new human resource management practices complementarities and the impact on innovation performance in this paper we take our theoretical point of departure in recent work in organisational economics on systems of human resource management hrm practices we develop the argument that just as complementarities between new hrm practices influence financial performance positively there are theoretical reasons for expecting them also to influence innovation performance positively we examine this overall hypothesis by estimating an empirical model of innovation performance using data from a danish survey of 1 900 business firms using principal component analysis we identify two hrm systems which are conducive to innovation in the first one seven of our nine hrm variables matter almost equally for the ability to innovate the second system is dominated by firm internal and firm external training of the total of nine sectors that we consider we find that the four manufacturing sectors correlate with the first system firms belonging to wholesale trade and to the ict intensive service sectors tend to be associated with the second system

the impact on economic performance of a transformation in workplace relations this study examines how a transformation in patterns of conflict and cooperation affected economic performance in 25 work areas of a large unionized manufacturing facility in the period 1984 87 unlike most studies of industrial relations and economic performance this study clearly distinguishes conflict from cooperation but evaluates the two together rather than focusing on only one an analysis of data collected from union and employer records and interviews strongly suggests that work areas with traditional labor management relations rooted in adversarial assumptions had higher costs more scrap lower productivity and a lower return to direct labor hours worked than work areas with transformational relations characterized by increased cooperation and improved dispute resolution

organisational and spatial determinants of the multi unit firm evidence from the french industry galliano d and soulie n organizational and spatial determinants of the multi unit firm evidence from french industry regional studies this article aims to analyse the factors internal characteristics spatial and industrial environments that determine the existence of multi unit firms and the intensity of their organizational fragmentation at a national scale the empirical models are based on individual data on all french industrial firms collected by the french national institute of statistics the results show the importance of internal characteristics scale economies specific assets as research and development and advertising skill level etc in organizational choice they also highlight the major role played by multi location and by the spatial profile of the firms on the intensity of their fragmentation galliano d and soulie n

markets hierarchies and information on a paradox in the economics of organization abstract the literature on the economics of organization presents the following paradox on the one hand firms are said to be repositories of superior information about input characteristics on the other hand markets are said to be superior to hierarchies in coordinating resource allocation because hierarchies are forced to aggregate heterogeneous inputs into homogeneous categories this paper suggests reasons for the association of firms with refined input information and argues that it is not their hierarchical features but their provision of an appropriate framework for rent sharing that is responsible for this association

beyond privatization institutional innovation and growth in china s large state owned enterprises abstract this article demonstrates that china s large state owned enterprises soes are not stagnant fossils waiting to die under economic reform policies this sector has undergone large change due to enhanced enterprise autonomy the impact of market forces rapid growth of domestic demand for upstream products strategic integration with the world economy and the state s policy to promote large businesses china s large soes are developing new institutional forms that do not neatly fit into existing patterns china is experimentally changing its institutions through a combination of central policy local initiative and interaction with international investment this presents a challenge to the transitional orthodoxy and to ideas concerning property rights in development economics there is not a universal model of property rights and government action that works best in all circumstances china s experience with the reform of large soes shows the diverse possibilities for effective industrial institutions

interest rate volatility and the term structure a two factor general equilibrium model we develop a two factor general equilibrium model of the term structure the factors are the short term interest rate and the volatility of the short term interest rate we derive closed form expressions for discount bonds and study the properties of the term structure implied by the model the dependence of yields on volatility allows the model to capture many observed properties of the term structure we also derive closed form expressions for discount bond options we use hansen s generalized method of moments framework to test the cross sectional restrictions imposed by the model the tests support the two factor model there are essentially two approaches to the modeling of the term structure of interest rates in continuous time the equilibrium approach pioneered by

long term employment and job security over the past 25 years a comparative study of japan and the united states the authors document and contrast changes or lack thereof in job stability over the past 25 years between japan and the united states prime age male workers with at least five years of tenure in japan continued to enjoy much higher job stability than did their u s counterparts most remarkably japan s lost decade had little discernible adverse effect on the job stability of this group of japanese employees by contrast job stability for mid career hires and youth workers deteriorated in japan the authors cross national regression analysis of job loss confirms the consistently more important role that seniority plays in protecting workers from job loss in japan than in the united states and reveals that this gap in seniority s influence on job stability between the two countries widened overall it is the u s economy with the longest economic expansion not the japanese economy with the longest economic stagnation that experienced deteriorating job stability pointing to the absence of converg

