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The Effect of Labor Flexibility on Financial Performance in Korea: The Moderating Effect of Labor Relations Climate

Author

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  • Hyunmin Choe

    (Office of the Senior Vice President for Research, Korea Development Institute, Sejong 30149, Korea)

  • Yongwon Kim

    (Korea Expressway Corp Research Institute, Hwaseong 18489, Korea)

  • Sungok Moon

    (School of Business, Yonsei University, Seoul 03722, Korea)

Abstract

This study reveals the impact of labor flexibility (i.e., numerical flexibility, functional flexibility, financial flexibility, and time flexibility) on financial performance and the effect of labor relations climate that moderates the two. Numerical flexibility, functional flexibility, financial flexibility, and time flexibility were chosen as the independent variables, and firms’ net profit was selected as the dependent variable to test the hypotheses. Statistical analysis was conducted on 1482 workplaces, and the findings of the regression analysis are as follows. First, numerical flexibility and financial flexibility had a positive effect on net profit among different types of labor flexibility. Second, the labor relations climate had a positive moderating effect on numerical and financial flexibility. This study is critical because it individually tested the four types of labor flexibility and empirically studied the relationship between each type and outcome variables. A labor relations climate strengthens the relationship between labor flexibility and net profit. Therefore, in order to increase the net profit of a company, it is necessary to utilize appropriate numerical and financial flexibility, and it is important to create a good labor–management partnership.

Suggested Citation

  • Hyunmin Choe & Yongwon Kim & Sungok Moon, 2022. "The Effect of Labor Flexibility on Financial Performance in Korea: The Moderating Effect of Labor Relations Climate," Sustainability, MDPI, vol. 14(4), pages 1-13, February.
    • Handle: RePEc:gam:jsusta:v:14:y:2022:i:4:p:2121-:d:748174
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