An Empirical Analysis of the Relationship between Employee Ownership and Employment Stability in the US: 1999–2011

Do firms with employee ownership (EO) programs exhibit greater employment stability in the face of economic downturns? In particular, are firms with EO programs less likely to lay off workers during negative shocks? In this article, we examine the relationship between EO programs and employment stability in the United States using longitudinal Form 5500‐CompuStat matched data on the universe of publicly traded companies during 1999–2011. We examine how firms with EO programs weathered the recessions of 2001 and 2008 in terms of employment stability relative to firms without EO programs, and also whether such firms were less likely to lay off workers when faced with negative shocks more broadly. In our econometric analyses, we use a rich array of measures of EO at firms, including the presence of EO stock in pension plans, the presence of employee stock ownership plans (ESOPs), the value of EO stock per employee, the share of the firm owned by employees, the share of workers at the firm participating in EO and the share of workers at the firm participating in ESOPs. We also consider both economy‐wide negative shock measures (increases in the unemployment rate, declines in the employment‐to‐population ratio) and firm‐specific negative shock measures (declines in firm sales, declines in firm stock price). Our results indicate that EO firms exhibit greater employment stability in the face of economy‐wide and firm‐specific negative shocks.     

The Effects of a Job‐Creation Scheme: Evidence from Regional Variation in Program Capacities

In direct job‐creation schemes, unemployed individuals at risk of permanent labor market exclusion are offered temporary subsidized employment in public‐ or nonprofit‐sector firms in combination with skills training and sociopedagogical support. The main aim is to stabilize and qualify them for later re‐integration into the regular labor market. Exploiting exogenous regional variation in population‐group–specific program capacities, I find that, on average, such a program eases the transition out of unemployment but has no long‐term effect on regular employment.     

Taking a hit to save the world? Employee participation in a corporate social initiative

Research Summary: Companies often justify their corporate social initiatives by citing talent management benefits. We examine the extent of, and the reasons for, employee interest in such an initiative in a global management consulting firm. We find a large fraction of employees to be interested in participation in the initiative even when participation requires a personal sacrifice in the form of a salary cut. However, this interest is driven not just by prosocial motivation: Expectations regarding private benefits, such as improved career prospects from new skills acquired, also play a role. Considerations of social impact and private benefits are equally salient when no salary cut is required, but private considerations become more prominent when participating employees are asked to accept a salary cut. Managerial Summary: Many companies are moving from stand‐alone corporate social responsibility (CSR) projects to social initiatives integrated into strategy. Providing employees with the opportunity to participate in such initiatives is said to help attract, motivate and retain talent. In this study, carried out in collaboration with a management consulting firm, we examine how much and why employees value participation in a corporate social initiative. Based on interviews and survey data, we find that employees are not only interested in, but often even willing to accept, a temporary salary cut for the opportunity. However, altruistic motivation is not the only driver of this interest: Employees also expect and value the possibility that the experience would lead to private benefits, such as developing skills likely to enhance their career prospects.     

When do strategic alliances inhibit innovation by firms? Evidence from patent pools in the global optical disc industry

Research and development (R&D) consortia are specialized strategic alliances that shape the direction and scope of firm innovation activities. Little research exists on the performance consequences of participating in R&D consortia. We study the effect of patent pools, a unique form of R&D consortia, on firm performance in innovation. While prior research on alliances generally implies that patent pools enhance firm innovation, our study finds the opposite. Analyzing data on systemic innovation in the global optical disc industry, we find that patent pool formation substantially and significantly decreases both the quantity and quality of patents subsequently generated by licensors and licensees relative to the patenting activity of nonparticipants. Our empirical findings suggest that patent pools actually inhibit, rather than enhance, systemic innovation by participating firms. Copyright © 2011 John Wiley & Sons, Ltd.     

Institutions Are What Actors Make of Them — The Changing Construction of Firm‐Level Employment Relations in Spain

This article analyses the variation and change in firm‐level employment relations in Spain between the transition to democracy and the global financial crisis. Using three auto companies as case studies, I address a crucial puzzle in the institutional literature on comparative employment relations: How do employment relations change and vary, even when national employment relations institutions do not? This article argues that differences in actor ideologies shape the construction of national institutions at the firm level, which explains change and variation of employment relations over time and across cases. The study identifies four drivers of ideological change — generational change, leadership change, identity work and diffusion — that impact the variation and change in employment relations at the firm level.     

Slack and the performance of state-owned enterprises

Organizational slack has been recognized as critical to firm performance, although its impact is not always positive. Slack may be used to fuel innovation or alternatively excess resources may be squandered on pet projects. However, most research on slack is rooted in studying private firms in developed economies, especially the United States. Whether prior research on organizational slack can readily inform our understanding of state-owned enterprises’ (SOEs) behavior is questionable since SOEs prioritize goals such as social welfare and full employment differently than do the privately owned enterprises (POEs). The differences between SOEs and POEs influence their sources and use of slack due to the nature of their ownership, budget constraints, and agency relations. To bring insight to this issue we develop an institutional change lifecycle model to study the relationship between slack and the economic and social aspects of SOE performance.     

