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Competition, agency and productivity

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  • Mark Rogers

Abstract

This article tests a set of hypotheses relating to agency and Schumpeterian views on how competition affects performance. A survey data set of Australian workplaces is used, with the change in labour productivity as the dependent variable. The results show strong support for the idea that intense competition raises productivity growth in managerial workplaces, but not in non-managerial workplaces (i.e. where the principal owner also works). Testing the agency theories in more detail, we find no evidence that the number of competitors, the price elasticity of demand or a proxy for bankruptcy (pre-tax losses) are the mechanisms behind the process. For non-managerial workplaces the results indicate support for the idea that greater demand uncertainty reduces productivity growth. In contrast, for managerial workplaces, greater demand uncertainty tends to raise productivity growth.

Suggested Citation

  • Mark Rogers, 2004. "Competition, agency and productivity," International Journal of the Economics of Business, Taylor & Francis Journals, vol. 11(3), pages 349-367.
  • Handle: RePEc:taf:ijecbs:v:11:y:2004:i:3:p:349-367
    DOI: 10.1080/1357151042000286447
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    References listed on IDEAS

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    Cited by:

    1. Bulan, Laarni & Sanyal, Paroma & Yan, Zhipeng, 2010. "A few bad apples: An analysis of CEO performance pay and firm productivity," Journal of Economics and Business, Elsevier, vol. 62(4), pages 273-306, July.
    2. Sue-Fung Wang & Yow-Jen Jou & Ke-Chiun Chang & Kun-Wei Wu, 2014. "Industry Competition, Agency Problem, and Firm Performance," Journal for Economic Forecasting, Institute for Economic Forecasting, vol. 0(4), pages 76-93, December.

    More about this item

    Keywords

    Competition; Agency; Schumpeterian; Productivity; JEL Classification: L1;

    JEL classification:

    • L1 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance

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