Kornelius Kraft

• TU Dortmund University

We analyse the effect of credit supply constraints on R&D conditional on the financial strength of firms and heterogeneity in the restrictions in the supply of external financing. The financial strength of firms and access to external financing are identified by an exogenously calculated rating index. Restrictions in the supply of external financin...

We analyze the effect of subsidies on firm R&D, conditional on firms’ access to external financing during the financial crisis when access to external financing was particularly difficult. Specifically, we determine whether subsidies can mitigate or completely offset the effect of external financing constraints of firms or banks. Financial constrai...

In this paper we investigate the relevance of bargaining institutions in the decline in labor share. Several explanations for the decline exist, which consider the relevance of technology, globalization and markups. Surprisingly neglected so far, however, is the influence of bargaining institutions, in particular with a focus on changes in the outs...

We analyze the change in firms’ innovation behavior (short-term adjustment and long-term strategy) in reaction to the credit supply shock to banks in the recent financial crisis 2008/2009. Using a matched bank-firm data set for Germany, we utilize the exogenous variation caused by the interbank market disruptions on credit supply in instrumental va...

Contrary to previous literature we hypothesize that labor’s interest may well—like that of shareholders—aim at securing the long-run survival of the firm. Consequently, employee representatives on the supervisory board could well have an interest in increasing incentive-based compensation to avoid management’s excessive risk taking and short-run or...

This paper tests for the sensitivity of R&D to financing constraints conditional on restrictions in external financing. Financing constraints of firms are identified by an exogenously calculated rating index. Restrictions in external financing are determined by (i) the specific time period (crisis vs. non-crisis) and (ii) the balance sheet strength...

This study investigates the efficiency of the process of benefit determination for welfare recipients in Germany. A stochastic frontier analysis is used to compute (in)efficiency of Jobcenters (employment offices) in terms of average processing time used for determining benefit levels per case. Next, the quality of the process of welfare benefit de...

This article investigates the impact of the financial crisis on decisions by innovative versus non-innovative firms regarding capital investments. This question is of particular interest, as distortions of financial markets especially affect innovative firms (i.e., firms with riskier business models) and thereby impact economic growth. The empirica...

We investigate the effect of individual banks affected by the recent financial crisis of 2008/2009 on the innovation activities of their business customers. Firms associated with a bank that relies strongly on the interbank market are more likely to be exposed to a credit supply shock during the financial crisis and therefore face external financin...

This paper studies the effect of employee representation bodies provided by management on product and process innovations. In contrast to statutory forms of co-determination such as works councils, participative practices initiated by management are not equipped with any legally granted rights at all. Such alternative forms of employee representati...

Die diesjährige Frühjahrsdelegiertenkonferenz der AWMF (Arbeitsgemeinschaft der Wissenschaftlichen Medizinischen Fachgesellschaften e. V. ) fand am 21.4.2018 in Frankfurt statt. Eine Reihe der vorgetragenen und diskutierten Themen, die großenteils im Jahresbericht der AWMF [1] verfügbar sind, dürften auch für die Gesellschaft für Phytotherapie, die...

Codetermination can be regarded as an extreme regulatory intervention of the legislator in the labor market which might affect the efficiency of production and the bargaining power of labor. Based on a model that covers both efficient bargaining and employment bargaining a simple equation is derived that is suited to empirical testing. The empirica...

This study examines differences in employment growth between firms with and without works councils by separating introduction effects from potential selectivity effects. Using a difference-in-differences framework, we show that firms with works councils have higher employment growth before adopting a works council. However, employment growth declin...

We analyze the causal effect of the credit supply shock to banks induced by interbank market disruptions in the recent financial crisis 2008/2009 on their business customers’ innovation activity. Using a matched bank-firm data set for Germany, we find that having relations with a more severely affected bank seriously hampers firms’ current innovati...

We investigate the effect of individual banks' liquidity shocks during the recent financial crisis of 2008/2009 on the innovation activities of their business customers. Individual banks' liquidity shocks are identified by the degree of interbank market usage. We use a difference-in-differences approach to identify the effect of interbank relian...

Many observers regard the German system of codetermination as a very strong intervention into the working of the capital market. With the introduction of the codetermination law in 1976, employee representatives in limited liability companies with more than 2000 employees are entitled to occupy half of the number of seats and are granted nearly 50%...

