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Yeh, I.-Jan, Ching-Liang Chang, Joe Ueng, and Vinita Ramaswamy. "Reducing Risk through Governance." International Journal of Risk and Contingency Management 3, no. 2 (April 2014): 43–53. http://dx.doi.org/10.4018/ijrcm.2014040104.
The main purpose of this study is to investigate the determinants of formal governance policy. Many firms have a formal governance policy. Others, however, have no such a policy. This study examines what kind of firm's characteristics that encourage companies to adopt a formal governance policy. Data were collected from Corporate Library. A sample of 3,068 firms from the database of 2010 Corporate Library was analyzed. Results show that when firms have a better financial performance and better corporate governance practice, they are more likely to have a formal governance policy. Specifically, when firms have a better board rating, compensation policy, takeover defense strategy, and accounting practice, firms are more likely to have a formal governance policy.
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O’Regan, Nicholas, and Abby Ghobadian. "Formal strategic planning." Business Process Management Journal 8, no. 5 (December 1, 2002): 416–29. http://dx.doi.org/10.1108/14637150210449102.
The literature contends that the lack of strategic business planning is a major drawback in the implementation of business process initiatives such as total quality management. In addition, it is evident that strategic planning firms achieve better performance than other firms. However, strategic planning often fails due to problems or barriers encountered at the implementation stage. It is unclear from the limited research carried out to date what actions, if any, firms can take to minimise or eliminate these barriers. This paper examines the concept of strategic planning and identifies the barriers to its implementation. It considers the suitability of formal strategic planning as the key to eliminating or reducing implementation barriers by comparing the extent to which the barriers are experienced in formal and non‐formal planning firms. The paper also examines the extent to which the barriers are experienced by high and low performing firms.
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Kimseng, Tieng, Amna Javed, Chawalit Jeenanunta, and Youji Kohda. "Applications of Fuzzy Logic to Reconfigure Human Resource Management Practices for Promoting Product Innovation in Formal and Non-Formal R&D Firms." Journal of Open Innovation: Technology, Market, and Complexity 6, no. 2 (May 18, 2020): 38. http://dx.doi.org/10.3390/joitmc6020038.
Human resource management (HRM) practices for promoting innovation tend to vary from one context to another. This leads us to investigate the configurations of internal HRM practices and supply chain collaborations that help firms to achieve high levels of product innovation or cause firms to achieve low levels of product innovation in formal R&D firms—firms which have actively engaged in systematic innovation, have established an R&D department, and/or have allocated budgets for R&D intention—and non-formal R&D firms. The data were collected during the period December 2016–February 2017 from manufacturing firms located in the Bangkok metropolitan area, Thailand. In total, 87 respondents were included for an empirical fuzzy-set qualitative comparative analysis. The results indicate that, first, formal and non-formal R&D firms achieve high levels of product innovation by adopting internal HRM practices or collaborating with customers/suppliers. They also can achieve high levels of product innovation if they adopt both simultaneously. Second, formal R&D firms achieve high levels of product innovation if they adopt R&D personnel development; otherwise, they need to collaborate with customers and suppliers to achieve high levels of product innovation. Finally, miss-adopting R&D personnel development causes formal and non-formal firms to achieve lows levels of product innovation.
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Pisani, Michael J. "Challenges to Formality from Formal Firms Behaving Informally: Evidence from Central America." Economía y Administración (E&A) 12, no. 2 (December 14, 2021): 91–114. http://dx.doi.org/10.5377/eya.v12i2.12974.
This research explores the competitive environment for urban formal sector firms competing against peer formal sector firms behaving informally in Central America. Explored is the upper bound of the formal-informal continuum in a regional economic environment of persistent and widespread economic informality where formal firms may employ informal tactics to gain competitive advantage versus their formal competitors. The 2010 World Bank Enterprise Surveys form the basis for empirical analyses. The results suggest formal firms utilizing informal practices is widespread and is influenced by firm maturity, firm location, industry sector, firm legal status, firm organization, ownership composition, regulatory environment, international quality certification, web presence, entry into global markets, and firm size.
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Steijvers, Tensie, Nadine Lybaert, and Julie Dekker. "Formal human resource practices in family firms." Journal of Family Business Management 7, no. 2 (July 10, 2017): 151–65. http://dx.doi.org/10.1108/jfbm-07-2016-0016.
Purpose The importance of formal human resource (HR) practices is widely recognized in management literature, but under-researched in the small business and family firm domain. Previous research indicates that family firms rely more on informal HR practices, based on social networks. However, given the heterogeneity of family firms, one cannot assume that all family firms are reluctant to formalize their HR. As the CEO is the key decision maker who covers HR management in family firms, the effect of the CEO type on formal HR practices will be studied. The paper aims to discuss these issues. Design/methodology/approach Based on a large-scale survey, resulting in a response of 532 family SMEs, the authors perform a hierarchical regression analysis studying the effect of a family/nonfamily CEO on the use of formal HR practices, introducing several moderating effects: CEO generational stage, tenure and education. Findings Results indicate that family firms with a family CEO have more formal HR practices than those managed by a nonfamily CEO due to higher levels of goal alignment and intentional trust between the owning family and family CEO. Moreover, family firms managed by first generation family CEOs and family CEOs with a higher education have more formal HR practices. Practical implications The findings suggest that family CEOs can be equally or even more able as nonfamily CEOs to run a family firm in a formalized/professionalized manner. Originality/value Given the scant amount of research on HR formalization in family firms, even though literature documents performance increasing effects, this study fulfils the need to study the effect of the CEO on HR formalization.
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Samuelsson, Joachim, Jim Andersén, Torbjörn Ljungkvist, and Christian Jansson. "Formal accounting planning in SMEs." Journal of Small Business and Enterprise Development 23, no. 3 (August 15, 2016): 691–702. http://dx.doi.org/10.1108/jsbed-12-2015-0167.
Purpose – Several studies have highlighted the importance of management accounting practices such as formal short-term planning and formal long-term planning for SME performance. However, few studies have considered what actually explains differences in the use of formal planning (from a management accounting approach) in SMEs. Family ownership and EO are two plausible explanations for such differences. The purpose of this paper is therefore to examine how family ownership and EO are correlated to the use of formal short-term planning and formal long-term planning in SMEs. Design/methodology/approach – In this study, the authors examined how family ownership and entrepreneurial orientation (EO) affect the use of formal planning by analyzing a sample of 156 Swedish manufacturing SMEs, using multivariate regression analysis. Findings – As could be expected, the authors were able to validate the notion that family firms use less formal planning than non-family firms. However, in contrast to some previous studies, the authors found that there is a strongly positive relationship between EO and the use of formal short-term planning and long-term planning. Originality/value – Whereas many previous studies on family business have assumed that family firms use less formal planning than non-family firms, the present study is one of few to actually confirm this notion. Also, this study has provided strong evidence that EO is positively correlated to the use of formal planning, in the short term and in the longer term.
