Abstract
AbstractDoes founding family control affect labor cost stickiness? Theoretically, labor cost stickiness is a double‐sided sword: While it can be interpreted as long‐term commitment to employees, it increases operating leverage, reduces operating performance, and thus jeopardizes long‐term firm survival. Empirically, we find that—consistent with socioemotional wealth theory suggesting that founding family firms are more employee oriented—founding family firms exhibit greater labor costs stickiness. The pattern is more pronounced in industries with high labor turnover and high labor intensity. Furthermore, we find that abnormal high labor cost stickiness in family firms reduces profitability and non‐labor investments.
Talk to us
Join us for a 30 min session where you can share your feedback and ask us any queries you have
Schedule a callMore From: Industrial Relations: A Journal of Economy and Society
Disclaimer: All third-party content on this website/platform is and will remain the property of their respective owners and is provided on "as is" basis without any warranties, express or implied. Use of third-party content does not indicate any affiliation, sponsorship with or endorsement by them. Any references to third-party content is to identify the corresponding services and shall be considered fair use under The CopyrightLaw.
