compensate for the loss of many large firms and economic downscaling in the Goldfields. Key sectors such as petro-chemicals and gold jewellery present certain opportunities for future growth.

Coexistence of large firms and less efficient small firms under price competition with free entry

This study constructs a game of technology selection and Bertrand-like price competition in a market with free entry. It demonstrates the existence of a Nash equilibrium in which a small number of firms adopting a large-scale technology coexist with, and charge a lower price than, a large number of firms adopting a small-scale technology. In this equilibrium, both available technologies and resources are allocated efficiently. This result provides a new economic rationale for antitrust law in general and, in particular, the US Sherman Act, wchich regards free entry and price competition as of foremost importance for maintaining market quality.

Information & Communication Technology and capital market perspectives

Capital markets in the late 1990s were shaped by the US stock market bubble which imploded in 2001. The new economy hype has shown all typical bubble aspects of a new sector taking-off: many new firms entering the market, few newcomers realizing enormous profits and a small number of firms with sustained profits. As the New York stock market dominates international stock markets, there were considerable international spillover effects from the US bubble which implied negative costs of capital for firms in most OECD countries and thus stimulated overinvestment in the late 1990s and a following phase of underinvestment. However, telecommunications services and software have remained dynamic drivers of the digital economy. Part of the overvaluation in the stock market in the late 1990s was caused by fraudulent investment bankers who publicly recommended investment in Information & Communication Technology (ICT) shares while putting the thumb down on New Economy firms in internal meetings. The main motive for such inconsistent public reinforcement of the stock market rallies apparently was the desire of investment bankers to stimulate positive cross-selling effects for the mergers & acquisitions department of the bank. Fraudulent accounting at some New Economy firms further drove the stock market boom and contributed to biased pricing. When prices in capital markets suddenly and strongly fell from their high levels in 2000, this move reflected some normalization of stock market prices in the New Economy segment. Is the New Economy over? An analysis of the perspectives of the digital economy requires a focus on the valid core of Information & Communication Technology. As regards the role of ICT, there is one key indicator for the strategic role of this sector for both productivity and growth. The number of software engineers in the US in 2000 was higher than the number of all conventional engineers which indicates that there is an enormous number of highly skilled people who build the digital economy. Indeed, ICT was the key driver of productivity and income growth in the US and part of Europe in the 1990s. High productivity growth in ICT production and productivity effects from the use of ICT have raised economic growth in most OECD countries and several

Developing the Appropriate Employee Skill Set and Degree for Small International Businesses

Small businesses are a formidable economic force in the U.S., representing the majority of firms, employing more than half the work force, creating two-thirds of new jobs, and accounting for just over half of the private sector output. Recently they have become an important factor in U.S. international business growth. The opportunity for small U.S. businesses to expand globally has never been greater as the number of small firms pursuing an international strategy continues to expand. This research looks at the skill needs and degree preferences of small businesses. The findings show that while small international businesses have the same kinds of personnel needs as all international business, the importance of some skills increases as the business becomes more involved in international commerce or grows larger. This article also discusses ways in which business schools can respond to small business personnel needs in curriculum design and emphasis.

L'entreprise publique en concurrence : les oligopoles mixtes

A Survey of the Mixed Oligopoly Literature We present a survey of the literature on mixed oligopoly, defined as markets where a small number of firms are active and where firms with different objectives coexist. The main part of the analysis focuses on the competition between private, profit-maximizing firms and public, social-welfare maximizing firms. We show when the intervention of a public firm is welfare-improving, what the optimal share of public ownership in a partially private firm is, and what the objectives of a public firm, or of its managers, should be. We also study the competition between profit-maximizing and employee-controlled firms. We show how results differ according to whether the goods produced are homogenous or differentiated.

Multidivisional firms, internal competition, and the merger paradox

Abstract. Traditional modelling of mergers has the merged firms (insiders) cooperate and maximize joint profits. This approach has several unappealing results in quantity‐setting games, for example, mergers typically are not profitable for insiders, but are profitable for non‐merging firms (outsiders). We take a different approach and allow for a parent company that can play each insider off one another. In quantity‐setting games, with our approach mergers are profitable for insiders, unprofitable for outsiders, socially beneficial, and involve (in a non‐monopolizing merger) a small number of firms. Finally, we find that the optimal strategy depends on whether firms compete in quantity or prices. JEL classification: L000

The export performance of Chilean firms: Some stylized facts

Although Chilean exports have performed well in recent decades, they are still largely confined to a few products, a few markets and a small number of firms. The present paper explores this last point, discussing the export behaviour of companies. The main stylized facts are as follows: only a small group of firms are capable of exporting on a permanent basis, and these companies are much larger and have much higher levels of productivity and human capital than the rest.