Buying into Capitalism? Employee Ownership in a Disconnected Era

This article considers whether employee ownership mitigates the negative workplace outcomes identified by the Disconnected Capitalism Thesis (DCT). Drawing on a programme of in‐depth interviews with workers and managers in employee‐owned businesses (EOBs), the article reveals how they are partially insulated from the vicissitudes endemic within contemporary capitalism. In contrast to the workplace outcomes envisaged within the DCT, these firms are characterized by strong workforce participation, high levels of employment security, active employee engagement and strong levels of employee creativity. Not only are these features beneficial for productivity and firm performance, they generate a form of ‘connected’ capitalism, partially offsetting wider negative systemic forces at play in the economy.     

政治关联能改善民营企业的经营绩效吗

本文以我国2002—2006年上市民营企业的数据为样本,实证分析了政治关联与企业经营绩效的关系。在控制了政治关联与企业经营绩效存在的内生性关系后,研究发现民营企业的政治关联程度越高,企业的经营效率越差;实际控制者的政治关联程度越高,企业的经营效率也越差。进一步的研究发现,制度环境的不同对政治关联与企业经营绩效之间的关系产生不同影响,随着政府干预程度的减弱和法律保护程度的提高,企业的政治关联程度对于经营绩效的负面影响也在减轻。     

When Might a Distressed Firm Share Work? Evidence from the Short-Time Compensation Programme in France

This paper analyses the participation patterns of publicly funded short-time compensation benefits (STC) in France. The regression equation directly models the choice of work units facing slack demand to adjust their labour force by declaring redundancies or by implementing an STC agreement. The likelihood of adopting the work-sharing mode is related to certain firm and labour force attributes, labour market institutions and policy parameters. The results suggest that employment protection laws increase the incidence of STC usage and hence decrease employers' recourse to layoffs. Work-forces receiving relatively high levels of pay and exhibiting relatively low levels of labour force attachment are less likely to participate in the STC programme, ceteris paribus . Although the programme is designed to prevent cyclical layoffs, there is preliminary evidence that chronic usage in instances of permanent layoffs is fairly widespread.     

Acquisitions of private vs. public firms: Private information,target selection,and acquirer returns

The acquisition of privately held firms is a prevalent phenomenon that has received little attention in mergers and acquisitions research. In this study, we examine three questions: (1) What drives the acquirer's choice between public and private targets? (2) Do acquisitions of private targets elicit a more positive stock market reaction than acquisitions of public targets, which, on average, destroy value for acquirers' shareholders? (3) Do acquirers gain when their selection of a public or private target fits the theory? In this paper, we argue that the lack of information on private targets limits the breadth of the acquirer's search and increases its risk of not evaluating properly the assets of private targets. At the same time, less information on private targets creates more value‐creating opportunities for exploiting private information, whereas the market of corporate control for public targets already serves as an information‐processing and asset valuation mechanism for all potential bidders. Using an event study and survey data, we find that: (1) acquirers favor private targets in familiar industries and turn to public targets to enter new business domains or industries with a high level of intangible assets; (2) acquirers of private targets perform better than acquirers of public targets on merger announcement, after controlling for endogeneity bias; (3) acquirers of private firms perform better than if they had acquired a public firm, and acquirers of public firms perform better than if they had acquired a private firm. These results support the expectation that acquirer returns from their target choice (private/public) are not universal but depend on the acquirer's type of search and on the merging firms' attributes. Copyright © 2007 John Wiley & Sons, Ltd.     

Internet use and job search

Regression analysis augmented with propensity score methods is used to estimate the effect of Internet use on job search. The formal distinction between the unemployed and the discouraged is exploited, where both desire employment but the latter has ceased active job search. Results indicate broadband use at home or at public locations reduces the probability that the unemployed cease job search by over 50% relative to unemployed persons who do not use the Internet at all. The results suggest that even public connections (e.g., at libraries) in unserved and underserved areas may produce substantial social benefits.     

Let them go? How losing employees to competitors can enhance firm status

Research summary : Because employees can provide a firm with human capital advantages over competitors, firms invest considerably in employee recruiting and retention. Departing from the retention imperative of strategic human capital management, we propose that certain employee departures can enhance a firm's competitiveness in the labor market. Specifically, increased rates of career‐advancing departures by a firm's employees can signal to potential future employees that the firm offers a prestigious employment experience that enhances external mobility opportunities. Characterizing advancement based on subsequent employers and positions, we analyze data on U.S. law firm hiring and industry surveys of perceived firm status between 2004 and 2013. We find that increased rates of employee departures lead to increases in a firm's prestige when these departures are for promotions with high‐status competitors. Managerial summary : Firms often emphasize employee retention. Employee departures, especially as a result of being hired away by competitors, are often viewed as threats to a firm's competitive advantage. We propose, however, that employee retention need not be an unconditional strategic imperative. We argue that certain employee departures can enhance a firm's competitiveness in the market for human capital by signaling to potential employees that the firm offers a prestigious employment experience, which can help them obtain attractive positions with other employers. Analyzing data on U.S. law firm hiring and industry surveys of firm associates between 2004 and 2013, we find that increased rates of employee departures lead to increases in a firm's prestige when these departures are for promotions with high‐status competitors. Copyright © 2016 John Wiley & Sons, Ltd.     

