Israeli Firms Research Articles

CORPORATE GOVERNANCE IN AN EMERGING MARKET: THE CASE OF ISRAEL

Despite significant capital‐market reforms in the mid‐1980s, the Israeli government and banks continue to play an unusually dominant role in Israeli financial markets. Israeli banks operate as merchant banks and, through pyramid structures of ownership, control large segments of manufacturing, construction, insurance, and services. In addition, the banks dominate all facets of the capital market, including underwriting, brokerage, investment advice, and the management of mutual and provident funds.Because of this dominance by the banks, several important mechanisms of corporate governance are missing. There is no effective market for corporate control; institutional investors have little incentive to monitor corporate managers; and those managers in turn have little incentive to improve firm performance and increase shareholder value.To be sure, there has been an impressive wave of IPOs on the Tel Aviv Stock Exchange (TASE) in the 1990s. But those firms' stocks have substantially underperformed the market since going public, and many “higher‐quality” Israeli firms have chosen in recent years to list their securities on the NASDAQ and not at home. The main reason the most promising Israeli firms go public in the U.S. is because that is where U.S. and other foreign investors want to buy them; such investors want the assurances that come with the U.S. corporate governance system.

High Technology Firms and Metropolitan Locational Choice in Israel; A Look at the Determinants

This paper investigates the tendency of high technology firms in Israel to choose metropolitan locations. A series of hypotheses are presented that link this spatial behavior with the firms' life cycle characteristics, its' network context and technological characteristics. These hypotheses are then structured in a causal framework and the choice of metropolitan location is modeled as a discrete choice problem. Firm behavior is taken as utility-maximizing rather than profit-maximizing. Empirical results, based on a survey of over 160 Israel high technology firms are presented. These suggest that the choice of metropolitan location is often used to substitute for disadvantages that the firm experiences. For example, metropolitan location for new firms can mitigate the negative effects associated with a precarious market position; for firms with weak network structures, metropolitan location can substitute for this drawback. The public policy implications of these findings with respect to prospects for network-based regional development in Israel, are also discussed.

High Technology Firms and Metropolitan Locational Choice in Israel; A Look at the Determinants

This paper investigates the tendency of high technology firms in Israel to choose metropolitan locations. A series of hypotheses are presented that link this spatial behavior with the firms' life cycle characteristics, its' network context and technological characteristics. These hypotheses are then structured in a causal framework and the choice of metropolitan location is modeled as a discrete choice problem. Firm behavior is taken as utility-maximizing rather than profit-maximizing. Empirical results, based on a survey of over 160 Israel high technology firms are presented. These suggest that the choice of metropolitan location is often used to substitute for disadvantages that the firm experiences. For example, metropolitan location for new firms can mitigate the negative effects associated with a precarious market position; for firms with weak network structures, metropolitan location can substitute for this drawback. The public policy implications of these findings with respect to prospects for network-based regional development in Israel, are also discussed.

The Making of a High Technology Node ; Foreign Owned Companies in Israeli Industry

This paper conceptualizes the role of Israel's high technology sector as that of a node in a global production network. In such a system, the role of the individual node and its' centrality is measured by the volume of its' interactivity with other nodes. Each node can characterized by the intensity of the incoming and outgoing flows of information, investments and so on, that pass through it. Foreign investment is one indicator of the centrality of a node. In this node/network structure, much of the classic rationale for investing abroad (incentives, cheap inputs and even market penetration), is of limited validity. This paper attempts to empirically measure this node function. This is done at two spatial levels. At the global level, a case study of US semiconductor direct investment in Israel is presented. This looks at the local and non-local linkages in the production of leading-edge IC products in the mid 1980's. At the national level, a firm level analysis is presented of the locational behavior of foreign-owned companies in Israeli industry and its1 determinants. Using a unique data base - the Dun and Bradstreet file on foreign-owned firms in Israel - the spatial behavior of these firms is modeled. The results seems to indicate the importance of 'node-type' factors such as the centrality of small firms in R&D activity and labor force stability, rather than the standard determinants such as incentives, labor costs and infrastructure.

