Market Frictions and the Competitive Advantage of Internal Labor Markets
ثبت نشده
چکیده
We show that frictions in labor and capital markets can be a source of competitive advantage for a¢ liates of corporate groups over standalone rms in environments where bene ts from internal marketsexibility are high. We argue that the advantage of exibility in changing labor inputs is related to how di¢ cult it is to change capital inputs. We predict that if substituting labor with capital is di¢ cult, the group advantage of exibly changing labor would be stronger in countries with high levels of nancial development. Consistent with this prediction, we nd a stronger competitive advantage for group a¢ liates in countries with rigid labor markets, but exible capital markets. In these environments, group a¢ liates are more prevalent and they outperform standalone rms in terms of growth and pro tability. Keywords: corporate groups, competitive advantage, market frictions, internal labor markets, worker mobility JEL Classi cation: J08, J40, L22, M51
منابع مشابه
Search Frictions on Product and Labor Markets: Money in the Matching Function
Search Frictions on Product and Labor Markets: Money in the Matching Function This paper builds a macroeconomic model of equilibrium unemployment in which firms persistently face difficulties in selling their production and this affects their decisions to create jobs. Due to search-frictions on the product market, equilibrium unemployment is a U-shaped function of the ratio of total demand to t...
متن کاملAggregate implications of indivisible labor, incomplete markets, and labor market frictions
This paper analyzes a model that features frictions, an operative labor supply margin, and incomplete markets. We first provide analytic solutions to a benchmark model that includes indivisible labor and incomplete markets in the absence of trading frictions. We show that the steady state levels of aggregate hours and aggregate capital stock are identical to those obtained in the economy with e...
متن کاملInteraction of Labor and Credit Market Frictions: A Theoretical and Empirical Analysis
In this paper we investigate macroeconomic dynamics in the presence of frictions in both labor and credit markets. On the basis of the macroeconomic model in Merz (1995) with labor market frictions and capital accumulation, our paper offers an extension to frictions in credit markets which, analogously, are modeled as a search-and-matching process. Using the Merz model as limit case, we conside...
متن کاملThe Effect of Institutional Factors on the Value of Corporate Diversification
Using a large sample of diversified firms from 38 countries we investigate the influence of several national-level institutional factors or ‘institutional voids’ on the value of corporate diversification. Specifically, we explore whether the presence of frictions in a country’s capital markets, labor markets, and product markets, affect the excess value of diversified firms. We find that the va...
متن کاملتبیین و تحلیل رقابت پذیری در کشورهای حوزه مورد نظر سند چشم انداز و اولویتهای ایران در ارتقای رقابت پذیری
Competitiveness index presented by World Economic Forum in the Framework of three factors, i.e. basic requirements, efficiency, and innovation indicates that as far as the “basic requirements” factor is concerned, Iran enjoys a relatively better status than other countries considered in the study though some of these requirements, namely basic education and health are less influential in effici...
متن کامل