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Investment in organization capital

  • Carlin, Bruce Ian
  • Chowdhry, Bhagwan
  • Garmaise, Mark J.
Registered author(s):

    We study a firm’s investment in organization capital by analyzing a dynamic model of language development and intrafirm communication. We show that firms with richer internal language (i.e., more organization capital) have lower employee turnover, and higher diversity in skill and wages among incumbents who are promoted from within the firm. Our results also suggest that firms in rapidly changing industries are less likely to invest in organization capital, and are more likely to have high managerial turnover. Finally, our model shows that employment protection regulations lead to more investment in organization capital but less innovation.

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    File URL: http://www.sciencedirect.com/science/article/pii/S1042957311000362
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    Article provided by Elsevier in its journal Journal of Financial Intermediation.

    Volume (Year): 21 (2012)
    Issue (Month): 2 ()
    Pages: 268-286

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    Handle: RePEc:eee:jfinin:v:21:y:2012:i:2:p:268-286
    Contact details of provider: Web page: http://www.elsevier.com/locate/inca/622875

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