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Labor Flexibility, Ownership and Firm Performance in China

Author

Listed:
  • Julia Lane
  • Harry G. Broadman
  • Inderjit Singh

Abstract

Developed and developing countries alike are privatizing or corporatizing state owned enterprises (SOEs), often citing the flexibility to hire and shed labor as an advantage. However, there is little empirical evidence on the extent to which this improves firm performance. This paper investigates the linkage between labor flexibility, ownership and firm performance using China as a case study. We find that SOEs are much less able to adjust quickly to demand shocks than are other ownership forms and that the degree of worker input into hiring and firing decisions slows the ability of firms to adapt, negatively affecting firm performance.

Suggested Citation

  • Julia Lane & Harry G. Broadman & Inderjit Singh, 1998. "Labor Flexibility, Ownership and Firm Performance in China," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 13(6), pages 621-635, December.
    • Handle: RePEc:kap:revind:v:13:y:1998:i:6:p:621-635
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    Citations

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    Cited by:

    1. Julia Lane & Robert Feinberg & Harry Broadman, 2002. "Do Labour Strategies Matter? An Analysis of Two Enterprise-Level Data Sets in China," International Journal of the Economics of Business, Taylor & Francis Journals, vol. 9(2), pages 225-237.
    2. Nico Dewaelheyns & Cynthia Van Hulle & Yannick Van Landuyt & Mathias Verreydt, 2021. "Labor Contracts, Wages and SME Failure," Sustainability, MDPI, vol. 13(14), pages 1-15, July.
    3. Saul Estrin & Jan Hanousek & Evzen Kocenda & Jan Svejnar, 2009. "The Effects of Privatization and Ownership in Transition Economies," Journal of Economic Literature, American Economic Association, vol. 47(3), pages 699-728, September.
    4. Michael J. Seiler & David M. Harrison & Pim Van Vliet & Kit Ching Yeung, 2005. "Return Characteristics of State‐Owned and Non‐State‐Owned Chinese A Shares," The Financial Review, Eastern Finance Association, vol. 40(4), pages 533-548, November.
    5. Svejnar, Jan, 1999. "Labor markets in the transitional Central and East European economies," Handbook of Labor Economics, in: O. Ashenfelter & D. Card (ed.), Handbook of Labor Economics, edition 1, volume 3, chapter 42, pages 2809-2857, Elsevier.
    6. Sandeep Mohapatra & Rachael Goodhue & Scott Rozelle, 2008. "Incentive Complementarity in China’s Rural Enterprises," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 33(1), pages 63-79, August.

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