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Li, Yi, and Lin Cui. "The Influence of Top Management Team on Chinese Firms’ FDI Ambidexterity." Management and Organization Review 14, no. 3 (May 7, 2018): 513–42. http://dx.doi.org/10.1017/mor.2017.47.
ABSTRACTStrategic ambidexterity has been under researched in the context of Chinese outward foreign direct investment (FDI). An ambidextrous FDI, balancing between exploratory and exploitive activities, is strategically desirable but managerially challenging. We examine the role of top management team (TMT) functional diversity in influencing Chinese firms’ degree of FDI ambidexterity, and its boundary conditions in relation to the informal and formal institutional environments within which the TMT operates. Based on a panel of Chinese outward-investing manufacturing firms, our empirical analyses show that a marginal positive effect of TMT functional diversity on a firm's FDI ambidexterity is strengthened by the social faultline presence in the firm's TMT, but is weakened by the development of formal institutions in the firm's external environment.
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Du, Xingqiang, and Jin-hui Luo. "Political Connections, Home Formal Institutions, and Internationalization: Evidence from China." Management and Organization Review 12, no. 01 (March 2016): 103–33. http://dx.doi.org/10.1017/mor.2015.40.
ABSTRACTThis study draws on the resource dependence theory and institution-based view to examine political connections in the home market and home formal institutions for their impact on the internationalization of emerging market firms in the context of China. The results suggest that political connections at home may prevent emerging market firms from implementing internationalization strategies by reducing the dependence constraints imposed by local governments and foreign firms, whereas home formal institutional development may promote the strategy transition of emerging market firms from building political connections to international expansion and also reduce the negative impact of political connections. Overall, our findings indicate that political connections and formal institutions at home play an important role in shaping emerging market firms’ strategies of outward internationalization.
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La Porta, Rafael, and Andrei Shleifer. "Informality and Development." Journal of Economic Perspectives 28, no. 3 (August 1, 2014): 109–26. http://dx.doi.org/10.1257/jep.28.3.109.
In developing countries, informal firms account for up to half of economic activity. They provide livelihood for billions of people. Yet their role in economic development remains controversial with some viewing informality as pent-up potential and others viewing informality as a parasitic organizational form that hinders economic growth. In this paper, we assess these perspectives. We argue that the evidence is most consistent with dual models, in which informality arises out of poverty and the informal and formal sectors are very different. It seems that informal firms have low productivity and produce low-quality products; and, consequently, they do not pose a threat to the formal firms. Economic growth comes from the formal sector, that is, from firms run by educated entrepreneurs and exhibiting much higher levels of productivity. The expansion of the formal sector leads to the decline of the informal sector in relative and eventually absolute terms. A few informal firms convert to formality, but more generally they disappear because they cannot compete with the much more-productive formal firms.
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Alidarous, Manal, and Fouad Jamaani. "The Concurrent Effects of IFRS Mandate and Formal Institutional Quality on the Aftermarket Performance of IPO Firms in Emerging Countries." International Journal of Financial Research 12, no. 3 (January 11, 2021): 320. http://dx.doi.org/10.5430/ijfr.v12n3p320.
This paper provides the first empirical investigation seeking to find whether International Financial Reporting Standards (IFRS) mandate, changes in the quality of formal institutions, or, the concurrent effect of these two elements can explain the ongoing phenomenon of the aftermarket performance difference of Initial Public Offerings (IPO) firms. We perceive little awareness of the concurrent effect of IFRS mandate and the quality of formal institutions in emerging countries, although these nations account for more than half of the IFRS mandating countries. We employ numerous Difference-in-Differences (DiD) models utilizing reliable IPO and formal institutional data for Saudi Arabia from 2005 to 2017. Our empirical results show that the absence of IFRS influence in the aftermarket performance of IPO firms led us to posit that the quality of formal institutions is the key player in influencing long-term performance of IPO firms in Saudi Arabia. We uncover evidence showing that an improvement in formal institutional quality increases the long-term performance of IPO firms. We find no evidence of a concurrent effect of changes in formal institutional quality and IFRS mandate on the aftermarket performance of IPO firms. Our results show that what does really matter in relation to the aftermarket performance of IPO firms in Saudi Arabia, are the enhancements in the level of formal institutional quality. Our results provide some important implications for IFRS-IPO research.
Dissertations / Theses on the topic "Formal firms":
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Lynch, Susan Elizabeth. "Structuring interaction inside firms : formal boundaries and tie formation." Thesis, London Business School (University of London), 2007. http://ethos.bl.uk/OrderDetails.do?uin=uk.bl.ethos.441330.
Mohamed, Ali Nesma. "Towards a better integration of the informal sector : three empirical essays on the interaction between formal and informal firms in Egypt and beyond." Thesis, Paris Est, 2017. http://www.theses.fr/2017PESC0046/document.