An empirical investigation of firm public and private knowledge

Many studies examine firm private knowledge, but purport to be generalizable to the totality of firm knowledge, both public and private. This study demonstrates that public and private firm knowledge are empirically separable constructs that have significant and yet different influences on innovative outcomes. The example of product development effectiveness within this study shows that both public and private knowledge are significantly related to product development quality; however, public knowledge is negatively related to quality lapses while private knowledge is positively related to quality lapses. Copyright © 2002 John Wiley & Sons, Ltd.     

Employment Effects of Acquisitions: Evidence from Acquired European Firms

This paper examines the employment effects of acquisitions for acquired European firms, taking non-random selection of acquisition targets explicitly into account. Following the empirical firm growth literature and theories put forward in the mergers and acquisition (M&A) literature, we control for convergence dynamics in firm size and distinguish between different types of acquisitions. Empirically, we estimate an endogenous treatment model using accounting data for a newly created sample of acquired and non-acquired European firms. Our results reveal positive employment effects for different types of acquisitions indicating that M&As likely induce efficiency gains.     

Firm heterogeneity and worker turnover

Previous empirical analyses of job mobility focus on worker rather than firm characteristics. This paper exploits a unique data set on enterprise employment. We describe sectoral differences in turnover rates and in the persistence of turnover. We also present evidence of persistent turnover differences at the level of the individual firms—a result that is expected if firms have managers with differing ability to screen workers. When we consider the consequences to the firm of such turnover, we discover that high turnover firms are less likely to survive.     

The Effect of Works Councils on Employment Change

Despite recent changes in the relationship between unionism and various indicators of firm performance, there is one seeming constant in the Anglophone countries: unions at the workplace are associated with reduced employment growth of around ?2.5% a year. Using German data, we examine the impact of the works council—that country's form of workplace representation—on employment change from 1993 to 2001. The German institution appears to have much the same negative effect on employment growth. That said, survival bias seems to play a small role, and works councils do not seem to further slow the tortuous pace of employment adjustment in Germany.     

Firm‐Level Collective Bargaining and Wages in Greece: A Quantile Decomposition Analysis

This article analyzes the effect of firm‐level contracting on the wage structure in the Greek private sector. Using a matched employer–employee dataset for 2006, unconditional quantile regressions and relevant decomposition methods, we identify a wage premium associated with firm‐level contracting, which follows a hump‐shaped profile across the wage distribution. Further, the wage differential between workers under firm‐level and broader‐level collective agreements can be primarily attributed to the differences in the regime‐specific wage setting structure, for those below the median of the unconditional wage distribution, and to differences in worker and firm‐specific characteristics for those in the upper tail.     

One Store, Two Employment Systems: Core, Periphery and Flexibility in China's Retail Sector

Research on 'flexible' or 'contingent work', derived primarily from manufacturing and production contexts in Western settings, has often been theorized in terms of a core-periphery model. Based upon ethnographic research on vendor representatives and regular store employees conducted at a multinational retail firm in China, we indicate that this model is insufficient to capture the complexity of employment arrangements in this context. This article delineates the coexistence of two employment systems and a quadrilateral relationship in which workers' interests sometimes overlap but often compete. Our research also indicates that institutional arrangements in China significantly affect the strategies that are open to firms and the consequent structure of employment relations.     

How Workers Fare When Employers Innovate

Complementing existing work on firm organizational structure and productivity, this article examines the impact of organizational change on workers. We find evidence that employers do appear to compensate at least some of their workers for engaging in high-performance workplace practices. We also find a significant association between high-performance workplace practices and increased wage inequality. Finally, we examine the relationship between organizational structure and employment changes and find that some practices, such as self-managed teams, are associated with greater employment reductions, whereas other practices, such as the percentage of workers involved in job rotation, are associated with lower employment reductions.     

Bidder asymmetries in procurement auctions: Efficiency vs. information – Evidence from railway passenger services

We estimate a structural model of procurement auctions with private and common value components and asymmetric bidders using detailed contract-level data on the German market for railway passenger services. Exploiting exogenous variation in the procurement design, we disentangle the asymmetries in private costs from asymmetries in information about the common value. While each asymmetry can rationalize a firm’s dominance, understanding its source is crucial for evaluating the auction design as welfare and revenue implications depend on the source of dominance. Our results indicate that the incumbent is slightly more cost-efficient and has substantially more precise information about the common value component. If the bidders’ strategic response to the common value asymmetry were eliminated, the average probability of selecting the efficient firm would increase by 43%-points.