Labor Flexibility, Ownership and Firm Performance in China

Labor Flexibility, Ownership and Firm Performance in China Developed and developing countries alike areprivatizing or corporatizing state owned enterprises(SOEs), often citing the flexibility to hire and shedlabor as an advantage. However, there is littleempirical evidence on the extent to which thisimproves firm performance. This paper investigates thelinkage between labor flexibility, ownership and firmperformance using China as a case study. We find thatSOEs are much less able to adjust quickly to demandshocks than are other ownership forms and that thedegree of worker input into hiring and firingdecisions slows the ability of firms to adapt,negatively affecting firm performance. Review of Industrial Organization Springer Journals

Labor Flexibility, Ownership and Firm Performance in China

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Kluwer Academic Publishers
Copyright © 1998 by Kluwer Academic Publishers
Economics; Industrial Organization; Microeconomics
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