Using German firm panel data, we analyze the productivity effects of profit sharing. Because selectivity should pose a severe problem in this context, we combine matching with a difference-in-differences approach. This method enables us to rule out potential bias. Our results suggest that selectivity does indeed matter. Firms with very special char...

This study analyzes the relation between works councils and overtime hours in Germany. The estimated effects differ considerably in dependence of standard contracted working time. Furthermore, we find differences across the quantiles of the overtime hours distribution and these differences between quantiles also vary between employees of establishm...

Codetermination can be regarded as an exogenously determined intervention which possibly affects efficiency of production and bargaining power of labor. Based on a model which covers efficient bargaining as well as employment bargaining a simple equation is derived which is suited to empirical testing. The empirical test is based on German data and...

Contrary to previous literature we hypothesize that interests of labor may well – like that of shareholders – aim at securing the long-run survival of the firm. Consequently, employee representatives on the supervisory board could well have an interest in increasing incentive-based compensation to avoid excessive risk taking and short-run orientate...

We investigate the effect of profit sharing on product and process innovation. Profit sharing is a credible commitment on the part of companies to allow their employees to participate in any efficiency gain. Resistance to technical progress becomes less plausible. Moreover, employees are motivated to share their specific information advantage on po...

Contrary to previous literature we hypothesize that interests of labor may well - like that of shareholders - aim at securing the long-run survival of the firm. Consequently, employee representatives on the supervisory board could well have an interest in increasing incentive-based compensation to avoid excessive risk taking and short-run orientate...

We estimate the effect of R&D spillovers on sales realized by products new to the firm (imitation) and new to the market (innovation). It turns out that spillovers from rivals lead to more imitation, while input from customers and research institutions enhance original innovation.

Models of competition for the market with endogenous market structures show that, contrary to the Arrow view, an endogenous entry threat induces the average firm to invest less in R&D and the incumbent leader to invest more. We test these predictions using a unique dataset for the German manufacturing sector (the Mannheim Innovation Panel). In line...

We estimate the effect of R&D spillovers on sales realized by products new to the firm (imitation) and new to the market (innovation). It turns out that spillovers from rivals lead to more imitation, while input from customers and research institutions enhance original innovation.

This paper discusses the incentives for innovation by a manager-led firm. In particular, it is investigated how remuneration practices influence the choice of a risky project. In the first place, a dynamic model with uncertainty is used to determine the optimal employment level with exogenous growth and risk. In the second part of the paper, growth...

This study analyzes the impact of German codetermination rights on overtime hours. Using German personal data, our results show that the effects of works councils strongly depend on the contracted working time. Furthermore, we find a strong heterogeneity in the effects of works councils across different quantiles of the overtime hours distribution....

This study analyzes the impact of works councils on discrepancies between the preferred and actual working hours of employees. The results show that workers in codetermined establishments are more likely to match their working time preferences. This positive effect is due to a reduction of overemployment. However, the presence of works councils can...

This study examines the differences in the likelihood of overpayment and overemployment in establishments with and without works councils. In contrast to other studies, we use assessments by the management concerning the existence of such problems. Furthermore, we also analyze how different types of works councils influence the probability of overe...

This paper analyses the effects of minimum wages on competition in the German roofing sector. The case is particularly interesting since this sector is faced with a uniform minimum wage despite significant regional disparities in productivity and wages. As a control industry we take the plumbing sector, which shows a similar market structure and de...

Die wissenschaftliche Diskussion zur Wirkung der durch das Betriebsverfassungsgesetz im betrieblichen Alltag verankerten Mitbestimmung wird nunmehr seit Mitte der 80er Jahre intensiv und kontrovers geführt. Beginnend mit den Studien von FitzRoy und Kraft (1985, 1987 und 1990) sowie Kraft (1986) befasst sich eine Vielzahl von Untersuchungen mit mögl...

We analyze the impact of profit sharing on the share of workers receiving training. An effect is plausible because: 1) profit sharing is a credible commitment by firms to reward firm-specific skills acquired by formal or informal training, 2) profit sharing may reduce turnover and increase the returns to training, 3) a common payment for the whole...