Depuis les années 2000, les économies du continent africain ont fait preuve de remarquable croissance. Toutefois, le contexte actuel met en péril le développement durable du secteur privé. Les imperfections liées au système institutionnel et à l’environnement commercial entravent l’évolution stable des entreprises et ouvrent la voie à la croissance d’un secteur informel très persistant. Cette thèse ouvre à nouveau le débat polémique sur le secteur informel en soulignant la capacité entrepreneuriale de ce secteur plutôt que les menaces qu’il représente. Afin de comprendre la forte persistance de l'informalité en dépit de ses impacts négatifs, nous testons à quel point la concurrence entre firmes formelles et informelles pourrait affecter l’économie égyptienne. Nous constatons qu'une concurrence plus intense incite les entreprises formelles à devenir plus productives. Nous étendons également notre analyse aux pays d'Afrique subsaharienne en soulignant l’effet stimulateur de la taxation et de la réglementation sur la puissance de la concurrence entre les entreprises formelles et informelles. Nos résultats font appel à l’introduction du secteur informel dans les politiques publiques visant la réforme de la fiscalité et de la réglementation en Afrique. Ces politiques devraient également viser l'accès des entreprises aux sources de financement, d'infrastructure et de formations comme outils principaux induisant le processus de formalisation et favorisant la croissance économique. Cette thèse souligne l’importance de repenser les effets du secteur informel dans les pays en développement, tout en le considérant comme un stimulateur de croissance économique plutôt qu’une menace Despite the impressive economic growth of African economies since 2000s, the actual context is threatening the sustainable development of the private sector. Large institutional imperfections and poor business environment are hindering the development of firms and are paving the way for a more persistent informal sector. This thesis reopens the controversial debate about the informal sector by looking at its entrepreneurial capacity rather than its threats. In order to understand the strong persistence of this sector despite its confirmed negative impacts, we investigate the extent to which the relationship between formal and informal firms, through market competition, could affect the Egyptian economy. We find that more intense competition stemming from informal firms can drive formal firms to become more productive. We also extend our analysis to Sub-Saharan African countries by underlining the effect of taxation and regulation on the strength of competition between formal and informal firms. Our findings call on the importance of introducing the informal sector in undertaken policies that target the reform of taxation and regulations in Africa. These policies should also target the firms’ access to source of finance, infrastructure and training as effective tools inducing the formalization process and fostering economic growth. Therefore, this thesis provides evidence on the importance of revisiting the impacts of the informal sector in developing countries by looking at it as a driver of economic growth rather than a threat
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Almquist, Bradley Kent, and Bradley Kent Almquist. "Marketing in small architecture firms: a comparison of marketing theory in formal texts and actual practices in small architecture firms." Thesis, The University of Arizona, 1992. http://hdl.handle.net/10150/625876.
Park, Hyun Kyu. "Empirical analysis of disguised relationships between formal economy firms and informal economy enterprises." Thesis, University of Cambridge, 2018. https://www.repository.cam.ac.uk/handle/1810/277907.
Scholarly interest in the informal economy has burgeoned in recent years, in anticipation of expanding our knowledge beyond the easily observable organizational life that takes place within the formal economic system. In line with this research endeavour, the present work represents a focused study of what I have labelled 'disguised relationships'. These ties result in repeated transactions between informal economy enterprises, which fail to comply with certain elements of the laws and regulations applying to their operations, and formal firms, which operate within the state-sanctioned formal economy. Drawing on an abductive reasoning process and grounded theory approach, I conduct a case study that captures the interactions between two leading cosmetics firms (i.e. formal firms) and ten daigou enterprises (i.e. informal enterprises) between 2013 and 2017. The examination of multiple data sources (i.e. interviews, news articles and social media observations) suggests that the organizational landscape under study differs considerably from the one in which formal firms are portrayed as rational choosers of best-performing partners or exploiters of subordinate actors within the informal economy. Rather, disguised relationships emerge in a unilateral and disguised fashion following the lead of informal enterprises, and formal firms unintentionally engage in the unexpected ties. Furthermore, disguised relationships create the image of dynamism replete with, metaphorically speaking, give-take, push-pull and chase-evade. More specifically, the emergent model illustrates the interactive practices through four mechanisms: (a) informal enterprises gaining social acceptability from certain society groups and acquiring the necessary resources from the members of identity-based groups; (b) drawing on this momentum, informal enterprises forming unilateral ties with formal firms in a disguised manner; (c) formal firms counteracting the unexpected ties, with temporary compromising on the counteracting efforts; and (d) informal enterprises avoiding the combatting efforts of formal firms through socially learnt tactics and leveraging network brokers (i.e. actors sharing the same ethnic/cultural backgrounds with informal enterprises while at the same time working for formal firms). This thesis makes contributions to the literature on both interorganizational relationships and the informal economy by overcoming the perennial problem of 'dualism' that is prevalent in the extant work. First, while the subject-object dualism bestows upon formal firms a heroic status such that they are conceptualized as rational actors forming interorganizational relationships, always on the basis of plans and goals, the current work argues that formal firms may participate in unexpected, yet lasting, ties, which requires ongoing situational responsiveness. Second, the structure-agency dualism projects the static image in which formal firms deliberately establish exploitative ties with structurally isolated informal enterprises, whereas the present study suggests that informal enterprises may exercise agency to proactively establish or dissolve connections with formal firms and to strengthen or weaken the relationships at their discretion. As such, dynamism figures prominently in the interorganizational relationships between formal firms and informal enterprises.
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Nuhu, Nuraddeen S. "Understanding the International Entrepreneurial Process of Emerging Economy Firms: Evidence from Nigerian SMEs." Thesis, University of Bradford, 2016. http://hdl.handle.net/10454/17374.
This study is motivated by the need to improve the understanding of international entrepreneurship (IE) in emerging economies. Thus, the researcher conducted an in-depth case study of four Nigerian firms to investigate how divergent institutional conditions influence the processes of IE from emerging economies to developed economies. The findings of the study depict how entrepreneurial activity from emerging economies to developed economies can involve many sub-activities and processes to achieve opportunity identification, development, and exploitation. This process which appears disruptive is significantly supported through resource acquisition and development. However, this process of IE is heavily shaped by the institutional conditions of the international entrepreneur’s host and home markets. The institutional environment impeded growth and entrepreneurial aspirations while simultaneously facilitating access to resources, reducing risks and providing legitimacy to the firms. These simultaneous effects of institutions constrained strategic choices of the entrepreneurs and by so doing, shaped the means and processes by which they identify and execute international opportunities.
The major contributions of this thesis include the validation of New Institutional Economics (NIE) framework for the examination of IE processes and empirical evidence demonstrating how entrepreneurial activity from emerging economies to developed economies can involve many sub-activities and processes to achieve opportunity identification, development, and exploitation. Also, the study guides emerging economy managers and entrepreneurs on ways to effectively manage their liabilities of smallness and foreignness. Lastly, the study provides some policy recommendations to facilitate the development of a conducive environment for entrepreneurship and IE to flourish in Nigeria.
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Mårtensson, Bardeman Johanna, and Emelie Winroth. "It`s all about whom you know : the meaning of networks for small entrepreneurial firms." Thesis, Högskolan Kristianstad, Sektionen för hälsa och samhälle, 2014. http://urn.kb.se/resolve?urn=urn:nbn:se:hkr:diva-12334.
