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International Differences in the Business Practices and Productivity of Firms$
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Richard B. Freeman and Kathryn L. Shaw

Print publication date: 2009

Print ISBN-13: 9780226261942

Published to Chicago Scholarship Online: February 2013

DOI: 10.7208/chicago/9780226261959.001.0001

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Within-firm Labor Productivity across Countries

Within-firm Labor Productivity across Countries

A Case Study

(p.137) 5 Within-firm Labor Productivity across Countries
International Differences in the Business Practices and Productivity of Firms

Francine Lafontaine

Jagadeesh Sivadasan

University of Chicago Press

This chapter presents a study that used weekly data from the outlets of an international retail food chain to analyze how labor productivity—defined as the number of items produced per working hour—varies with outlet characteristics and organizational factors such as experience levels of the workers, average order size, governance, execution, and compliance differences, and a cross-country index of the severity of labor regulations. The chapter found that execution quality has a negative effect on labor productivity as expected, outlet age beyond the first year of operation and increases in the number of experienced employees do not have a statistically significant effect on labor productivity, and larger order sizes improve labor productivity. The effect of governance form is ambiguous, and the choice of governance form appears to be correlated with unobserved country fixed effects. Finally, a high frequency of the data was used to develop an empirical strategy that would allow us to estimate the net impact of the labor law rigidity on the output at the outlet level

Keywords:   labor productivity, countries, cross cultural differences, food chain, organizational factors, outlet characteristics

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