Skilled Workforces and Law-abiding Organizational Climates in Emerging Markets

Abstract

Scarcity of skilled workers in the emerging market context is considered a severe challenge facing organizations since it limits the quality and depth of their labour force. Despite the prevalence of the issue, and the wide-spread illegality that often characterizes emerging markets, the relationship between skilled workers at the organizational-level and law-abiding climate, a measure of an organization's adherence to the rule of law, has not been examined. In this paper, we investigate this relationship, hypothesizing that skilled workforce negatively affects law-abiding organizational climate, by reducing an organization's ability to adapt to its environment. Furthermore, we explain the impact that managerial ties have on this relationship, hypothesizing how ties with industry firms and ties with government influence a firm’s adherence to law-abiding norms. Hypotheses were tested with survey data collected from 150 Mexican companies.