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Access to skilled labor, institutions and firm performance in developing countries

Author

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  • Charilaos Mertzanis
  • Mona Said

Abstract

Purpose - The purpose of this paper is to examine the role of access to skilled labor in explaining firms’ sales growth subject to the controlling influence of a wide range of firm-specific characteristics and country-level economic and non-economic factors. Design/methodology/approach - The analysis uses a consistent and large firm-level data set from the World Bank’s Enterprise Surveys that includes 138 developing countries. An instrumental variables model with a GMM estimator is used for estimating the impact of access to skilled labor on firm performance. In order to obtain more robust estimators, the analysis introduces country-level controls reflecting the influence of economic and institutional factors, such as economic and financial development, institutional governance, education and technological progress. Findings - The results document a significant and positive association between access to skilled labor and firm performance in the developing world. The explanatory power of access to skilled labor remains broadly robust after controlling for a wide range of firm-specific characteristics: sectoral and geographical influences matter. The results also show that the association between labor skill constraints and firm performance is mitigated by country-level factors but in diverse ways. Development, institutions, education and technological progress exert various mitigating effects on firm-level behavior regarding access to skilled labor. Originality/value - The paper’s novel contribution is threefold: first, it uses joint firm, sector and country-level information to analyze the role of access to skilled labor on firm performance; second, it uses consistently produced information at the firm level from 138 developing countries; and, third, it considers the controlling impact of a wide range of country-level factors that reflect a country’s overall development, institutions and evolution.

Suggested Citation

  • Charilaos Mertzanis & Mona Said, 2019. "Access to skilled labor, institutions and firm performance in developing countries," International Journal of Manpower, Emerald Group Publishing Limited, vol. 40(2), pages 328-355, February.
    • Handle: RePEc:eme:ijmpps:ijm-11-2017-0301
    DOI: 10.1108/IJM-11-2017-0301
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    Citations

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    Cited by:

    1. Cătălina-Ioana TOADER, 2022. "The Impact of Socio-Cultural Factors on the Business Environment," CECCAR Business Review, Body of Expert and Licensed Accountants of Romania (CECCAR), vol. 3(7), pages 35-42, July.
    2. Omar Farooq & Khondker Aktaruzzaman & Harit Satt & Fatima Zahra Bendriouch, 2022. "Innovations as a Response to Shadow Economy: Evidence from Privately Held Firms," Journal of Industry, Competition and Trade, Springer, vol. 22(3), pages 349-370, December.
    3. Mohammad, Shoeb & Husted, Bryan, 2023. "Skilled workforces and Law-abiding organizational climates in emerging markets," Journal of Business Research, Elsevier, vol. 158(C).
    4. Adamu Jibir & Musa Abdu & Farida Bello & Iliya Garba, 2019. "Do Institutions Promote Firm Performance? Evidence from Sub-Saharan Africa," Review of Market Integration, India Development Foundation, vol. 11(3), pages 111-137, December.
    5. Moraes, Ricardo Kalil & Wanke, Peter Fernandes & Faria, João Ricardo, 2021. "Unveiling the endogeneity between social-welfare and labor efficiency: Two-stage NDEA neural network approach," Socio-Economic Planning Sciences, Elsevier, vol. 77(C).
    6. Natalia Shmatko & Galina Volkova, 2020. "Bridging the Skill Gap in Robotics: Global and National Environment," SAGE Open, , vol. 10(3), pages 21582440209, September.

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