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Competition, Agency and Productivity

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  • Mark Rogers

    (Harris Manchester College, Oxford and Melbourne Institute of Applied Economic and Social Research, The University of Melbourne)

Abstract

This paper 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 growth 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, 2003. "Competition, Agency and Productivity," Melbourne Institute Working Paper Series wp2003n20, Melbourne Institute of Applied Economic and Social Research, The University of Melbourne.
    • Handle: RePEc:iae:iaewps:wp2003n20
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    File URL: http://melbourneinstitute.unimelb.edu.au/downloads/working_paper_series/wp2003n20.pdf
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    References listed on IDEAS

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    Cited by:

    1. 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.
    2. 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.

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    JEL classification:

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

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