This study examines differences in employment growth between firms with and without works councils by separating introduction effects from potential selectivity effects. Using a difference in differences framework, we show that firms with works councils have higher employment growth before establishing a works council. However, employment growth de...

In diesem Beitrag werden die Ergebnisse einer empirischen Studie zu den Determinanten eines zu hohen Personalbestands und überhöhten Lohnkosten vorgestellt. Hierzu werden Einschätzungen des Managements zum Vorliegen der genannten Probleme ausgewertet. Im Zentrum steht der Einfluss von Betriebsräten und wir finden in Betrieben mit Betriebsräten häuf...

Dieser Artikel bietet einen Überblick zu aktuellen Forschungsarbeiten hinsichtlich der Auswirkungen von organisatorischen Änderungen wie Gewinn- oder Entscheidungsbeteiligung von Arbeitnehmern auf den Unternehmenserfolg. Die verwendete Methodik zur Berücksichtigung von möglichen Selektionsproblemen wird ausführlich erläutert. Dieser Rahmen wird zur...

Die Konzentration bzw. Streuung der Kapitalanteile variiert in deutschen Aktiengesellschaften erheblich. Die Literatur diskutiert seit langem, inwiefern Unterschiede der Streuung die Effizienz von Firmen beeinflussen. Wir untersuchen die Auswirkung der Streuung von Kapitalanteilen in Unternehmen in Zusammenhang mit Unternehmensmitbestimmung. Auf de...

"In 2004, the national and international debate on labor market performance forcefully made a case for more flexibility in the German labor market (OECD 1994, 2004; Heckman 2002; SVR 2002). In contrast, in 2010, experts were surprised by the flexibility of the German labor market during the world recession 2008 and 2009 (Möller 2010). What a change...

Simple models of competition for the market with endogenous entry show that, contrary to the Arrow view, an endogenous entry threat in a market induces the average firm to invest less in R&D and the incumbent leader to invest more. We test these predictions based on a unique dataset and survey for the German manufacturing sector (the Mannheim Innov...

Principle-agent theory suggests managers might under-invest into R&D for reasons of risk tied to project failure, such as reduced remuneration and job loss. However, managers might over-invest into innovation for reasons of growth implying higher remuneration, power and prestige. Using a sample of 1,406 Belgian firms, we find, first, that managers...

This paper presents the empirical results of a comparison of technology licensing expenditures of German companies in order to test implications of the Gilbert and Newbery (1982) model. Aside from standard control variables, the motives for innovation expenditures are also taken into account. We differentiate between firms intending to secure their...

Using German panel data from 1984 to 2007, we analyze the impact of labor division between husband and wife on the risk of divorce. Gary Becker's theory of marriage predicts that specialization in domestic and market work, respectively, reduces the risk of separation. Traditionally, the breadwinner role is assigned to the husband, however, female l...

This paper examines the effect of the German co-determination law of 1976 (MitbestG) on the innovative activity of German firms. Co-determination applies to firms with 2000 employees or more. Data from 1971-1976 and 1981-1990 on 148 firms are used to compare the number of patents granted to co-determined firms before and after the introduction of t...

Many studies investigate the relationship between R&D and patents applying knowledge production functions. Using aggregated R&D may underestimate the productivity of ‘R’, as mainly ‘R’ but not ‘D’ leads to patents. Disaggregating ‘R’ and ‘D’ shows a significant premium of ‘R’ towards patenting.

The present paper discusses the effects of dispersed versus concentrated capital ownership on investment into innovative activity. While the market for equity capital might exert insufficient control on top managements’ behavior, this weakness may be mitigated by a suitable degree of debt financing. We report the results of an empirical study on th...

In his article “The tale of the inflexible German labour market” (“Die Mär vom starren deutschen Arbeitsmarkt”) in this issue of the Journal for Labour Market Research (ZAF) Werner Sengenberger criticises our introductory paper “Potentials for flexibility in heterogeneous labour markets – an introduction”, which was published in issue 2/3 of the ZA...

Using a rich panel data set from the German Socio-Economic Panel, we test whether spouses who are similar to each other in certain respects have a lower probability of divorce than dissimilar spouses. We focus on the effect of homogamy with respect to education and church attendance. Gary Becker's theory of marriage predicts that usually, positive...

