Abstract

In this study, we examine the impact of relative pay (manager pay divided by average worker pay) on a firm's productivity. Using data from a major transitional economy, China, we find that relative pay is negatively associated with high productivity. Our results provide support for the view that workers are alienated when their incomes are far lower than that of top management and this leads to lower productivity. This effect is most pronounced in labor intensive firms.

Keyword

Productivity ;  Relative pay ;  Top management pay ;  Transitional economy

Abstract

This study investigates how heterogeneous firms choose their lenders when they raise external finance for Foreign Direct Investment (FDI) and how the choice of financing structure affects FDI activities. We establish an asymmetric information model to analyze why certain firms use private bank loans while others use public bonds to finance foreign production. The hidden information is the productivity shock to FDI. Banks are willing to monitor the risk of FDI, while bondholders are not; hence, banks act as a costly middleman that enables firms to avoid excessive risk. We show that firms’ productivity levels, the riskiness of FDI, and the relative costs of bank finance and bond finance are three key determinants of the firm’s financing choice. Countries with higher productivity, higher bank costs, or investment in less risky destinations, use more bond finance than bank finance. These results are supported by evidence from OECD countries.

Keyword

Bank finance ;  Bond finance ;  Foreign direct investment ;  Productivity ;  Risk

Abstract

Despite the increasing availability of computer-based information sources within organizations, employees "continue to rely on other people as important sources of information. However, relatively little is known about the relations among positive affect, personal information search, and related outcomes - especially in organizations. Using data from 276 service representatives in one organization we find that positive affect is positively related to the likelihood of searching for information through personal sources. Moreover, we find that the relations between the likelihood of searching for information via personal sources and work outcomes, such as productivity and job satisfaction, are moderated by positive affect. Specifically, we find that positive affect negatively moderates the relations between personal information search and productivity, but positively moderates the relations between personal information search and job satisfaction. As we will discuss, these findings not only contribute to the IT and organizational behavior literatures but also have significant implications for practitioners.

Keyword

Call center ;  Information search ;  Job satisfaction ;  Personal information source ;  Positive affect ;  Productivity

Abstract

Purpose – The purpose of this paper is to examine the relationships between foreign direct investment (FDI), wages and productivity in China. The direction of causality among these variables is also to be emphasized. Design/methodology/approach – The authors develop a system of equations and test the relationships based on a vector autoregressive regression (VAR) model and two‐step generalized method of moments (GMM)‐type estimation approach. They use a panel data set of China's provinces for a 20‐year time period, 1988‐2007, and also distinguish between the coastal and inland provinces. Findings – The result confirms the cheap labor argument for China, although this particularly true for inland provinces. In the coastal provinces, FDI inflow influences the wage rates upwards. FDI also has a positive effect on productivity, particularly in the coastal provinces, but does not act as a significant determinant of FDI. Research limitations/implications – Factors other than wage rates and labor productivity are also important determinants of FDI. This paper focuses on the interplay of these three variables, while assuming other factors constant. Practical implications – Cheap labor as an attraction of FDI is a short term policy. Improvements in productivity should be the focus both in the coastal and the inland provinces. A conducive business environment, a suitable education policy and incentives for greater R&D contribute toward improving labor productivity, which in turn attracts greater FDI inflow. Originality/value – The paper provides empirical evidence on the direction of causality between FDI inflow, wages rates and labor productivity in one system of equations.

Keyword

China ;  International investments ;  Pay structures ;  Productivity rate

Abstract

This paper examines international trade and foreign direct investment as channels for technology diffusion among industrialized countries. We find strong empirical support for capital goods trade as a channel for international technology diffusion and some evidence that multinational enterprises (outward FDI) transmit foreign technology back to the home country. We find no evidence that inward FDI is a significant channel for international technology diffusion among industrialized countries. Our results also show that technology diffuses in disembodied forms, with countries that are farther from the world technology frontier benefiting more.

Keyword

Capital goods ;  Distributive trade ;  Foreign direct investments ;  Information technology ;  International trade ;  Multinational corporations ;  Productivity ;  Statistical estimation ;  Statistical significance ;  Technology transfer