Networking among entrepreneurial firms is a widely researched and debated topic amongst academics; however, there are still research gaps. Most research is based on quantitative studies and researchers have called for more qualitative analysis to gain a deeper understanding in what impact networks have on entrepreneurial firms. The purpose with this dissertation is to explore in what way networks are important (or not) for small entrepreneurial firms, and if this changes over the firms’ development. The study has an interpretive philosophy and an exploratory research design. To collect data eight semi-structured interviews, with entrepreneurs in Kristianstad and the nearby area, were completed. The findings of this study are that networks look different for all entrepreneurial firms and the importance of different relationships changes over the firms’ life cycle. Informal relationships (family and friends) are important for the entrepreneur when it comes to encouragement and support, while formal relationships (suppliers, employees, customers and other entrepreneurs) contribute to the success of the firm by providing the entrepreneur with knowledge and advice. The conclusions, from the collected data, are that all relations are not of equal importance to all entrepreneurs. The importance depends on the entrepreneur’s personality and the industry the entrepreneur operates in. However, we found that the importance of talking to other entrepreneurs has grown and that the most important relationship seems to be with family and friends. The demarcations of this study are that only entrepreneurs in one area of one country were interviewed, also that a qualitative method was used; therefore, we cannot show any statistical proof of the findings.
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Record, Richard. "Why do firms invest in an unstable business environment? : investigating formal and informal investment climate institutions in Vietnam." Thesis, University of Manchester, 2014. https://www.research.manchester.ac.uk/portal/en/theses/why-do-firms-invest-in-an-unstable-business-environment-investigating-formal-and-informal-investment-climate-institutions-in-vietnam(bbec31b1-9881-48e5-86b5-b1438ac93112).html.
The mainstream investment climate literature often fails to take account the methods that firms in developing countries adopt in order to mitigate the effects of a poor investment climate. A better understanding of these informal “coping strategies” may add to the body of knowledge on what is important, and what isn’t, when it comes to prioritising investment climate reforms in developing and transitional economies. Original research from Vietnam, a country which is growing rapidly and in the midst of its transition from plan to market, shows how firms have been able to adapt their business operations given an unstable and partially reformed institutional enabling environment. By comparing the behaviour of manufacturing enterprises across a number of differing local jurisdictions, we are able to discern just how firm level coping strategies adapt. We find evidence that entrepreneurs are able to use a variety of informal institutional mechanisms to invest and operate in an inhospitable business environment where private property rights are not well protected and develop “second best” response mechanisms. These mechanisms include establishing formal and informal networks and linkages, seeking patronage and protection, and by sharing ownership with potential expropriators. We also find evidence that in the face of weak property rights protection, firms adopt approaches to reduce the costs to the original investors if third party expropriation is attempted and are less likely to reinvest retained earnings. Where they do invest, it is principally in dissolvable and/or movable assets, and adopting a higher discount rate or risk adjusted time value of money for capital investments. Similarly, we find evidence of linkages between measures of firm confidence in the local investment climate, and the extent to which firms are willing to employ outside salaried management. Thus, the thesis provides a contribution to the growing literature reviewing the development of formal and informal investment climate institutions in transitional and developing economies. The principle research finding, namely that the establishment and use of informal or second best institutional arrangements can offset some of the costs and risks associated with an otherwise weak and unstable business environment, has important implications for policymakers when it comes to the prioritization of investment climate reforms in developing countries.
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El, Said H., and Frank McDonald. "Institutional reform and entry mode by foreign firms: The case of Jordan." UMAR Institute of Macroeconomic Analysis (Ljubljana, Slovenia), 2002. http://hdl.handle.net/10454/2591.
This paper investigates the links
between institutional systems and the
entry mode of Multinational
Corporations (MNCs) in developing
and transition countries (DTCs). An
assessment is made of the reasons for
the continuing use of international joint
ventures (IJVs) in countries that have
undergone reforms intended to lead to
the development of wholly owned
subsidiaries. The paper argues that
formal and informal institutional
constraints in DTCs lead to high
transaction and uncertainty costs for
MNCs, and that the use of IJVs is a
rational response to attempt to lower
these high costs. The paper follows the
literature suggesting that IJVs are
normally a `second best¿ entry mode
in terms of the potential for foreign
direct investment (FDI) to contribute
to the development of DTCs. The
reform process in Jordan is used to
illustrate how institutional systems,
especially informal institutional
constraints, lead to high transaction
and uncertainty costs. In the case of
Jordan, this occurred despite a series
of four reform packages seeking to
reduce the institutional barriers to
effective business activities. Interviews
of 28 foreign companies provide the
basis for an empirical assessment of
the importance of both formal and
informal institutional constraints and
infrastructure problems. The paper
includes an outline of a future research
agenda that seeks to generalise and
develop the results from Jordan to other
DTCs.
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Qu, Yi. "The investigation of innovation and performance of Chinese manufacturing firms : the role of foreign direct investment, formal institutions and research and development strategies." Thesis, University of York, 2014. http://etheses.whiterose.ac.uk/6249/.
By employing an institution-based view, this thesis proposes that the innovation of indigenous firms is directly influenced by FDI and formal institutions and the latter also moderate the effects of the former. I use the World Bank Enterprise Survey 2003(WBES2003). The following findings are obtained: 1) FDI generates negative spillover effects on patents; 2) formal institutions positively affect innovation of firms; 3) formal institutions positively moderate the negative FDI innovation effects. This thesis also looks at the role of formal institutions at regional level. It proposes that regional formal institutions and FDI affect the innovation of Chinese firms and also affect regional innovation. I use the WBES2012, China Statistical Yearbook and the NERI Index of Marketization of China. The following findings are obtained: 1) FDI generates no spillover effects on innovation; 2) regional formal institutions promote innovation of Chinese firms, while the study fails to discover such an impact from legal institutions; 3) regional formal institutions promote regional innovation. In addition, this thesis also looks at the role of national innovation system (NIS) and a firm’s R&D strategy in firm performance. It proposes that the performance of indigenous firms is directly affected by R&D strategy, NIS and FDI. Moreover, R&D strategy and NIS can also moderate FDI spillover effects. I use the WBES2003.The findings suggest the following: 1) firm performance is positively linked to the level of originality in a firm’s R&D strategy; 2) NIS promotes firm performance; 3) FDI generates positive spillover effects on total sales; 4) FDI spillover effects are positively moderated by a firm’s R&D strategy and NIS.
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Abdulai, Abdul-Fatahi. "University-industry interactions : a comparative analysis of the influence of formal and informal university knowledge transfer mechanisms on innovation performance in firms in Ghana." Thesis, Cardiff Metropolitan University, 2018. http://hdl.handle.net/10369/9933.
