The Structure of the Wage Gap for Temporary Workers: Evidence from Australian Panel Data

This study uses panel data for Australia to estimate the wage differential between workers in temporary jobs and workers in permanent jobs. It is the first study to use unconditional quantile regression methods in combination with fixed effects to examine how this gap varies over the entire wage distribution. While the wages of fixed‐term contract workers are found to be similar to those of permanent workers, low‐paid casual workers experience a wage penalty and high‐paid casual workers a wage premium compared to their permanent counterparts. Temporary agency workers also usually receive a wage premium, which is particularly large for the most well paid.     

Do Changes in Regulation Affect Temporary Agency Workers’ Job Satisfaction?

This paper evaluates how a reform relaxing regulations of the temporary help service sector in Germany affected job satisfaction of male temporary agency workers. We isolate the causal effect of this reform by combining a difference‐in‐difference and matching approach using rich survey data. We find that the regulatory change substantially decreased agency workers’ job satisfaction while leaving regular workers’ job satisfaction unchanged. Further analysis reveals that the negative effect on agency workers’ job satisfaction can be attributed to a decrease in wages and an increase in perceived job insecurity. These results are robust to the use of different specifications and placebo tests.     

Non‐Standard “Contingent” Employment and Job Satisfaction: A Panel Data Analysis

Contingent forms of employment are usually associated with low‐quality jobs and, by inference, jobs that workers find relatively unsatisfying. This assumption is tested using data from a representative household panel survey covering a country (Australia) with a high incidence of nonstandard employment. Results from the estimation of ordered logit regression models reveal that among males, both casual employees and labor‐hire (agency) workers (but not fixed‐term contract workers) report noticeably lower levels of job satisfaction, though this association diminishes with job tenure. Negative effects for women are mainly restricted to labor‐hire workers.     

Manufacturing Plants' Use of Temporary Workers: An Analysis Using Census Microdata

Using plant‐level data from the plant capacity utilization survey, we explore how manufacturing plants' use of temporary workers is associated with the nature of their output fluctuations and other plant characteristics. We find that plants tend to use temporary workers when their output is expected to fall; this may indicate that firms use temporary workers to reduce costs associated with dismissing permanent employees. In addition, we find that plants whose future output levels are subject to greater uncertainty tend to use more temporary workers. We also examine the effects of wage and benefit levels for permanent workers, unionization rates, turnover rates, seasonal factors, and plant size and age on the use of temporary workers; based on our results, we discuss various views of why firms use temporary workers.     

HRM Practices and the Within‐Firm Gender Wage Gap

The effect of HRM practices on the within‐firm gender gap in wages in manufacturing is investigated merging a 1999 survey on work practices among Danish firms to matched employer–employee panel data. Self‐managed teams, project organization and job rotation schemes are the most widely introduced practices. Accounting for non‐randomness in adoption, the pay gap is reduced among hourly paid workers but increases among salaried workers. Considering practices individually, wage gains from adoption accrue to males except for salaried workers in firms that adopt project organization and for hourly paid workers in firms that introduce quality control circles.     

Short Notice,Big Difference? The Effect of Temporary Employment on Firm Competitiveness across Sectors

This article is one of the first to examine how the use of fixed‐term employment contracts (FTCs) affects firm competitiveness (i.e. productivity, wages and profits) while controlling for key econometric issues such as time‐invariant unobserved workplace characteristics, endogeneity and state dependence. We apply dynamic panel data estimation techniques to detailed Belgian linked employer–employee data covering all years from 1999 to 2010. Results show that the effects of FTCs on firm competitiveness vary across sectors: while temporary employment is found (at the 10 per cent significance level) to enhance productivity and profits in (labour‐intensive) services, this is not the case in manufacturing and construction.     

The Role of Temporary Agency Work in Different Industrial Relations Systems — a Comparison between Germany and the USA

Although temporary agency work has been growing over the last decade, its use differs widely in different industrial relations systems. Drawing on theoretical and empirical insights, propositions are developed on why companies deploy temporary agency work. These propositions are then contrasted with case‐study evidence collected in Germany and the USA to analyse the deployment of agency work in two different industrial relations systems and the role that agency work plays in these diverse settings. The main conclusions of the research are that differences in the deployment of temporary agency workers exist with regard to legal regulation and employers' strategies of labour use while similarities exist regarding the supply of agency labour.     

Boards of Directors,Innovation, and Performance: An Exploration at Multiple Levels

This work reports on an investigation of the dynamics of governance over breakthrough innovation within Fortune 1000 firms. The primary research question investigates the boundary of agency theory within the firm. Using agency and stakeholder theoretic perspectives, the study tests the hypothesis that innovation will thrive in firms that combine a board of directors operating in accordance with a high agency theoretic focus in addition to an innovation governance board operating deeper within the firm that employs a strong stakeholder theoretic orientation in its behavior. The model is tested with data from 98 large firms. Results suggest that the relationship between board of directors' behavior and the firm's overall innovativeness is mediated by innovation decision‐making boards that (1) promote projects that are breakthrough in scope, (2) incorporate input of diverse constituencies within the firm, (3) exhibit patience with financial results, and (4) engage in frequent, informal interactions with project teams. Firms exhibiting high board of director agency orientation in combination with loyalty to mandate, patient financial capital disposition, inclusiveness, and project team interaction as described above for innovation governance board decision‐making prove to be the most innovative as measured by external indicators. For firm innovativeness, consolidated managerial power and behavior is frequently present at the upper levels of the firm, but must be broken down at deeper levels of the firm. This research offers implications to innovation decision‐makers as to how to proceed if the intent is to offer commercializably successful breakthrough innovations.     