Stock Repurchases as an Earnings Management Device

This paper investigates the role of earnings per share management in the decision to repurchase shares. We identify the conditions under which repurchases increase EPS and document the frequency of EPS increasing and EPS decreasing repurchases among U.S. firms from 1988 to 2001. We then compare the empirical distribution of EPS increasing and EPS decreasing repurchases relative to pre-repurchase forecast errors to examine whether EPS considerations appear to affect the repurchase decision. Finally, we examine the share price response to quarterly earnings announcements to determine how investors price the repurchase-induced component of reported EPS. We find evidence that a disproportionately large number of firms have EPS increasing repurchases when they would have marginally missed analyst forecasts without the repurchase, and a disproportionately small number of firms have EPS decreasing repurchases when they are close to analyst forecasts before the repurchase. Also, the market appears to discount the repurchase induced component of earnings surprise relative to the earnings surprise attributable to operations. Finally, firms that meet or exceed expectations only because of the repurchase receive approximately a 60% lower valuation premium than firms that meet or exceed expectations without a repurchase.

Outsourcing salesforces via self‐employment: the case of direct selling in the UK

The past two decades have witnessed little, if any, growth in the numbers of small firms with employees in the UK. At the same time, a substantial growth in the numbers of self‐employed without employees as a component of the UK national labour force has been witnessed. The current article reports on a recent study into direct selling that accounts for around 500,000 “independent contractors” at any one time, albeit, in this case, operating often as part of an invisible economy, though linked with household‐name direct selling companies. With the advent of more large companies, such as the recently privatised utilities, using direct selling as a distribution format, there is a strong case for achieving a wider understanding of the dynamics of this system.

Are dividends disappearing? Dividend concentration and the consolidation of earnings

Aggregate real dividends paid by industrial firms increased over the past two decades even though, as Fama and French (J. Financial Econ. 60, 3) (2001a) document, the number of dividend payers decreased by over 50%. The reason is that (i) the reduction in payers occurs almost entirely among firms that paid very small dividends, and (ii) increased real dividends from the top payers swamp the modest dividend reduction from the loss of many small payers. These trends reflect high and increasing concentration in the supply of dividends which, in turn, reflects high and increasing earnings concentration. For example, the 25 firms that paid the largest dividends in 2000 account for a majority of the aggregate dividends and earnings of industrial firms. Industrial firms exhibit a two-tier structure in which a small number of firms with very high earnings collectively generates the majority of earnings and dominates the dividend supply, while the vast majority of firms has at best a modest collective impact on aggregate earnings and dividends.

The Small-Sample Bias of the Gini Coefficient: Results and Implications for Empirical Research

The Gini coefficient is a downward-biased measure of inequality in small populations when income is generated by one of three common distributions. The paper discusses the sources of bias and argues that this property is far more general. This has implications for (i) the comparison of inequality among subsamples, some of which may be small, and (ii) the use of the Gini in measuring firm size inequality in markets with a small number of firms. The small-sample bias has often led to misperceptions about trends in industry concentration. A small-sample adjustment results in a reduced bias, which can no longer be signed. This remaining bias rises with the dispersion and falls with increasing skewness of the distribution. Finally, an empirical example illustrates the importance of using the adjusted Gini. In this example it is shown that, controlling for market characteristics, larger shipping cartels include a set of firms that is stochastically identical (in terms of relative size) to those of smaller shipp...

The Changing Wholesaling Industry in the Post-1990 Turkey: Three Case Studies

ABSTRACT By examining three specific wholesalers who are currently active in the distribution of food, drink, and other fast-moving consumer goods in Turkey, we explore the recent transition that has occurred in the Turkish wholesaling industry. The transition has been from a homogeneous wholesale sector of many small firms dealing with multiple suppliers and retailers to a sector bifurcated between a small number of large wholesalers tied into relatively stable distribution networks and a large number of small firms which are not so linked.

Employment impacts of cleaner production – evidence from a German study using case studies and surveys

AbstractThe study assesses net employment effects of technical progress, which can be expected by the ongoing transition from end‐of‐pipe technologies towards cleaner production. Empirical evidence is presented on the basis of case studies and firm data including a telephone survey from German industry. The main result is that the transition from end‐of‐pipe technologies to cleaner production leads to a net creation of jobs, which is however restricted to a only small number of firms and to the group of highly skilled labour. Eco‐innovations, like other innovations, are non‐neutral. The demand for skilled and highly skilled labour rises while the demand for unskilled labour decreases. Synergies between environmental, labour market and innovation policy are apparent but they are however small and specific. The exploitation of these synergies requires the design of specific policy programmes differentiating between types of eco‐innovation. The promotion of product‐integrated environmental measures should be more successful if new products complement older ones, while process‐integrated environmental measures should be more successful if consumers' demand is more price elastic. Copyright © 2001 John Wiley & Sons, Ltd. and ERP Environment

Is the Growth of Small Firms Constrained by Internal Finance?

This paper examines the long-standing theory that the growth of small firms is often constrained by the quantity of internal finance. Under plausible assumptions, when financing constraints are binding, an additional dollar of internal finance should generate slightly more than an additional dollar of growth in assets. This quantitative prediction should not hold for the relatively small number of firms which access external equity. We test these predictions with a panel of more than 1, 600 small firms and find that the growth of most firms is constrained by internal finance. Our results have implications for several different research literatures, including models of firm growth.