Knowledge transferred from universities is known to pass through many mechanisms to influence innovation in firms. Nonetheless, research on university knowledge transfer in less developed economies is not readily available in the extant literature. At the heart of this is a lack of analytical framework to guide university knowledge transfer in developing economies. The current study therefore elicits a comprehensive understanding of university knowledge transfer in the West African country of Ghana. The study adapts a generic integrated university knowledge transfer framework that suites the context of developing economies and evaluates how university knowledge transfer mechanisms influence innovation in firms in primary, manufacturing and service sectors in Ghana. To achieve the study aim, explanatory sequential mixed methods was employed from which the study contends that universities interactions with industry in Ghana are effective through both formal and informal mechanisms. However, the two are found not to directly lead to the ultimate results of innovation performance in firms and will have to be expedited through other means such as technology transfer offices, knowledge networks and collaborative research projects between universities and firms. In addition, the study shows that firms in different sectors of Ghanaian economy have some similarities as well as differences by which they acquire new knowledge from universities to significantly improve their products and services. These disparities in particular are explained accordingly by specific characteristics the sectors, pace of innovation adoption in each sector and greatly influenced equally by size, socio-cultural factors and general background of management staff in all sectors. Based on these, primary and manufacturing sectors firms are found to have comparatively weak relations with universities, whereas service sector firms have stronger interactions. The study concludes that interactions driving universities and industry are productive and worth pursuing as one of many instruments for innovative changes in all aspects of Ghanaian economy. The study suggests that knowledge generation players in Ghana need to have a well-defined national innovation agenda that seeks to facilitate and address sector specific needs. Significantly, the government of Ghana needs to create avenues for local firms, particularly small to medium scale enterprises in primary and manufacturing sectors to gain additional capabilities to absorb knowledge. Nevertheless, a stronger relationship between universities and firms in Ghana will by no means usher in the required knowledge for wealth and prosperity. Finally, the study recommends a rigorous adjustment in current universities' physical and administrative structures to accommodate industry interactions and create knowledge that suits basic characteristics needs of individual sectors. Most of all, economic policies will have to be carefully designed and efficiently directed by dedicated experts to work to successful realisation of the country's industrialisation objective. Lastly, more research will need to be conducted in the area of innovation policy effectiveness and impact evaluation for deeper understanding and to help to create ideal environment for productive research outcomes in all sectors of the economy.
Bigsten, Arne. Are formal and informal small firms really different?: Evidence from Kenyan manufacturing. Nairobi, Kenya: Institute of Policy Analysis and Research, 1999.
Ng'ang'a, Wilson. Access to formal finance: Constraints for small and medium manufacturing firms in Kenya. Nairobi, Kenya: Kenya Institute for Public Policy Research and Analysis, 2015.
Cook, G. Formal rehabilitation procedures and insolvent firms: Empirical evidence on the UK Company Voluntary Arrangement procedure. Loughborough: Loughborough University Banking Centre, 1999.
Alarcón, Inmaculada Sánchez, Marta Álvarez, and Hanna Hatzmann. No es está quieto: Nuevas formas documentales en el audiovisual hispánico. Madrid: Iberoamericana, 2015.
Regalia, Ida. "Prospects for Employment Relations: Between Informal and Formal and Inside and Outside." In Regulating Work in Small Firms, 205–36. Cham: Springer International Publishing, 2019. http://dx.doi.org/10.1007/978-3-030-21820-1_6.
Shai, Aron. "Britain and China: From Imperial Relations to Formal Equalization." In The Fate of British and French Firms in China, 1949–54, 5–17. London: Palgrave Macmillan UK, 1996. http://dx.doi.org/10.1057/9780230375628_2.
Freitas, Isabel Maria Bodas, Tommy Clausen, Roberto Fontana, and Bart Verspagen. "Formal and Informal External Linkages and Firms’ Innovative Strategies: A Cross-Country Comparison." In Catching Up, Spillovers and Innovation Networks in a Schumpeterian Perspective, 119–45. Berlin, Heidelberg: Springer Berlin Heidelberg, 2011. http://dx.doi.org/10.1007/978-3-642-15886-5_6.
Zhang, Chuang, Zhenyao Cai, and Ji Li. "Formal Contract in Marketing Channel and Firms’ Transactional Performance in China: Does Renqing Matter?" In Looking Forward, Looking Back: Drawing on the Past to Shape the Future of Marketing, 6. Cham: Springer International Publishing, 2015. http://dx.doi.org/10.1007/978-3-319-24184-5_2.
Jiang, Wen. "Formal Control, Social Control and Guanxi in IT Outsourcing: A Study in Chinese Firms." In Lecture Notes in Business Information Processing, 150–61. Cham: Springer International Publishing, 2017. http://dx.doi.org/10.1007/978-3-319-70305-3_10.
Herrigel, Gary. "Experimentalist Systems in Manufacturing Multinationals: Recursivity and Continuous Learning Through Destabilization." In Knowledge for Governance, 415–39. Cham: Springer International Publishing, 2020. http://dx.doi.org/10.1007/978-3-030-47150-7_18.
AbstractThis chapter explores manufacturing MNC governance practices under conditions of uncertainty. It shows that organized recursivity in knowledge flow and practice (“experimentalism”) can diffuse learning and innovation throughout the MNC. Three sorts of obstacles, however, are common: hierarchical insulation, stakeholder exclusion, and inadequate empowerment resources for participants. These obstacles exist not only ex ante, as firms attempt to construct formal experimentalist systems; they also are continually regenerated by the experimentalist dynamics themselves. In order to avoid disruption of recursive flow, MNCs are developing an array of destabilization mechanisms to undermine obstacles and reconstitute the deliberative experimentalist learning process.
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Black, Julia. "The Role of Third Parties in Regulatory Systems: Examples from Financial Services Regulation." In The Regulator–Regulatee Relationship in High-Hazard Industry Sectors, 23–31. Cham: Springer Nature Switzerland, 2024. http://dx.doi.org/10.1007/978-3-031-49570-0_3.
AbstractRegulatory systems can include a variety of third-party intermediaries, performing a variety of roles, with variable capacities, motivations, strategic position, and authority. Third parties may be deliberately ‘enrolled’ in the regulatory system, or they may be ‘enrolled’ de facto, due to the business model/activities/markets of the regulated firms. Such third parties can be a benefit to the regulator, expanding its capacity. But as well as introducing unintended consequences, they can also introduce key dependencies, with associated risks to which the regulator needs to be alert, and which it needs to mitigate where possible through a range of formal and informal strategies.
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Moen, Øystein, Julie Dahl Benum, and Ingeborg Gjærum. "Exploring Informal and Formal Learning Activities as Enablers of Learning-by-Exporting in Small and Medium Sized Firms." In Advances in Global Marketing, 127–46. Cham: Springer International Publishing, 2017. http://dx.doi.org/10.1007/978-3-319-61385-7_6.
