Flexible Production and Entry: Institutional, Technological, and Organizational Determinants

Autor: Sharon Belenzon, Andrea Patacconi, Victor Manuel Bennett
Rok vydání: 2019
Předmět:
Zdroj: Strategy Science. 4:193-216
ISSN: 2333-2077
2333-2050
Popis: Academics, the media, and policy makers have all raised concerns about the implications of human workers being replaced by machines or software. Few have discussed the implications of the reverse: firms’ ability to replace capital with workers. We show that this flexibility can help new firms overcome uncertainty and increase entrepreneurial entry. We develop a simple real options model where permissive labor regulations allow firms to take advantage of capital–labor substitutability by replacing “rigid” capital with “flexible” labor. The model highlights institutional, technological, and organizational preconditions to using this flexibility. Using a large and comprehensive data set on entry by stand-alone firms and group affiliates, we provide evidence in support of the model.
Databáze: OpenAIRE