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Unions, collective relations laws and R&D investment in emerging and developing countries

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  • Balsmeier, Benjamin

Abstract

Many scholars argue that workforce unionization leads to a reduction in R&D investment because unions appropriate a share of the returns to successful inventive efforts. On the other hand, it is widely acknowledged that unions may encourage investment in R&D because of increased cooperation between workers and management. Our empirical analysis on cross-country firm- level data from 23 emerging and developing countries reveals a negative association between workforce unionization and firms’ R&D investment. This association is particularly pronounced when unions are protected by strong collective relations laws, supporting the notion that strong unions ‘tax’ the returns to successful inventions. Our findings have implications for policy makers who seek to improve emerging countries’ chances of catching up to the technological frontier, and for firm leaders concerned about the appropriation of returns to their R&D investments.

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  • Balsmeier, Benjamin, 2017. "Unions, collective relations laws and R&D investment in emerging and developing countries," Research Policy, Elsevier, vol. 46(1), pages 292-304.
    • Handle: RePEc:eee:respol:v:46:y:2017:i:1:p:292-304
    DOI: 10.1016/j.respol.2016.11.005
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    2. KOUAKOU, Dorgyles C.M., 2024. "Can past informality impede registered firms' access to credit?," MPRA Paper 121766, University Library of Munich, Germany.
    3. Koh, Yumi & Lee, Gea M., 2023. "R&D subsidies in permissive and restrictive environment: Evidence from Korea," Research Policy, Elsevier, vol. 52(1).
    4. Fan, Shuangrui & Wang, Cong, 2021. "Firm age, ultimate ownership, and R&D investments," International Review of Economics & Finance, Elsevier, vol. 76(C), pages 1245-1264.
    5. Kong, Dongmin & Wang, Yanan & Zhang, Jian, 2020. "Efficiency wages as gift exchange: Evidence from corporate innovation in China," Journal of Corporate Finance, Elsevier, vol. 65(C).
    6. Dorgyles C.M. Kouakou, 2024. "Can past informality impede registered firms’ access to credit?," Economics Working Paper Archive (University of Rennes & University of Caen) 2024-08, Center for Research in Economics and Management (CREM), University of Rennes, University of Caen and CNRS.
    7. Debasmita Basak & Andreas Hoefele & Arijit Mukherjee, 2022. "Wage bargaining and product innovation: The role of market expansion effect," Manchester School, University of Manchester, vol. 90(3), pages 319-340, June.
    8. Dorgyles C. M. Kouakou, 2023. "Competing against ‘invisibles’: the effect of competition from informal firms on formal firms’ R&D," Eurasian Business Review, Springer;Eurasia Business and Economics Society, vol. 13(1), pages 87-117, March.
    9. Chen, Feng-Wen & Xu, Jingwei & Wang, Jiang & Li, Zhilong & Wu, Yongqiu, 2023. "Do rising labour costs promote technology upgrading? A novel theoretical hypothesis of an inverted U-shaped relationship," Structural Change and Economic Dynamics, Elsevier, vol. 66(C), pages 327-341.
    10. Laroche, Patrice, 2020. "Unions, Collective Bargaining and Firm Performance," GLO Discussion Paper Series 728, Global Labor Organization (GLO).
    11. Dorgyles C.M. Kouakou, 2022. "Separating innovation short-run and long-run technical efficiencies: Evidence from the Economic Community of West African States (ECOWAS)," European Journal of Comparative Economics, Cattaneo University (LIUC), vol. 19(1), pages 103-141, June.

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    More about this item

    Keywords

    Emerging countries; Developing countries; R&D; Unions;
    All these keywords.

    JEL classification:

    • G38 - Financial Economics - - Corporate Finance and Governance - - - Government Policy and Regulation
    • J51 - Labor and Demographic Economics - - Labor-Management Relations, Trade Unions, and Collective Bargaining - - - Trade Unions: Objectives, Structure, and Effects
    • L25 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Performance
    • O16 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Financial Markets; Saving and Capital Investment; Corporate Finance and Governance

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