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Does Business Model Risk Affect Corporate Labor Policy?

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  • Lobna Bouslimi

Abstract

In this study, we attempt to provide a key understanding on how and through which channel customer concentration (Business risk) affects managers’ employment decision efficiency. Understanding the costs associated with customer concentration is important, as the modern business-to-business economy continues to experience higher levels of concentration and supply-chain integration. We find that managers of firms with higher customer concentrations are less efficient in their hiring decisions. Our main results are robust when using exogenous shocks based on federal laws to address endogeneity concerns. Additionally, we provide evidence that this negative impact is more pronounced in firms that offer more trade credit to larger customers, have higher financial risk, invest heavily in research and development, or deal with customers at greater risk of default.

Suggested Citation

  • Lobna Bouslimi, 2025. "Does Business Model Risk Affect Corporate Labor Policy?," International Journal of Economics and Finance, Canadian Center of Science and Education, vol. 17(4), pages 1-63, April.
    • Handle: RePEc:ibn:ijefaa:v:17:y:2025:i:4:p:63
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    References listed on IDEAS

    as
    1. Itzkowitz, Jennifer, 2013. "Customers and cash: How relationships affect suppliers' cash holdings," Journal of Corporate Finance, Elsevier, vol. 19(C), pages 159-180.
    2. B. Korcan Ak & Panos N. Patatoukas, 2016. "Customer-Base Concentration and Inventory Efficiencies: Evidence from the Manufacturing Sector," Production and Operations Management, Production and Operations Management Society, vol. 25(2), pages 258-272, February.
    3. R. David Mclean & Mengxin Zhao, 2014. "The Business Cycle, Investor Sentiment, and Costly External Finance," Journal of Finance, American Finance Association, vol. 69(3), pages 1377-1409, June.
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    More about this item

    JEL classification:

    • R00 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General - - - General
    • Z0 - Other Special Topics - - General

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