Flexible Wage Contracts,Temporary Jobs,and Firm Performance: Evidence From Italian Firms

This study focuses on the effects of decentralized wage schemes and temporary forms of employment on firm performance. The effect of monetary incentives on workers' effort and firm performance is a central topic in economics. According to the principal‐agent paradigm, firms (the principal) have to link employees' remuneration schemes to any verifiable indicator of performance to avoid opportunistic behavior. The empirical evidence shows that financial incentives have the potential to exert strong effects on indicators of firm performance, such as productivity and worker absenteeism, although the degree of effectiveness of such schemes varies significantly according to the institutional/economic context in which firms operate. From both a theoretical and empirical point of view, the prediction on the effects of temporary types of employment on effort and productivity is less neat. In light of these considerations, this study uses a sample of Italian firms to provide further empirical evidence on whether and to what extent performance‐related pay schemes and contract flexibility affect workers' effort (in terms of absenteeism) and, in turn, firm productivity. These effects are analyzed for different types of workers (white collar vs. blue collar), working in workplaces characterized by a different degree of uncertainty and risk and in firms operating in different economic and institutional settings. Our results show that wage flexibility has a significant effect on effort and then on firm's productivity and that white‐collar workers are more responsive to monetary incentives than blue‐collar workers. Moreover, the presence of a large share of temporary contracts, implying a lower dismissal probability for permanent workers and a deterioration of the working environment, appears to reduce workers' motivation and effort.     

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.     

How do young firms manage product portfolio complexity? The role of absorptive capacity and ambidexterity

Building a complex portfolio of products can be beneficial for young firms due to increased sales growth and competitiveness. Yet, the benefits from product portfolio complexity (PPC) are often outweighed by rising costs, leading to an inverted U‐shaped relationship between PPC and performance. Recent research has called for an increased understanding of how firms are able to better manage higher levels of PPC. We suggest that absorptive capacity and ambidexterity are vital to enhancing the benefits and mitigating the costs of increasing PPC. Using a sample of 215 young high technology firms, we find support for positive moderating effects of absorptive capacity and ambidexterity on the inverted U‐shaped relationship between PPC and firm performance. Copyright © 2012 John Wiley & Sons, Ltd.     

Lopsided inclusion: The impact of multi-employer bargaining and class-based unionism on non-regular employment in South Korea

This study examines the impact of multi-employer bargaining on non-regular workers across different unions and types of non-regular employment. Using national representative survey data from South Korea, I find that multi-employer bargaining increases the likelihood that a workplace union would address a pay increase for non-regular workers when the union was affiliated with a confederation espousing class-based as opposed to business-unionism. However, such a relationship was weaker for temporary agency workers and subcontractors than for direct-hire fixed-term workers. This mechanism is further illustrated through a second round of data collection and analysis, namely in-depth interviews. I identify two factors that characterize the class-based confederation: (1) centralized pressure from the union and (2) activists and their identity work. Altogether, these results further an understanding of how the identities of national union confederations can influence local representatives’ approach to representing non-regular workers and how those influences are manifested through workplace-level collective bargaining.     

Diversification strategy,capital structure,and the Asian financial crisis (1997–1998): evidence from Singapore firms

We use agency theory to predict the influence of related and unrelated product diversification on a firm's level of debt financing. Further, we argue that the link between diversification and capital structure is moderated by the environment in which firms operate. Using SAS PROC MIXED, we fit a mixed‐effects model to our unique six‐year longitudinal dataset (1995–2000) of 245 publicly listed Singapore firms. Our data spans the period of the Asian Financial Crisis (1997–1998). We find that firms pursuing unrelated product diversification take on less debt financing in stable environments, but more debt financing in dynamic environments. Using longitudinal structural equation modeling, we find a reciprocal relationship between a firm's product diversification strategy and its debt financing level. Copyright © 2009 John Wiley & Sons, Ltd.     

Examining the performance effects of post spin‐off links to parent firms: should the apron strings be cut?

Little research has examined the performance implications of the parent‐child relationship post spin‐off. Although the parent provided oversight of the child prior to the spin‐off, effects of post spin‐off links to the child remain unclear. Applying transaction cost and agency theories, our study of 142 firms spun‐off between 1986 and 1997 examines how oversight and ownership by the parent firm influence stock market performance post spin‐off. We find that while child firms benefit from some links to the parent, having too many links is negatively related to performance. The findings suggest that there is a balance between having too much parental involvement and not enough. Our study extends understanding of post spin‐off child firm performance and provides valuable insights for both parent and child firms. Copyright © 2011 John Wiley & Sons, Ltd.     

