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What Drives Employment Relationships in Taxicab Organizations? Linking Agency to Firm Capabilities and Strategic Opportunities

Author

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  • Peter D. Sherer

    (Charles H. Lundquist College of Business, University of Oregon, Eugene, Oregon 97403-1208)

  • Nikolai Rogovsky

    (International Institute for Labor Studies, International Labor Organization, CH 1211, Geneva, 22, Switzerland)

  • Norman Wright

    (School of Business, Brigham Young University—Hawaii, Laie, Hawaii 96762-1294)

Abstract

Agency theorists argue that organizations typically get little value from using employees and that they should instead use nonemployees operating fully as residual claimants. Yet, even in a context where those theorists would predict virtually no employees—taxicab organizations—they are common. What drives the use of employment relationships in these organizations? The authors show how employment relationships are linked to firm capabilities and strategic opportunities in a sample of taxicab organizations, relying on arguments about the linkage of employment to the internal liquidity of labor, organizational routines, and internal cooperation. The theoretical arguments and findings suggest what organizations gain by having employment relationships and show that integrating the agency theoretic argument with the other theoretical arguments leads toward a resource-based view of strategy and human resources. The authors highlight the importance of embedding arguments on the internal management of human resources in the strategic and competitive context in which organizations operate. Their arguments also have implications for the resource-based approach to strategy in mapping the resource space of human assets in organizations and, within that space, directing attention to how organizations gain sustainable competitive advantage through managing human resources.

Suggested Citation

  • Peter D. Sherer & Nikolai Rogovsky & Norman Wright, 1998. "What Drives Employment Relationships in Taxicab Organizations? Linking Agency to Firm Capabilities and Strategic Opportunities," Organization Science, INFORMS, vol. 9(1), pages 34-48, February.
    • Handle: RePEc:inm:ororsc:v:9:y:1998:i:1:p:34-48
    DOI: 10.1287/orsc.9.1.34
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    References listed on IDEAS

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    1. Jay B. Barney & Edward J. Zajac, 1994. "Competitive Organizational Behavior: Toward an Organizationally‐Based Theory of Competitive Advantage," Strategic Management Journal, Wiley Blackwell, vol. 15(S1), pages 5-9, December.
    2. Russell, Raymond, 1985. "Employee ownership and internal governance," Journal of Economic Behavior & Organization, Elsevier, vol. 6(3), pages 217-241, September.
    3. Williamson, Oliver E., 1980. "The organization of work a comparative institutional assessment," Journal of Economic Behavior & Organization, Elsevier, vol. 1(1), pages 5-38, March.
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    Cited by:

    1. Jack A. Nickerson & Brian S. Silverman, 2003. "Why aren't all Truck Drivers Owner‐Operators? Asset Ownership and the Employment Relation in Interstate for‐hire Trucking," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 12(1), pages 91-118, March.
    2. Evan Rawley & Timothy Simcoe, 2008. "Horizontal Diversification and Vertical Contracting: Firm Scope and Asset Ownership in Taxi Fleets," Working Papers 08-10, Center for Economic Studies, U.S. Census Bureau.
    3. Ekin Alakent & Seung‐Hyun Lee, 2010. "Do Institutionalized Traditions Matter During Crisis? Employee Downsizing in Korean Manufacturing Organizations," Journal of Management Studies, Wiley Blackwell, vol. 47(3), pages 509-532, May.
    4. Brenda A. Lautsch, 2002. "Uncovering and Explaining Variance in the Features and Outcomes of Contingent Work," ILR Review, Cornell University, ILR School, vol. 56(1), pages 23-43, October.
    5. Zsolt Bihary & P'eter Cs'oka & P'eter Ker'enyi & Alexander Szimayer, 2019. "Self-respecting worker in the precarious gig economy: A dynamic principal-agent model," Papers 1902.10021, arXiv.org, revised Aug 2022.

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