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Imperfect information and labor market bias against small and medium-sized enterprises: a Korean case

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  • Soonae Park
  • Byung-Yeon Kim
  • Wonchang Jang
  • Kyung-Min Nam

Abstract

We examine the labor market’s bias against small and medium-sized enterprises focusing on the Seoul Digital Industrial Complex case. We adopt Heckman’s approach to control selection bias, and use primary data from questionnaire surveys conducted at both firm and employee levels. We find that conventional firm-specific factors, such as wages, fringe benefits, and weekly work hours, primarily explain the labor market bias, but imperfect information is also positively associated with the bias. For example, a firm’s inadequate ability to identify a pool of potential employee candidates or to provide them comprehensive firm- or job-specific information tends to worsen labor shortages, and an employee’s ex-ante incomplete knowledge of on-the-job training or education opportunities tends to increase ex-post turnover intentions. Our results suggest that reducing the market bias requires improving imperfect information as well as conventional firm-specific conditions. Copyright Springer Science+Business Media New York 2014

Suggested Citation

  • Soonae Park & Byung-Yeon Kim & Wonchang Jang & Kyung-Min Nam, 2014. "Imperfect information and labor market bias against small and medium-sized enterprises: a Korean case," Small Business Economics, Springer, vol. 43(3), pages 725-741, October.
    • Handle: RePEc:kap:sbusec:v:43:y:2014:i:3:p:725-741
    DOI: 10.1007/s11187-014-9571-7
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    Cited by:

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    2. Cordes, Alexander, 2016. "Stellenbesetzung und personalpolitische Probleme in KMU: Analysen des IAB-Betriebspanels," Studien zum deutschen Innovationssystem 7-2016, Expertenkommission Forschung und Innovation (EFI) - Commission of Experts for Research and Innovation, Berlin.

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    More about this item

    Keywords

    Small and medium-sized enterprises; Labor shortage; Turnover intentions; Imperfect information; Korea; E24; J21; J48; J64; L25; L26; L53; M54; O25;
    All these keywords.

    JEL classification:

    • E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
    • J21 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Force and Employment, Size, and Structure
    • J48 - Labor and Demographic Economics - - Particular Labor Markets - - - Particular Labor Markets; Public Policy
    • J64 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Unemployment: Models, Duration, Incidence, and Job Search
    • L25 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Performance
    • L26 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Entrepreneurship
    • L53 - Industrial Organization - - Regulation and Industrial Policy - - - Enterprise Policy
    • M54 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Personnel Economics - - - Labor Management
    • O25 - Economic Development, Innovation, Technological Change, and Growth - - Development Planning and Policy - - - Industrial Policy

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