The Impact of Middle Manager Training on Productivity: A Test on Italian Companies

This paper presents panel evidence on the productivity effects of middle managers’ off‐the‐job formal training in Italy. It is based on a rich and reliable panel dataset covering all sectors of the Italian economy over the period 2006–2011. We employ panel data techniques and self‐selection models to show that off‐the‐job formal training for middle management has a significant nonlinear exogenous effect on total factor productivity. Moreover, results indicate that middle managers’ off‐the‐job formal training is more effective in larger firms and that different training methods have heterogeneous effects on productivity.     

Liberalization Only at the Margins? Analysing the Growth of Temporary Work in German Core Manufacturing Sectors

Drawing on workers’ surveys and workplace interviews, this article investigates the growth of temporary work in German manufacturing sectors since the 1980s. Findings partly confirm a ‘dualization’ scenario as workers without industry‐specific vocational training are more likely to be on a temporary contract than skilled workers, and the gap has widened over time. However, also skilled workers have become increasingly vulnerable to casualization due to job routine and the erosion of industrial relations. Evidence confirms the crucial role of institutions in supporting the linkage between specific skills and employment stability, and suggests that the liberalization of the employment relationship has the potential to advance also in the core of the German economy.     

Antecedents and consequences of corporate governance reform: the case of Germany

The paper examines the antecedents and consequences of the voluntary adoption of corporate governance reform in firms embedded in a relationship‐based governance system with less protection of minority shareholders. In such locations, ownership structure should be a key determinant of governance reform. Firms with dispersed ownership are likely to face agency problems but may lack sufficient ownership power in the hand of external owners for adoption to occur. Extensive ownership by external parties facilitates adoption but decreases the need and motivation to adopt governance reform. We examined the adoption of stock‐based incentive plans and transparent accounting regulations (e.g., greater disclosure to shareholders) among large German firms (DAX 100) during the late 1990s. We found an inverse ‘U’‐shaped relationship between ownership concentration and governance reform. In addition, we found that firms adopting governance reform were more likely to engage in corporate divestitures and achieve higher levels of market performance than firms not adopting governance reform. Copyright © 2003 John Wiley & Sons, Ltd.     

Creating incentives for innovation? The relationship between pay dispersion in R&D groups and firm innovation performance

Innovation is a critical organizational outcome for its potential to generate competitive advantage. While the contribution of knowledge workers to the generation of innovation is widely recognized, little is known about how organizational incentive mechanisms stimulate or inhibit these workers' behaviors that promote innovation. This study examines the relationship between pay dispersion in R&D groups and firm innovation using employee‐level compensation data in US high‐technology firms. The results show that (1) pay dispersion in R&D groups is negatively related to firm innovation and (2) this negative relationship is alleviated in firms with greater financial slack. This study contributes to the innovation literature by illuminating the implications of organizational incentive systems for successful innovation. Copyright © 2013 John Wiley & Sons, Ltd.     

Technological diversity,related diversification,and firm performance

Previous findings that related diversification creates value have been called into question over concerns about methodology and measures. Reviewing existing theory to consider how a firm's knowledge base interacts with its product market activity, I address several of these concerns by creating a measure of technological diversity based on citation‐weighted patents. The measure indicates a firm's opportunity for corporate diversification based on economies of scope in valuable knowledge assets, is defined for both single‐ and multibusiness firms, and is not correlated with more fundamental aspects of diversification, such as the number of businesses in the corporate portfolio. Evidence from a large sample of firms shows the positive relationship between diversification based on technological diversity and market‐based measures of performance, controlling for R&D intensity and capital intensity as further indicators of the type of assets underlying diversification. Results hold when controlling for the endogeneity of diversification and performance in a cross‐sectional sample or when controlling for unobserved factors using panel data. Copyright © 2006 John Wiley & Sons, Ltd.     

Competing for government procurement contracts: The role of corporate social responsibility

Research Summary: This study examines whether corporate social responsibility (CSR) improves firms’ competitiveness in the market for government procurement contracts. To obtain exogenous variation in firms’ social engagement, I exploit a quasi‐natural experiment provided by the enactment of state‐level constituency statutes, which allow directors to consider stakeholders’ interests when making business decisions. Using constituency statutes as instrumental variable (IV) for CSR, I find that companies with higher CSR receive more procurement contracts. The effect is stronger for more complex contracts and in the early years of the government‐company relationship, suggesting that CSR helps mitigate information asymmetries by signaling trustworthiness. Moreover, the effect is stronger in competitive industries, indicating that CSR can serve as a differentiation strategy to compete against other bidders. Managerial Summary: This study examines how companies can strategically improve their competitiveness in the market for government procurement contracts—a market of economic importance (15–20% of GDP). It shows that companies with higher social and environmental performance (CSR) receive more procurement contracts. This effect is stronger for more complex contracts, in the early years of the government–company relationship, and in more competitive industries. These findings indicate that firms’ CSR can serve as a signaling and differentiation strategy that influences the purchasing decision of government agencies. Accordingly, managers operating in the business‐to‐government (B2G) sector could benefit from integrating social and environmental considerations into their strategic decision making.