industrial relations performance economic performance and qwl programs an interplant analysis this study analyzes the relationship among plant level measures of industrial relations performance economic performance and quality of working life programs the analysis employs pooled time series and cross section data from 18 plants within a division of general motors for the years 1970 79 the empirical results show strong associations between industrial relations and economic performance measures and limited support for the hypothesis that quality of working life efforts improve both kinds of performance

what makes management style similar and distinct across borders growth experience and culture in korean and japanese firms using a survey database of japanese and korean firms we compare the styles of two asian business systems with a japanese rather than an american mirror there are substantial differences in the two country styles we introduce two sources of convergence firm size as measured by sales and globalization as measured by export ratio and find that both of these factors reduce the difference with globalization the more significant of the two

social security and migration with endogenous skill upgrading abstract the aim of the paper is to investigate the joint redistributive effects of migration and pensions and to reassess the sustainability issue raised in the existing economic literature the paper first develops a theoretical framework to analyse the impact of international migration on the labour market the model allows for heterogeneity across native born individuals and for migrants to affect both the wages and the education decision in the recipient country it then explicitly focuses on pensions under alternative migration scenarios the analysis shows that migration causes redistributive effects which increase across group wage inequality however the endogenous educational response by residents partially offsets the redistributive impact of migration while creating additional interest groups migration helps the financial sustainability of the pension scheme but the interaction between migration and pensions causes complex inter and intragenerational redistributive conflicts which are analysed in the paper

the impact of immigration on the human capital of natives implications of the quantity number and quality skill of immigration on the destination economy are analyzed including impacts on value added wages quasi rents rates of return and the skill distribution of the native labor force quantity quality trade offs are considered for both immigrant and native workers medium and long run labor supply responses by natives to immigrant induced changes in wage rates are shown to have second order effects which substantively affect the impacts of immigrants the impact of immigration policy depends on the quality as well as quantity of immigrants the time horizon and the speed of factor market adjustment

conjecture uncertainty and cooperation in prisoner s dilemma games some experimental evidence abstract this paper presents experimental tests of two models of cooperation in finitely repeated prisoner s dilemma games kreps milgrom roberts and wilson 1982 the models suggest that either a perception that the other party may use the tit for tat strategy or mutual uncertainty concerning dominant noncooperative strategies can lead to rational cooperation the experiment independently manipulated both types of uncertainty and allowed for inferences concerning the players prior homemade preferences for cooperation only in relatively restricted situations did either type of uncertainty promote cooperation instead players cooperated much more than was predicted they also cooperated more when they were certain of their opponents payoffs

the efficiency wage hypothesis applying a general model of the interaction between labor quantity and quality abstract the efficiency wage is analyzed in the context of a market for labor quality units the model is equivalent to that of a perishable one period form of firm specific human capital which is most efficiently financed by the employer indirectly through higher wages the hypothesis also assumes a labor market in which the quantity units have zero price i e labor earns no rent which can occur in the absence of unemployment only if the supply of some quality attribute is subject to constant costs on the intensive margin this constant cost condition is implicit in w a lewis original description of the traditional sector in a dual economy otherwise the zero rent assumption requires unemployment in which case it can not be used to explain the existence of unemployment the general applicability of the constant cost condition and of the efficiency wage hypothesis is questioned

toward an economic model of the japanese firm i owe a great deal to professor moses abramovitz who suggested that i write this article i appreciate his constant encouragement and guidance which aided me throughout its preparation i am also indebted to three anonymous referees of the journal and to professors ryutaro komiya and michael riordan for their critical comments and helpful suggestions needless to say i am solely responsible for the views expressed in this paper