AbstractThe extensive examination of the defining innovations, which were gleaned from the documented companies, was driven by the importance those early decisions had in shaping the companies. Most of these ideas were product innovations. The separation of the defining ideas from ongoing product innovations was based upon the need to show that following an initial Big Bang step, company management then had to refine these product ideas over time. While the first ideas were often generated from the outside and involved little or no formal research or development, the firms needed to engage in the constant renewal of their product lines in order to stay on top. It was observed that this is actually a different process: one that is most pronounced at those companies where the starting idea was built upon over a long period of time.
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Adams, Tracey L. "Professions, Knowledge, and Workplace Change: The Case of Canadian Engineers." In Knowledge and Space, 221–38. Cham: Springer International Publishing, 2023. http://dx.doi.org/10.1007/978-3-031-24910-5_11.
AbstractIn North America, training in engineering has long been balanced between formal university education and on-the-job training. Over the last few decades, however, Canadian engineering workplaces have changed. In the drive for efficiency and profit, firms are increasingly reluctant to invest in training. This paper’s author draws on interviews with 53 Ontario, Canada, engineers to explore how workplace change impacts professional skills, and to identify the implications for professional knowledge. From her findings, she concludes that engineers have fewer opportunities to learn on the job than in the past. Increasingly, many are asked to learn in their own time, or on an ad-hoc basis to complete pressing tasks. This encourages information gathering, rather than building deep knowledge. Moreover, knowledge benefiting employers is emphasized at the expense of knowledge benefiting society, with potential long-term implications for engineers’ fiduciary responsibilities.
Conference papers on the topic "Formal firms":
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Singh, Ranjita M. "Increased sustainability initiatives among the largest Canadian firms: Routine, strategic or board oversight." In New outlooks for the scholarly research in corporate governance. Virtus Interpress, 2023. http://dx.doi.org/10.22495/nosrcgp12.
Using a multi-theory framework, we analyze why there is a difference in reporting between firms in their number of sustainability indicators. Firms not only need to earn profits but also contribute to the well-being of society and the environment. A firm’s corporate social responsibility (CSR) activities as visible from its sustainability reporting disclosure help it in various ways such as gaining greater legitimacy among its stakeholders, improving its competitive advantage (Grant et al., 2015), attracting talent (Turban & Greening, 1996), reducing risk (Godfrey et al., 2009), etc. Formal sustainability reporting has been available for over two decades and is no longer considered novel. However, the diversity and details in their reporting differ among these firms
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Pei, Xudong. "Impact of Relational Mechanisms and Formal Contracts on Firms' Innovation Performance." In 2011 International Conference on Business Computing and Global Informatization (BCGIn). IEEE, 2011. http://dx.doi.org/10.1109/bcgin.2011.35.
Tieng, Kimseng, Chawalit Jeenanunta, Nattharika Rittippant, Pornpimol Chongpisal, and Ryoju Hamada. "The influences of knowledge management on innovation within formal and non-formal R&D manufacturing firms, Thailand." In 2016 IEEE International Conference on Management of Innovation and Technology (ICMIT). IEEE, 2016. http://dx.doi.org/10.1109/icmit.2016.7605035.
Cheung, Yun Kuen, Stefanos Leonardos, and Georgios Piliouras. "Learning in Markets: Greed Leads to Chaos but Following the Price is Right." In Thirtieth International Joint Conference on Artificial Intelligence {IJCAI-21}. California: International Joint Conferences on Artificial Intelligence Organization, 2021. http://dx.doi.org/10.24963/ijcai.2021/16.
We study learning dynamics in distributed production economies such as blockchain mining, peer-to-peer file sharing and crowdsourcing. These economies can be modelled as multi-product Cournot competitions or all-pay auctions (Tullock contests) when individual firms have market power, or as Fisher markets with quasi-linear utilities when every firm has negligible influence on market outcomes. In the former case, we provide a formal proof that Gradient Ascent (GA) can be Li-Yorke chaotic for a step size as small as Θ(1/n), where n is the number of firms. In stark contrast, for the Fisher market case, we derive a Proportional Response (PR) protocol that converges to market equilibrium. The positive results on the convergence of the PR dynamics are obtained in full generality, in the sense that they hold for Fisher markets with any quasi-linear utility functions. Conversely, the chaos results for the GA dynamics are established even in the simplest possible setting of two firms and one good, and they hold for a wide range of price functions with different demand elasticities. Our findings suggest that by considering multi-agent interactions from a market rather than a game-theoretic perspective, we can formally derive natural learning protocols which are stable and converge to effective outcomes rather than being chaotic.
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Carretero-Ayuso, Manuel J. "Desglose y sistematización de ítems para las labores de supervisión formal de proyectos de edificación." In I Congreso de Escuelas de Edificación y Arquitectura Técnica de España. Valencia: Editorial Universitat Politècnica de València, 2021. http://dx.doi.org/10.4995/edificate2021.2021.13355.
Graduates of technical architecture and construction have several work possibilities ahead of them. One is to join firms that carry out supervisory work of construction design projects, and their role in such firms is to perform an in-depth and formal verification of the content of design documents. This paper presents a number of results obtained in practical activities with students, the objective of which was to understand how they would carry out the management of such supervisory tasks by means of a systematic process of item verification. It is thus intended to hold an exercise of how they will eventually organise their professional duties. The results are grouped into five fully systematised checklist tables, one for each of the component elements of design projects (description, attachments, plans, measurements and budgets, and terms and conditions). A total of 108 testing and control checks were envisaged, each of which is well suited to be used, as-is, in a real professional context.
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Akaba, Julius, Patient Rambe, and Edem Korku Agbobli. "Formal project management adoption readiness of emerging contractor firms in the Mangaung Metropolitan Municipality." In Proceedings of the International Conference on Business and Management Dynamics 2016: Sustainable economies in the information economy. AOSIS, 2016. http://dx.doi.org/10.4102/aosis.2016.icbmd10.08.
Bode, Meikel. "Towards a Formal Description Language for Digital IT Consulting Products in Decentralized IT Consulting Firms." In 2019 IEEE 23rd International Enterprise Distributed Object Computing Workshop (EDOCW). IEEE, 2019. http://dx.doi.org/10.1109/edocw.2019.00037.
Irgang, Luís, Henrik Barth, and Magnus Holmén. "Interorganizational Relations in New Product-Service Systems Development: The Role of Complementary Capabilities." In New Business Models 2023. Maastricht University Press, 2023. http://dx.doi.org/10.26481/mup.2302.20.