Efficiency of French Privatizations: A Dynamic Vision

The French privatizations program is one of the principal programs worldwide regarding the volume of equity issues. A reading of the privatization process through the corporate governance theory resulted in the development of a model allowing to take into account, on the one hand, the temporal dimension of the privatization process, and on the other hand, the contextual, organizational, governance and strategic variables that influence this process. After having replicated a certain number of traditional tests, we tested this model on a sample of 19 French privatized firms over a seven-year horizon, which resulted in the following conclusions. The favorable incidence traditionally attributed to privatizations was not truly confirmed for French privatizations, at least for the considered horizon. Privatization induces a significant positive effect on performance for only a small number of firms. The importance of the effect, however, is subordinate to some of the suggested variables.

Continuous improvement through collaborative action learning

The development of continuous improvement capability within a small firm can benefit from action learning and external collaboration with other firms. This paper describes an action research initiative with two objectives: 1) to facilitate continuous improvement of operations practice and performance through collaborative action learning in a small number of firms; and, 2) to develop an approach, of a contingent nature, to address this need which could be replicable both in Ireland and throughout Europe. In particular, the paper will describe the movement by five Irish firms towards 'World Class' operations practice and performance. A case study on one firm will be featured. The firm developed a capability to improve their operations as they participated and collaborated in the National Action Learning Program (NALP).

The Small Sample Bias of the Gini Coefficient: Results and Implications for Empirical Research

The Gini coefficient is a downwardly biased measure of inequality in small populations when income is generated by one of three common distributions. The paper discusses the sources of bias and argues that this property is far more general. This has implications for (i) the comparison of inequality among sub-samples, some of which may be small, and (ii) the use of the Gini in measuring firm size inequality in markets with a small number of firms. The small sample bias has often lead to mis-perceptions about trends in industry concentration. A small sample adjustment results in a reduced bias which can no longer be signed as positive or negative. Finally, an empirical example illustrates the importance of using the adjusted Gini. In this example it is shown that, controlling for market characteristics, larger shipping cartels include a stochastically identical (in terms of relative size) set of firms as smaller shipping cartels.

The conservation of historic buildings in Britain and The Netherlands: a comparative study

Britain and The Netherlands both have a large stock of historic buildings dating from pre‐Roman to modern. Both provide some degree of state funding and each has a series of national bodies that concern themselves with historic building preservation both by the allocation of grants and the awarding of special “listing” status. In both cases the creation of societies to protect historic buildings dates to the second half of the nineteenth century. Despite these similarities, there are substantive differences in the current approach to the preservation of historic buildings. In terms of government intervention The Netherlands employs a far more localised approach than is found in Britain. Tax deduction and government subsidies provide a substantial incentive to building maintenance in contrast to the British laissez faire approach. The private sector in The Netherlands also contrasts substantively with that of Britain. Most conservation work is undertaken by a relatively small number of large firms who belong to a close‐knit federation, in contrast to the British approach of a large number of small firms operating in a free market.

Information Processing among Exporters: An Empirical Examination of Small Firms

As an increasing number of small firms move into export operations, information gathering, analysis, and distribution are critical for successful exporters. These activities are aspects of information processing, a theory that attempts to explain various information elements within organizations. This study examines information processing among small exporters by examining the impact twelve organizational and environmental variables have on three key dimensions of information processing-amount of foreign market information created, horizontal information flow, and vertical information flow. Results suggest that information processing within small firms may not mirror patterns of activities in their larger counterparts.

Has new business creation in russia come to a halt?

Successful transformation of centrally planned economies requires not just the privatization of the existing firms, but also the formation of new ones. New entrants serve to correct for the central planners' neglect of such sectors as services and consumer goods, and their bias in favor of large firms. Indeed, Central European economies have been experiencing a rapid rate of new business creation, as measured by the change in the number of small firms. Russia also experienced a short period of explosive growth in the number of new business. However, since 1994 net new business formation has stagnated. This paper looks into the possible causes of this phenomenon. Official data on the change in the number of small businesses, which serve as a proxy for net new business formation, arouse justified suspicion because of the frequent changes in the definition of “small enterprise.” Like everywhere in the world, some Russian registered firms do not become operational, and some firms that have ceased operations do not legally disband. If the share of these “dead souls” in the total count of small firms changes over time and official statistics does not adjust its count accordingly, the data may show the opposite of the actual processes. This paper analyzes Russian data collection procedures and other evidence, and concludes that stagnation in the new business formation is a real phenomenon, rather than a statistical artifact. The difficulty in finding out the causes of stagnation is that empirical studies focus on the existing businesses and miss those that should have been born but were not. The problems faced by the incumbents and frustrated entrants may well be different. The likely causes of the end of new business creation are the increased tax and regulatory burden, combined with plunder by the numerous tax and regulatory authorities. Other possible explanations involve the incumbents' use of the authorities and/or racketeers to erect barriers against new entrants.