decentralization hierarchies and incentives a mechanism design perspective separation of ownership from management multidivisional firm organizations delegation of production decisions to worker teams delegation of pricing and advertising decisions to retail franchisers reliance on intermediaries in trade or finance and distribution of regulatory authority across different agencies represent examples of organizations that delegate and distribute decision making authority instead of centralizing it this paper reviews literature on costs and benefits of delegated decision making in hierarchical organizations or contracting networks with regard to problems of incentives and coordination it starts by describing incentive and coordination costs of delegation in simple canonical examples of hierarchies where both information and incentives of different decisionmakers differ one class of models pertain to contexts where the classical revelation principle applies i e where costs of contractual complexity information processing or communication are absent agents do not collude and the mechanism designer can commit to the mechanism delegation may conceivably entail a loss of control and coordination arising from the divergence of information and incentives sufficient and necessary conditions for this loss to be mitigated entirely include risk neutrality top down contracting and monitoring of transfers or production assignments between subordinates the next class of models introduces communication costs that restrict the performance of centralized arrangements relative to delegation owing to a resulting loss of flexibility which has to be traded off against possible control losses of delegation finally consequences of collusion among agents is discussed which typically enlarge the range of circumstances under which delegation can attain optimal second best outcomes the paper concludes with a discussion of the relevance of this theoretical literature to recently emerging empirical studies of industrial organizations where delegated decision making plays an important role adoption of innovative human resource management practices new information technologies and retail franchising

the substitutability of black hispanic and white labor this paper analyzes the extent of labor market competition among blacks hispanics and whites in the united states the specification of a generalized leontief production function leads to an empirically tractable system of input demand functions the estimation of the demand system using the 1976 survey of income and education reveals that a blacks and hispanics are complementary inputs b hispanics and whites may also be complements and c blacks and whites are not complements and may be substitutes

a preliminary exploration on stochastic dynamic asset allocation models under a continuous time sticky price general equilibrium this article studies asset allocation problems under endogenous macroeconomic dynamics and monetary policy rules by merging a continuous time sticky price general equilibrium model based on the ne

union membership in the united states 1973 1981 this paper reports estimates of union membership gathered from may current population surveys from 1973 to 1981 the authors present data by occupation industry selected states and smsas race gender and educational attainment the paper both extends and differs from that by freeman and medoff which presents unionism estimates for the private sector for 1968 75 to facilitate longitudinal analysis this paper reports three year moving averages of occupational and industry data and annual estimates of demographic classifications the data include public sector as well as private sector workers and they exclude workers not covered by the national labor relations act also the authors provide only union membership estimates not estimates on workers covered by union contracts this paper suggests that the percentage of all workers that are unionized in the united states remained fairly constant over the 1973 81 period

efficient wage bargaining as a repeated game this paper builds a bridge between the two existing approaches for wage and employment determination in a unionized market the monopoly union model and the efficient bargaining model both fail to capture the dynamic aspects of wage bargaining when the repeated nature of the wage bargaining process is considered the equilibria are neither as inefficient as the monopoly union model predicts nor as fully efficient rather the two models can be regarded as particular cases with certain discount rates we apply our model to issues such as the endgame interpretation of the u s steel industry wage concessions and featherbedding

toward a stakeholder theory of the firm the saturn partnership this paper seeks to engage the organization theory community in contemporary debates over the role of the corporation in american society by using the case of the saturn corporation to develop and illustrate a stakeholder theory of the firm one normative and three positive questions are posed for a stakeholder theory the normative question is why should stakeholder models be given serious consideration at this moment in history the positive questions are 1 under what conditions is a stakeholder firm likely to emerge in the united states 2 what are the critical determinants of performance in a stakeholder firm and 3 what will determine the sustainability and diffusion of this organizational form in the american environment the history design features and dynamics of the labormanagement partnership at saturn are used to illustrate and interpret a specific case of employees as stakeholders saturn s original mission governance structure and internal processes fit the characteristics of a stakeholder firm employees establish themselves as influential definitive stakeholders by using their knowledge to improve organizational performance the local union likewise contributes to firm performance by organizing workers into a dense social network that contributes to problem solving conflict resolution and quality improvement however the legal and political environment in which the firm operates produces considerable uncertainty over the sustainability and diffusion of saturn s features in particular and the stakeholder organizational form in general additional hypotheses and research questions are proposed to continue theory building around the more general model of the stakeholder firm researchers are encouraged to take up the analysis of stakeholder models and thereby contribute to the contemporary and future debates over the role of the corporation in american society

the impact of immigrants on host country crime it is conventionally believed that immigration increases crime rates in the host country however empirical results are not in line with this crime concern we develop a model with endogenous skill upgrading and criminal choices to reconcile the inconsistency

