Research

Working Papers

Do Supply Chain Disruptions Harm Firm Performance? Evidence from Japan

(with Takafumi Suzuki)

Abstract: Recent major supply-chain disruptions and the measures taken by firms to protect themselves against future disruptions have raised concerns over their long-term implications on firm performance. Using panel data from 2007 to 2018 on buyer-supplier linkages in Japan, we study the effects of the 2011 Great East Japan Earthquake on firm performance and supplier relationships. In a difference-in-differences empirical strategy, we focus on buyer firms outside the disaster area and compare those with and without suppliers in the disaster area. On average, treated firms managed to "weather the storm" - their ability to replace lost suppliers swiftly allowed them not to be differentially hurt by the earthquake. Nonetheless, buyers in long-term relationships with suppliers in the disaster area suffered significant sales losses and struggled to replace their old suppliers. Moreover, we show that treated firms disproportionately accumulated new suppliers closer to their headquarters. Using seismological data, we show that this "nearshoring" was not due to information updates on earthquake risk and suggest it could be due to firms putting greater weight on supply chain resiliency.. 

Do Well Managed Firms Make Better Forecasts?

(with Nick Bloom, Charlotte Meng, Paul Mizen, Rebecca Riley, Tatsuro Senga, and John Van Reenen)

Abstract: We link a new UK management survey covering 8,000 firms to panel data on productivity in manufacturing and services. There is a large variation in management practices, which are highly correlated with productivity, profitability and size. Uniquely, the survey collects firms’ micro forecasts of their own sales and also macro forecasts of GDP. We find that better managed firms make more accurate micro and macro forecasts, even after controlling for their size, age, industry and many other factors. We also show better managed firms appear aware that their forecasts are more accurate, with lower subjective uncertainty around central values. These stylized facts suggest that one reason for the superior performance of better managed firms is that they knowingly make more accurate forecasts, enabling them to make superior operational and strategic choices. 

Do Firms Avoid Compliance Costs? Evidence from VAT Reforms in Japan

(with Takafumi Suzuki)

Abstract: This paper disentangles the motivations behind how enterprises respond to size-dependent tax regulations by exploiting the value-added tax (VAT) reforms in Japan. In Japan, both tax threshold and tax rate have been changed over the past three decades since the introduction of VAT. We build on the model of Harju et al. (2019) to incorporate various tax reforms and derive empirically testable implications. By using a panel of Japanese Census of Manufacture covering the periods of VAT introduction and reforms, we conducted bunching estimation. The local estimates imply that the observed output response by enterprises is mainly caused by compliance costs rather than tax rates for small enterprises in Japan. The results suggest that the authorities are encouraged to ease compliance costs while enhancing tax revenue to achieve more efficient tax design.

Selected Work in Progress

Theory and Evidence of Firm-to-firm Transaction Network Dynamics

(with Takafumi Suzuki)

Trade and Management: Evidence from Brexit

(with Paul Mizen, Rebecca Riley, and Greg Thwaites)