This study explores the complementary capabilities in PSS development by MedTech firms and how it drives interorganizational relations. The findings indicate three categories of complementary capabilities: health-related, data-driven, and social capital capabilities. They are attracted with formal contracts and additional benefits, remote support, and exploration of partners’ networks.
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Kárpáti, Zoltán. "Professionalization of Family Firms: Striking a Balance Between Personal and Non-Personal Factors." In New Horizons in Business and Management Studies. Conference Proceedings. Corvinus University of Budapest, 2021. http://dx.doi.org/10.14267/978-963-503-867-1_12.
The amount of research on family businesses’ analysis has increased significantly in recent years, thus showing the high importance of the topic. In most countries, family businesses occupy a prominent place in contributing to the economy with the added value they produce. However, less attention has been paid to the professionalization of family businesses and the exploration and presentation of the related literature. The professionalization of family business is a significant research concern in the entrepreneurship and governance literature. In the context of family businesses, professionalization initially meant nothing more than hiring an outside, non-family manager. For today, the content of professionalization has expanded, and a multidimensional model has evolved: a broader, deeper understanding has evolved, which involves other vital aspects such as developing formal control and human resource systems, decentralization of authority, formal strategic planning, or top-level activeness. This study aims to present the essential international literature on professionalization and provide a comprehensive overview of the studies published. The literature review mainly summarizes the results of the last twenty years and closely related articles. The paper follows the next logic; in the first part, the definition of professionalization is introduced along with its benefits and challenges. Then, based on the research methodology presented, the related empirical and theoretical studies are examined. In the end, the review summarizes the key findings in a table.
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Schuebert, Bryce, Devanshi Shah, Jesse Mullis, Fatemeh Mozaffar, and Beshoy Morkos. "The Impact of COVID-19 on Mass Personalization Supply Chain Networks – A Qualitative Inquiry." In ASME 2023 International Design Engineering Technical Conferences and Computers and Information in Engineering Conference. American Society of Mechanical Engineers, 2023. http://dx.doi.org/10.1115/detc2023-117191.
Abstract Mass personalization (MPP) is a novel production method that integrates the consumer into the design process, efficiently producing distinct, scalable products that satisfy latent consumer needs. Previous MPP research has focused on the Industry 4.0 manufacturing processes and technologies required to make personalization a feasible method. Inherently, MPP necessitates a configurable supply chain that accommodates fluctuating product requirements. However, there has been little effort to examine the resilience and robustness of MPP supply chain networks in instances of external disruptions such as the ongoing COVID-19 supply chain crisis. This research takes a formal qualitative approach to investigate three MPP focal firms and the pandemic’s impact on their supply chain network through interviews with industry leaders. In doing so, we address research questions centered on MPP robust and resilience against external disruptions. The study finds that faced COVID-19 disruptions, MPP firms with centralized, specialty suppliers were vulnerable, while firms with increased supplier redundancy, network transitivity, and amplified visibility were robust and resilient. Evidence indicates that MPP capabilities provided robustness advantages over other production methods. Further, This work discovered that MPP FFs were particularly vulnerable to COVID-19 disruptions when using non-redundant, centralized suppliers. However, FFs taking advantage of MPP technologies to increase visibility and supplier redundancy were robust to disruptions and quick to recover from interruptions.
Reports on the topic "Formal firms":
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Morón, Eduardo, Edgar Salgado, and Cristhian Seminario. Financial Dependence, Formal Credit and Firm Informality: Evidence from Peruvian Household Data. Inter-American Development Bank, May 2012. http://dx.doi.org/10.18235/0011384.
This paper examines the link between financial deepening and formalization in Peru. Using data from the National Household Survey, Bloomberg and the Central Bank of Peru Central Bank, the Catão, Pagés, and Rosales (2009) model is implemented at activity level (2-digits ISIC), and the Rajan and Zingales (1998) approach of sectors' dependence on external funds is followed. The sample is divided into three firm size categories, and two formality measures are assessed. Using the accounting books specification, robust results are obtained, supporting a significant and positive effect of credit growth on formalization only for the self-employment firms category. Alternatively, using the pension enrollment specification, the channel is found positively significant only for firms with more than 10 workers; there is a smaller effect for firms with 2-10 workers. There is also a significant between effect, explaining the transition from small firms to larger firms due to greater credit availability.
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Catão, Luis, María Fernanda Rosales, and Carmen Pagés. Financial Dependence, Formal Credit and Informal Jobs: New Evidence from Brazilian Household Data. Inter-American Development Bank, November 2009. http://dx.doi.org/10.18235/0010726.
This paper examines a much overlooked link between credit markets and formalization: since access to bank credit typically requires compliance with tax and employment legislation, firms are more likely to incur such formalization costs once bank credit is more widely available at lower cost. The relevance of this credit channel is gauged using the Rajan-Zingales measure of financial dependence and a difference-in-differences approach applied to household survey data from Brazil. It is found that formalization rates increase with financial deepening, especially in sectors where firms are typically more dependent on external finance. Also found is that, decomposing shifts in formalization rates into those within each firm size category and those between firm sizes, financial deepening significantly explains the former but not so much the latter. Some key policy implications are derived.
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Campoverde, Jose Israel, María Granda, and José Luis Saboin. The Impact of ICT Capital on Firm Output and Productivity: Evidence for Ecuadorian firms. Inter-American Development Bank, December 2022. http://dx.doi.org/10.18235/0004664.
We estimate the effects of ICT capital and ICT use on firm output and total factor productivity in Ecuador, using a capital augmented production function. We study heterogeneities across 2 dimensions: (i) economic sectors and (ii) firm characteristics (size, export orientation, age, location, technological intensity, and knowledge intensity). Using a novel and comprehensive data set of 27,489 Ecuadorian formal firms and using 2 identification strategies, we find positive and statistically significant effects of ICT capital and ICT use on output and TFP across economic sectors, controlling for firm characteristics. For robustness, we use four alternative measures of (i) ICT capital intensity and (ii) ICT use by the firm, finding, for the former, interesting industry differences on the effect of ICT capital and, for the latter, a positive effect of digital training on firms TFP.
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Busso, Matías, Santiago Levy Algazi, and Maria Victoria Fazio. (In)Formal and (Un)Productive: The Productivity Costs of Excessive Informality in Mexico. Inter-American Development Bank, August 2012. http://dx.doi.org/10.18235/0011401.