financial intermediaries ownership structure and monitored finance evidence from japan this paper introduces new and unique data from 127 japanese private equity funds that enable a first ever direct comparison of individual owner manager structures versus financial intermediation structures in terms of the governance provided to investee companies through private equity funds the data indicate individual owner manager structures financial disintermediation give rise to much smaller portfolios of entrepreneurial firms and more advice to entrepreneurs across the scope of different financial intermediation structures including banks life insurance companies securities firms corporations and government bodies there are further differences in the provision of governance and value added advice provided to investees the data further indicate us affiliated funds in japan are more likely to have smaller portfolios and provide more advice to entrepreneurial companies possibly due to a greater skill set in providing advice to facilitate the development of small entrepreneurial firms

pay equality and industrial politics personnel managers often argue that equitable pay treatment manifested as wage compression is useful because it reduces disharmony among workers but it is far from obvious that a compressed salary structure is morale improving since better workers may feel disenchanted by this scheme however when workers rewards are based on relative comparisons salary compression reduces uncooperative behavior that is detrimental to the firm relative comparisons imply that some reference group must be selected the major result is that within the relevant groups some wage compression is efficient

does the japanese governance system enhance shareholder wealth evidence from the stock price effects of top management turnover this article examines the stock price effects of top management turnover announcements for 432 japanese corporations from 1985 to 1990 we find that these announcements are associated with significantly positive abnormal returns the returns are greater when turnover is forced than when turnover represents normal succession the stock price effects are also significantly positive when turnover is forced and the successor is appointed from outside the firm we find that large shareholders play an important role during outside succession this evidence suggests that the disciplinary decisions of japanese governance mechanisms are consistent with shareholder wealth maximization article published by oxford university press on behalf of the society for financial studies in its journal the review of financial studies

managerial objectives capital structure and the provision of worker incentives worker incentive schemes are invariably assumed to be administered by an owner entrepreneur who has an incentive to understate worker performance after the event while tournaments can overcome this problem they discourage cooperation between workers we show that a professional manager concerned with equality between workers and with avoiding bankruptcy rather than maximizing shareholder wealth will conduct a tournament that preserves individual effort incentives while promoting cooperation between workers the theory predicts lower debt levels and more compressed pay scales as cooperation becomes more important in the limit this becomes a group bonus scheme supported by blue chip debt

estimating the performance effects of business groups in emerging markets business groups confederations of legally independent firms are ubiquitous in emerging economies yet very little is known about their effects on the performance of affiliated firms we conceive of business groups as responses to market failures and high transaction costs in doing so we develop hypotheses about the effects of group affiliation on firm profitability affiliation could either boost or depress firm profitability and members of a group are likely to earn rates of return similar to other members of the same group using a unique data set compiled largely from local sources we test for these effects in 14 emerging markets argentina brazil chile india indonesia israel mexico peru the philippines south africa south korea taiwan thailand and turkey we find evidence that business groups indeed affect the broad patterns of economic performance in 12 of the markets we examine group affiliation appears to have as profound an effect on profitability as does industry membership yet strategy scholars have a much clearer grasp of industries than of groups moreover membership in a group raises the profitability of the average group member in several of the markets we examine this runs contrary to the wisdom conventional in advanced economies that unrelated diversification depresses profitability overall our findings suggest that the roots of sustained differences in profitability may vary across institutional contexts conclusions drawn in one context may well not apply to another copyright 2001 john wiley sons ltd

firms choice of method of pay using data from the bls industry wage survey the author tests the theory that firms choose their methods of pay by balancing the gains from more precise links between performance and pay against m

unions and cooperative behavior the effect of discounting using union contract and industry wage survey data this article examines the effect of discounting on cooperative bargaining behavior by unions and firms game theory predicts that higher discount rates raise the temptation to defect from cooperation measures of cooperative behavior included the presence of merit pay incentive pay wage employment guarantees or labor management study committees discount rates were proxied by the relevant industry s failure rate failure rates generally had negative effects on cooperation industry wage survey results showed larger effects for union than non union establishments providing support for the union bargaining framework

