Competition, Agency and Productivity
AbstractThis paper tests a set of hypotheses relating to agency and Schumpeterian views on how competition affects performance. A survey data set of Australian workplaces is used, with the change in labour productivity growth as the dependent variable. The results show strong support for the idea that intense competition raises productivity growth in managerial workplaces, but not in non-managerial workplaces (i.e. where the principal owner also works). Testing the agency theories in more detail we find no evidence that the number of competitors, the price elasticity of demand or a proxy for bankruptcy (pre-tax losses) are the mechanisms behind the process. For non-managerial workplaces the results indicate support for the idea that greater demand uncertainty reduces productivity growth. In contrast, for managerial workplaces greater demand uncertainty tends to raise productivity growth.
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Bibliographic InfoPaper provided by Melbourne Institute of Applied Economic and Social Research, The University of Melbourne in its series Melbourne Institute Working Paper Series with number wp2003n20.
Length: 24 pages
Date of creation: Jul 2003
Date of revision:
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Other versions of this item:
- Mark Rogers, 2004. "Competition, agency and productivity," International Journal of the Economics of Business, Taylor & Francis Journals, vol. 11(3), pages 349-367.
- L1 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance
This paper has been announced in the following NEP Reports:
- NEP-ALL-2003-07-29 (All new papers)
- NEP-EFF-2003-07-29 (Efficiency & Productivity)
- NEP-ENT-2003-08-17 (Entrepreneurship)
- NEP-INO-2003-07-29 (Innovation)
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