The laws that regulate relations between firms and workers in Mexico distinguish sharply between salaried and non-salaried workers, and they are at the root of the existence of informality. This paper provides a clear definition of informality, distinguishing it from illegality. Using Mexico's Economic Census, the paper shows that the majority of firms are informal but legal, that there are more small formal firms than large ones, and that some large firms are informal. It also shows that informality and illegality increased in the period 1998-2008. Using a simple model of monopolistic competition to measure the productivity losses due to distortions that misallocate resources, the paper finds that one peso of capital and labor allocated to formal and legal firms is worth 28 percent more than if allocated to illegal and informal firms, and 50 percent more than if allocated to legal and informal firms. The paper concludes arguing that the distortions in the labor market created by informality reduce total factor productivity.
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Bernal, Raquel, and Marcela Eslava. Switching from Payroll Taxes to Corporate Income Taxes. Inter-American Development Bank, April 2017. http://dx.doi.org/10.18235/0009369.
The Colombian 2012 tax reform reduced payroll taxes and employer contributions to health insurance by 13.5%, while also increasing corporate income taxes, and leaving untouched the benefits to workers financed through these taxes. Shifting taxation from formal employment to other business activities is a policy recipe under heated discussion in Latin America. In this context, the reform offers an ideal laboratory to study empirically the potential distortions against formal employment associated with payroll taxes in contrast to other taxes to firms. Using monthly firm-level data on all formal employment in the country, and a difference-in-difference approach that takes advantage of the fact that a few sectors were exempt from the 2012 tax reform, we analyze the impact of the reform on employment and wages. We find a positive average effect of 4.3% on employment and of 2.7% on average firm wage, for the average firm. The employment effect is identified only for micro and small firms, while we do not find a significant employment effect for medium and large firms, where the bulk of the employment is concentrated. According to these estimates, between January and May of 2015 about 145K new jobs were created by virtue of the reform. Though our findings on employment are less robust than those on wages, they are generally supportive of efforts to reduce payroll taxes, which are still high in the country. Since the apparent lack of effect for medium and large employers may be due to these firms being more sensitive to the increase in corporate taxation that financed the reduction in payroll taxes, our results also raise concerns about this particular way of financing the reform, especially formedium and large firms, which according to our data represent 70% of formal employment.
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Parra Torrado, Mónica, and María Angélica Arbeláez. Innovation, R&D Investment and Productivity in Colombian Firms. Inter-American Development Bank, April 2011. http://dx.doi.org/10.18235/0011194.
This paper attempts to establish a formal relationship between innovation and productivity using Colombian firm-level data. It is found that the production of goods and services new to the firm and to the domestic market enhances firms' sales per worker, and innovation that results in introducing new goods and services to the international market boosts both sales and Total Factor Productivity (TFP). Innovation in processes likewise improves firms' productivity and sales. Finally, innovation in marketing and management increases sales per worker and enhances TFP when investment is made in Research and Development. The paper also studies the factors behind firms' decision to invest in innovation, the intensity of such investment and the returns to investment in innovation.
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Bobić, Vida, Lucia Delgado, María Paula Gerardino, Michael Hennessey, and José Martinez-Carrasco. The Impact of the One-Stop Shop for Business Registration in the Dominican Republic. Inter-American Development Bank, August 2023. http://dx.doi.org/10.18235/0005089.
Digital one-stop shops for firm registration can significantly reduce costs and increase access to information for firms entering the formal sector. This paper examines the impact of a nationwide program with a one-stop registration shop and lower registration fees. In addition to analyzing its impact on the number of firms registering in the formal sector, this study explores how the program reshapes the labor market for women and men. The empirical setting, the Dominican Republic, is characterized by high levels of firm and labor informality. The government launched the digital one-stop shop called Formalízate in 2013. To analyze its impact, this paper takes advantage of the sequential rollout of the program across provinces in the country. Results show that the launch of the program in a province is associated with a greater number of micro firms entering the formal market. Interestingly, these firms are concentrated in sectors in which informality was high prior to rollout of the program, especially the commerce and tourism sector. In addition, the results show that women's participation in the labor forced is impacted by the program, but men's participation is not. More specifically, the presence of Formalízate increased women's participation in the labor market as self-employed entrepreneurs.
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Yimam, Seid, Fissha Asmare, and Mick Moore. Does Competition from the Informal Sector Reduce Tax Compliance in the Formal Sector? Evidence from Ethiopia. Institute of Development Studies, July 2023. http://dx.doi.org/10.19088/ictd.2023.023.
It is widely believed that the existence of ‘informal sector’ enterprises that visibly do not pay direct taxes reduces the willingness of owners of formal, tax-registered enterprises to pay their own taxes. We call this the adverse evasion spillover hypothesis. It is for several reasons hard to test this hypothesis, especially in this most general form. We test a more focused version, with two components. One is that the levels of tax compliance of formal firms are reduced when those firms perceive that they are adversely affected by direct economic competition from informal enterprises. The other is that these effects are especially marked for smaller formal sector firms. Two particular procedures enabled us to collect the data needed to test these hypotheses in a satisfactory way.
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Santos, Cezar. Labor Market Regulation and Informality. Inter-American Development Bank, March 2023. http://dx.doi.org/10.18235/0004809.
Developing countries are characterized by a high share of informal workers and several types of labor market regulation. We study the effects of the enforcement of this type of regulation on firm dynamics in Brazil, using different linked administrative data sets. Using a difference-in-differences design, we show that firms caught with informal workers experience a slowdown in their growth rates that last several years. Informal workers are present in firms of all sizes. Formal and informal workers exhibit almost identical observable characteristics.
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Luduvice, André Victor D., Tomás R. Martinez, and Alexandre B. Sollaci. Minimum Wage, Business Dynamism, and the Life Cycle of Firms. Inter-American Development Bank, March 2024. http://dx.doi.org/10.18235/0012849.
This paper studies the effects of the minimum wage on the life cycle of firms. We first build a tractable model where heterogeneous firms have labor market power, invest in innovation, and choose formal or informal sectors. The model predicts that a minimum wage hike not only shrinks young and low-productivity firms but also lowers incentives to innovate, resulting in lower life cycle growth. We then test the predictions of the model using Brazilian administrative and census data leveraging the variation in exposure across establishments and municipalities to the large increase in the minimum wage between 1999 and 2010. At the establishment level, an increase in the minimum wage: i) decreases the growth rates of small and young establishments and ii) increases the growth rates of old and large establishments. When analyzing exposed municipalities, we observe an increase in the earnings of workers in both the formal and informal sectors, as well as informal employment. Our findings suggest that the minimum wage is a possible explanation for the decline in the importance of young establishments and business dynamism in Brazil.