union s threats and wage determination this paper considers local wage bargaining as a sequential game and focus es on how different rules of the game affect employment and equilibri um payment to workers and employers work to rule and other go slow t hreats lead to low employment while strike threats lead to high empl oyment an increase in the bargaining power of the union induces high er or unchanged equilibrium employment in the strike threat case whi le employment is reduced in the slow down case finally if all kinds of industrial actions are legal only one is credible which type de pends on the parameters of the model copyright 1988 by royal economic society

the japanese crisis a case of strategic failure this paper provides an alternative insight into japan s current economic problems we concentrate upon the role played by the economy s central actors namely japan s transnational corporations since the early 1980 s japan s transnationals have become dominant players in the global economy and now have a higher rate of physical investment in new overseas greenfield sites than their competitors this has had detrimental consequences for japan s domestic economy particularly for small firms who operate in keiretsu networks this has led to concerns about the hollowing out of japan s domestic industry raising the possibility of long term industrial decline and strategic failure

industrial strategy a missing link in british economic policy this paper critically analyzes the potential and limitations of economic instruments for environmental protection it presents a general framework for analyzing environmental issues along with a taxonomy for classifying different approaches to environmental protection a key contribution of the paper is to identify critical steps in marketing economic incentive approaches for environmental protection the challenge to researchers is to design tools that will help achieve environmental goals more effectively this means taking careful account of political technical and economic constraints in system design copyright 1993 by oxford university press

markets and organizations as coherent systems of innovation abstract the firm its tasks and the way in which it relates to the market appear in a different light with respect to the standard theory within the perspective of a process of innovation interpreted as a creation of resources the main problem with a similar process a learning process which essentially consists of the structuring of new and totally original productive options is to make it viable this implies that markets and organizations should not be looked at as distinct institutions whose respective efficiency must be tested with respect to a problem of allocation of given resources but rather considered as a system whose coherence depends on being able to render a process of creation of new specific resources viable

international trade and the internal organization of firms an evolutionary approach masahiko aoki and others have distinguished two alternative modes for a firm s internal organization we argue that the profitability of each mode depends on the distribution of firms across modes and on the general economic environment we characterize the evolutionary equilibria in both a parametric and a general model and argue that corner equilibria predominate we analyze the effects of trade between the two countries in a outputs only and b inputs factors as well as outputs our most striking conclusion is that in case b a less efficient mode can displace a more efficient mode when trade barriers are sufficiently low

union wage practices and wage dispersion within establishments this study analyzes establishment level data primarily to examine the effect of unionism on the wage structure within establishments the major finding is that within establishment dispersion of wages is significantly narrower in unionized than in nonunionized establishments a pattern the author attributes in large part to unions wage practices such as single rate or automatic progression modes of wage payment as opposed to merit reviews and individual wage determination the data also show that dispersion in average wages is narrower among organized plants but by more modest amounts than the within establishment differential overall the evidence suggests a major role for explicit union wage policies in explaining the dispersion of wages within firms and in the economy as a whole

organizational structure and expected output at nuclear power plants this paper examines the relationship between organizational structure and operation and outage durations at nuclear power plants in the united states it empirically examines aoki s 1990 proposition that 1 hierarchical control increases productivity in situations that are very stable or very uncertain and 2 horizontal coordination increases productivity in intermediate situations it describes a model of continuous production in which management chooses an organizational structure that minimizes the ratio of the hazard rates for operation and outage and proposes an index of hierarchy based on measures of plant level organization parameter estimates support the proposition that less hierarchy is associated with higher productivity through longer periods of operation copyright 1996 by mit press

the heterogeneity of immigrants host countries income and productivity a channel accounting approach this article exploits changes in the distribution of immigrants across 20 organization for economic co operation and development countries from 1960 to 2005 in order to assess their contribution to income of destination countries the non random sorting of immigrants across countries is addressed by using an instrumental variable strategy the instrument is built by estimating a bilateral migration model incorporating exogenous origin country determinants of migration aggregate results reveal that immigrants have a positive effect on income that works primarily through total factor productivity tfp we further construct a novel dataset from censuses and labor force surveys to explore the information on the age of immigrants contrasting income effects are found across age groups a higher share of immigrants among the youth has a negative impact on aggregate income while a higher share of immigrants among prime aged workers has a positive effect we interpret this disparity as short term versus medium term effects adjustments over time involve changes in tfp but also in the human capital of the native born jel f22 j24 j31 o31

