Understanding Superstar firms, market dynamics and intangibles
File(s)
Author(s)
Solorzano Mosquera, Jenniffer
Type
Thesis
Abstract
This thesis adds to the debate whether superstar firms, defined as top-income
distribution firms (e.g., Amazon, Microsoft, Google, Facebook (Meta)) are good
for economies. Rather than attributing market power to observed trends in
reduced business dynamics and increased concentration, I propose a more optimistic
explanation stemming from an economic model transformation due to a more
intangible economy, technological advancements, and globalization.
The first chapter describes U.K. business dynamics (e.g., entry and exit of firms)
and its connection with intangible investments (e.g., brands, management practices,
corporate culture). It builds on an original longitudinal database using business
register data and the application, for the first time in the U.K. in decades, of the
OECD’s DynEmp3 software routine to obtain comparable and matchable business
dynamics indicators with intangibles’ data. Findings expose a negative relationship
between employment growth rates and intangible investments, likely arising from
frictions generated by a more intangible economy; skilled over unskilled labor is
preferred.
The second chapter addresses market power increasing concerns. Evidence
of increasing measured markups, especially for Superstars, is debunked by the
chapter, demonstrating it highly depends on the estimation approach used. After
correcting some estimation inconsistencies, measured markups in the U.S. and
Europe remained stable since the Great Recession. Findings support notions of
rising industry concentration resulting from technological changes rather than lax
regulation permitting market power.
In the third chapter, we introduce unexplored innovation and intangible
asset measurements for empirical research connecting markups and business
dynamics. We find that in the U.K. and some Latin American countries, social
media data can serve as proxies for these concepts at the firm level. We
create measurements Twitnovation, representing a firm’s innovation drivers, and
Aboutnovation, representing a firm’s investment in customer engagement. They
explain a substantial portion of labor productivity variation and correlate strongly
with marketing expenses. Social media data can offer a more cost-effective and
immediate alternative to traditional firm innovation surveys.
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distribution firms (e.g., Amazon, Microsoft, Google, Facebook (Meta)) are good
for economies. Rather than attributing market power to observed trends in
reduced business dynamics and increased concentration, I propose a more optimistic
explanation stemming from an economic model transformation due to a more
intangible economy, technological advancements, and globalization.
The first chapter describes U.K. business dynamics (e.g., entry and exit of firms)
and its connection with intangible investments (e.g., brands, management practices,
corporate culture). It builds on an original longitudinal database using business
register data and the application, for the first time in the U.K. in decades, of the
OECD’s DynEmp3 software routine to obtain comparable and matchable business
dynamics indicators with intangibles’ data. Findings expose a negative relationship
between employment growth rates and intangible investments, likely arising from
frictions generated by a more intangible economy; skilled over unskilled labor is
preferred.
The second chapter addresses market power increasing concerns. Evidence
of increasing measured markups, especially for Superstars, is debunked by the
chapter, demonstrating it highly depends on the estimation approach used. After
correcting some estimation inconsistencies, measured markups in the U.S. and
Europe remained stable since the Great Recession. Findings support notions of
rising industry concentration resulting from technological changes rather than lax
regulation permitting market power.
In the third chapter, we introduce unexplored innovation and intangible
asset measurements for empirical research connecting markups and business
dynamics. We find that in the U.K. and some Latin American countries, social
media data can serve as proxies for these concepts at the firm level. We
create measurements Twitnovation, representing a firm’s innovation drivers, and
Aboutnovation, representing a firm’s investment in customer engagement. They
explain a substantial portion of labor productivity variation and correlate strongly
with marketing expenses. Social media data can offer a more cost-effective and
immediate alternative to traditional firm innovation surveys.
1
Version
Open Access
Date Issued
2023-05
Date Awarded
2023-12
Copyright Statement
Creative Commons Attribution NonCommercial Licence
License URL
Advisor
Haskel, Jonathan
Martin, Ralf
Publisher Department
Business School
Publisher Institution
Imperial College London
Qualification Level
Doctoral
Qualification Name
Doctor of Philosophy (PhD)