"In his article 'The tale of the inflexible German labour market' ('Die Mär vom starren deutschen Arbeitsmarkt') in this issue of the Journal for Labour Market Research (ZAF) Werner Sengenberger criticises our introductory paper 'Potentials for flexibility in heterogeneous labour markets - an introduction', which was published in issue 2/3 of the Z...

Zusammenfassung Flexibilität und Heterogenität sind zentrale Themen der Arbeitsmarktforschung. Das seit 2004 von der Deutschen Forschungsgemeinschaft (DFG) geförderte Forschungsschwerpunktprogramms "Flexibilisierungspotenziale bei heterogenen Arbeitsmärkten" beabsichtigt Flexibilisierungspotenziale aufzudecken sowie die Verbindungen zwischen hetero...

Barriers to entry are regarded as major impediments to the working of markets. Entry must not necessarily actually take place - the perceived threat of entry may encourage incumbent firms to behave as if they are in a competitive market, even if they are not. We present empirical evidence on effects of perceived threat of entry on profitability. Us...

Theory predicts a positive relationship between market concentration and profitability in most scenarios. In empirical work, however, this relation is frequently not found or only a weak connection is observed. We compare the performance of concentration and market share variables, which are generated on the basis of the official industry classific...

We develop a simple model of competition for the market that shows that, contrary to the Arrow view, endogenous entry threat in a market induces the average firm to invest less in R&D and the incumbent leader to invest more. We test these predictions with a Tobit model based on a unique dataset and survey for the German manufacturing sector (the Ma...

"Flexibility and heterogeneity are important topics in labour market research. Since 2004 the Deutsche Forschungsgemeinschaft (DFG) has funded a research network addressing the issue of 'Flexibility in Heterogeneous Labour Markets', which intends to uncover possibilities for fostering flexibility. Furthermore, the research network aims to identify...

Using data on a sample of manufacturing establishments in Germany, we find that the use of self-managed teams is associated with increased intra-firm wage inequality between skilled and unskilled blue-collar workers. We also show that moderating factors play an important role. While teamwork interacts positively with employer-provided further train...

We investigate the effect of profit sharing on product and process innovation. Profit sharing is a credible commitment on the part of companies to allow their employees to participate in any efficiency gain. Resistance to technical progress becomes less plausible. Moreover, employees are motivated to share their specific information advantage on po...

Many studies investigate the relationship between R&D expenditures as an input and patents as an intermediate product or output of a knowledge production function. We suggest that the productivity of research in patent production functions has been underestimated in the literature, as scholars typically use information about R&D, i.e. the sum of re...

"We discuss the determinants of a successful implementation of an employee suggestion scheme and other measures to stimulate innovation success. Subsequently the effects of the employee suggestion schemes are investigated empirically. We analyse the realisation of cost reductions and alternatively sales expansion due to quality improvements. It tur...

Motivation and productivity were increased when the traditional division of labour and surplus was modified to give workers extended tasks and profit-shares in firm Z. In X, traditional division of labour combined with worker-shareholding and formal, representative participation failed to improve motivation.

The Gilbert and Newbery (1982) model considers the auction of a process innovation and, in the case of a non-drastic innovation, the monopoly tends to persist. This is the starting point for our analysis of a much more general setting: in contrast to the original study, not only the case with just one in-cumbent and one challenger is analyzed, but...

Knowledge spillovers to competitors are regarded as an important aspect of the innovation process. While a company possibly benefits from incoming information on successful R&D conducted by other companies, a generally high probability of leakage of knowledge in an industry will negatively affect profitability. This paper presents the results of an...

Wir diskutieren die Faktoren für eine erfolgreiche Umsetzung eines Systems des betrieblichen Vorschlagswesens und anderer Maßnahmen zur Stimulierung des Innovationserfolgs. Im Anschluss wird die Wirkung des betrieblichen Vorschlagswesens auf den Innovationserfolg empirisch überprüft. Als Innovationserfolg wird die Umsetzung einer Kostenreduktion un...

Credit ratings are commonly used by lenders to assess the default risk, because every credit is connected with a possible loss. If the probability of a default is above a certain threshold, a credit will not be provided. The purpose of this study is to test whether credit ratings contribute valuable information on the creditworthiness of firms. Emp...