international trade and labor migration a theory of the relationship between international trade and labor mobility is developed that takes into account five characteristics of such migration including its temporary nature differences between migrant and native labor the acceptance of unpredictable conditions of employment by migrant labor the ready availability of further labor resources and international capital mobility particular attention is paid to the role of international labor migration in helping to insulate native populations from the rigors of industrial fluctuations and in helping to preserve import competing industries that would have succumbed without the availability of cheap imported labor

a clash of capitalisms foreign shareholders and corporate restructuring in 1990s japan this article examines the clash between stakeholder and shareholder based business systems resulting from an increase in foreign portfolio investment in the japanese economy during the 1990s an analysis of 1 108 firms between 1991 and 2000 shows that as foreign institutional investors who were more interested in investment returns than in long term relationships replaced domestic shareholders one fundamental pillar of japan s stakeholder capitalism began to crack japanese firms began to adopt downsizing and asset divestiture practices more characteristic of anglo american shareholder economies the influence of foreigners however was weaker in firms more deeply embedded in the local system through close ties to domestic financial institutions and corporate groups thus foreign investors were influential primarily in firms less embedded in the existing stakeholder system this research contributes to debates on globalization and convergence of business systems institutional change and corporate

labor supply flexibility and portfolio choice in a life cycle model abstract this paper examines the effect of the labor leisure choice on portfolio and consumption decisions over an individual s life cycle the model incorporates the fact that individuals may have considerable flexibility in varying their work effort including their choice of when to retire given this flexibility the individual simultaneously determines optimal levels of current consumption labor effort and an optimal financial investment strategy at each point in his life cycle we show that labor and investment choices are intimately related the ability to vary labor supply ex post induces the individual to assume greater risks in his investment portfolio ex ante

the comovement between output and prices abstract in this paper i analyze the comovement of us prices and output in the postwar period i use a new set of statistics to characterize the comovement between variables the statistics capture important information about the dynamics in the system the estimation procedure does not require assumptions about the order of integration or the types of assumptions needed for var decompositions i find that the comovement between output and prices is positive in the short run and negative in the long run i show that a model in which demand shocks dominate in the short run and supply shocks dominate in the long run can explain these empirical results while sticky price models with only demand shocks cannot

basic research inside the firm lessons from an in depth case study abstract the economic analysis of basic research in firms has been a growing concern but only a few attempts have been made to understand the realities which characterize the implementation of this activity in an in depth case study this paper considers the organisational specificities of basic research inside the firm and emphasizes the strategic role of human resources it shows that the process of innovation which was seen in the 1970s as a stock of information to be managed became during the 1980s a sequential learning process which covers a variety of different but complementary organizational designs in the basic research unit on this basis some analytical implications for technology and innovation processes are suggested as the production process is a sequential learning process an innovative firm strategy is defined as one which is able to balance short and long terms requirements with regard to profitability this appears as an out of equilibrium problem where the crucial determinant is the organizational design chosen by the firm in order to generate and implement new learning and skills

rational cooperation in the finitely repeated prisoner s dilemma experimental evidence this paper presents experiments designed to examine the sequential equilibrium reputation hypothesis in the finitely repeated prisoner s dilemma the authors test the hypothesis by controlling the subjects ability to build reputations and by manipulating their beliefs that their opponent is irrational or altruistic the responses of subjects strongly support the sequential equilibrium prediction the results also suggest an important role for homemade altruism that is a natural tendency to cooperate that subjects bring to the experiment from the outside the authors find that there may be no difference between the beliefs that an opponent is altruistic and the actual chance it is so copyright 1993 by royal economic society

the productivity effects of employee stock ownership plans and bonuses evidence from japanese panel data the authors report the first results for japanese firms on the effects of employee stock ownership plans esops and bonuses by estimating production functions using new panel data they find that the introduction of an esop will lead to a 4 5 percent increase in productivity this productivity payoff takes three to four years there is a modest productivity gain from the bonus system the authors also find evidence that the productivity effect of bonuses is enhanced by the existence of esops suggesting that esops may create a climate conducive to profit sharing by enhancing long term commitment and peer monitoring copyright 1995 by american economic association