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The impact of group incentives on performance of small firms: Hausman-Taylor estimates

  • Kshitija Dixit

    (Med Health Care and Decor Pvt. Ltd., Pune, India)

  • Rupayan Pal

    (Indira Gandhi Institute of Development Research (IGIDR), Mumbai, India)

This paper investigates the impact of group incentives on firms' performance. It shows that group incentive raises firms' performance. This result empirically validates the implication of the theoretical literature that performance-related pay can potentially improve firms' performance, in the context of a developing country, and indicates the importance of group incentives in small firms. It also shows that partnership firms perform better than private limited companies and labour unions have a negative impact on firms' performance. It employs the Hausman-Taylor random effects estimator in order to isolate the effects of time-invariant covariates and also to tackle potential endogeneity problem. Copyright © 2010 John Wiley & Sons, Ltd.

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File URL: http://hdl.handle.net/10.1002/mde.1494
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Article provided by John Wiley & Sons, Ltd. in its journal Managerial and Decision Economics.

Volume (Year): 31 (2010)
Issue (Month): 6 ()
Pages: 403-414

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Handle: RePEc:wly:mgtdec:v:31:y:2010:i:6:p:403-414
Contact details of provider: Web page: http://www3.interscience.wiley.com/cgi-bin/jhome/7976

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  1. Shleifer, Andrei & Vishny, Robert W, 1986. "Large Shareholders and Corporate Control," Journal of Political Economy, University of Chicago Press, vol. 94(3), pages 461-88, June.
  2. Bhattacherjee, Debashish, 2003. "The Effects of Group Incentives in an Indian Firm - Evidence from Payroll Data," Working Papers 03-14, University of Aarhus, Aarhus School of Business, Department of Economics.
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  9. (*), Nigel Rice & Paul Contoyannis, 2001. "The impact of health on wages: Evidence from the British Household Panel Survey," Empirical Economics, Springer, vol. 26(4), pages 599-622.
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  14. repec:lan:wpaper:3982 is not listed on IDEAS
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