Empirical studies examining the impact of intra-firm wage dispersion on firm performance report extremely mixed results. Yet, almost all of the studies implicitly assume that there is a uniform relationship between wage dispersion and firm performance across all types of firms. In contrast, we argue that the effects of wage dispersion depend on the...

This paper analyses whether the effect of compensation of former spouses after divorce has an impact on the probability of divorces occurring. In particular, it is assumed that the income difference after divorce is shared equally between former spouses, in line with rules in Germany. The reference situation within the marriage is, on the one hand,...

This paper combines internal bargaining between firms and their employees with a situation of imperfect competition, in particular a Cournot-oligopoly. Wage bargaining is compared with simultaneous negotiations on wages and employment (efficient bargaining). It turns out that for a large range of parameter values a prisoner's dilemma concerning pro...

Many observers regard the German system of codetermination as a very strong intervention into the working of the capital market. With the introduction of the codetermination law in 1976, employee representatives in limited liability companies with more than 2000 employees are entitled to occupy half of the number of seats and are granted nearly 50%...

This article discusses earlier work by Frick (1996) on the impact of works councils on turnover in Germany. It turns out that his econometric methodology can be improved in several ways. Additionally the number of dismissals can be extended by including fixed term contracts that are not prolongated. Recalculating by use of his data shows that his r...

We estimate the determinants of various types of product innovation. Knowledge spillovers from rivals have a positive impact on incremental innovations. This impact is largely independent of the participation in R&D cooperations. Spillovers exert no such independent influence on drastic innovation activities. The results support the hypothesis that...

Many observers regard the German system of codetermination as a very strong intervention into the working of the capital market. With the introduction of the codetermination law in 1976, employee representatives in limited lability companies with more than 2000 employees are entitled to occupy half of the number of seats and are granted nearly 50%...

We estimate the effects of R&D on firms' credit ratings and on financial distress. The main purpose is the comparison of firms in Western Germany and Eastern Germany as a transitional economy. Innovative activity has a positive impact on firm value proxied by ratings in Western Germany, but a negative impact in Eastern Germany. We also consider fut...

This study examines the relationship between profit sharing and profitability using a nationally representative German panel data set. Applying a matched difference-in-differences approach, we find that an introduction of profit sharing positively affects profitability.

Die paritätische Mitbestimmung gibt es in Deutschland mittlerweile seit 30 Jahren. Demnächst soll eine Kommission Vorschläge zu ihrer Modernisierung und Anpassung an EU-Regelungen unterbreiten. Welche Vor- und Nachteile hat die Mitbestimmung aus theoretischer Sicht? Welche Wirkungen sind auf die Effizienz und Produktivität der Unternehmen feststellb...

Numerous empirical studies attribute profit sharing a productivity-enhancing effect. Far less attention has been given to the question how an introduction of profit sharing affects wages and thus the question whether productivity gains are partially offset by higher labor costs. Using nationally representative German establishment panel data, we fi...

This paper presents the results of an empirical test concerning the auction model of Gilbert and Newbery (1982). The study uses data on German firms in order to analyze expenditures for technology licenses. Aside of standard control variables the motives for innovation expenditures are taken into account. We differentiate between firms which intend...

We present the first panel estimates of the productivity effects of the unique German institution of parity, board-level co-determination. Although our data span two severe recessions when labour hoarding costs of co-determination are probably highest, and the panel is too short to capture the likely long-run benefits in terms of human capital form...

This paper considers the effect of different firm leadership on the innovative performance of firms from seven EU countries. We investigate whether owner-led or manager-led firms achieve a larger share of their turnover with product innovations. Economic theory does not propose clear answers to this question. In the empirical analysis, it turns out...

The literature on the relationship between firm value and knowledge capital is based on stock market valuation. We use a credit rating score as an alternative measure. Innovative firms achieve better ratings, whilst too many innovative activities reduce the rating.

We investigate the effects of the German codetermination law of 1976 on the innova-tiveness of a sample of German stock companies from the manufacturing industry. Information from 155 companies on the number of patents granted in the time period 1971-1990 is combined with other firm and industry data. The sample, totalling 1,961 observations, is us...