Minimal Adjustment Costs and the Optimal Choice of Inputs Under Time-of-Use Electricity Rates

In Time-of-Use(TOU) pricing schemes, utilities charge rates that depend on the time of day and the season of the year at which electricity is used. Estimates of the effects of TOU rates on business customers in the U.S. and Israel demonstrate that most firms do not appear to respond at all to newly introduced TOU rates, but those that do respond make substantial adjustments. In this paper we show that adjustment costs associated with changing the level of employment can explain the observed pattern of behavior in the U.S. and Israel. We apply our model to large industrial firms in Israel and show that it predicts their actual responses to TOU rates quite well.

Outsiders' Response to Europe 1992: Theoretical Considerations and Empirical Evidence

This paper examines the response to the creation of the European Union by firms located outside the European Community that seek to serve its markets. Analysis of some of the major steps taken by the European Community to complete the internal market shows that the relative competitive position of outsiders is expected to deteriorate, even if the concept of “Fortress Europe” is rejected by the Community. Outsider firms can neutralize some of the disadvantages they encounter by engaging in foreign direct investment in the European Community which transforms them, in some sense, into insiders. This paper outlines a model that distinguishes between the expected investment behavior of producers of different kinds of goods. Distinction is made between Heckscher-Ohlin goods (H-goods), characterized by publicly available technologies, and Schumpeter goods (S-goods), based on firm-specific knowledge. Analysis of recent foreign direct investment by Israeli firms in the European Community and in other parts of the world shows that patterns of actual flows by sector, by geographic region and over time, correspond to predictions derived from the model.

Recruitment and selection of workers in Israel: The question of disparate impact

Abstract Like employers elsewhere, Israeli firms rely on an extensive variety of mechanisms to recruit and select job applicants. Some of these recruitment sources such as word‐of‐mouth referrals, reliance on local employment exchanges, and newspaper advertisements limit information on job openings to Jewish workers, and/or discourage Arab workers who are citizens of Israel from applying. Where Israeli Arab workers do succeed in identifying and applying for job vacancies, their chances of employment are disproportionately impaired by intensive employer use of such selection factors as the personal interview, experience, residency, and army service requirements. Currently the Israeli legal system permits employers to use recruitment and selection criteria which, although neutral on their face, have a discriminatory effect on Arab workers. To provide equal employment opportunity for Israeli Arab workers, Israeli policy should challenge recruitment policies and techniques which reach only a limited segment o...

LOCATION OF HIGH TECHNOLOGY INDUSTRIES AND REGIONAL DEVELOPMENT – THE ISRAELI CASE

This paper reviews and empirically examines the effectiveness of the Israeli government's declared policy to induce the location of high technology industries in developing regions. The first section of the paper reviews the literature on high technology industry location. The second section presents the findings from the analyses of a sample of 53 high technology Israeli firms in regard to their critical locational determinants. The findings corroborate the results reported in other similar studies. High technology industries, primarily those engaged in research and development, appear to favor the large urban concentrations, where agglomeration economies, large pools of skilled workers and high quality educational and cultural facilities exist. High technology firms which choose to locate in peripheral regions engage primarily in production activities and employ larger proportions of unskilled and semi‐skilled labor. The average size of these firms is greater than their counterparts, firms located in and around urban concentrations.

Work commitment in relation to withdrawal intentions and union effectiveness

This article assesses how forms of work commitments (job, occupational, union, and organization commitment) are related to withdrawal intentions and union effectiveness. Using a matrix measurement approach for work commitment (WC), 129 white-collar employees from three private industrial firms in Israel were surveyed. The findings indicate that almost all of the outcome variables are affected by WC forms. When job satisfaction was included in the equations, it contributed to the explained variance mainly in the case of withdrawal intentions. The results are discussed in terms of their implications for future investigation into WC, and on the need for a new conceptual framework of the relationships among WC, job satisfaction, and work outcomes.

Human resource management in Israeli firms

This research deals with career planning and managing and is concentrated on the organizational point of view. The examination focuses on the role which organizational career planning and managing plays in increasing organizational effectiveness. The findings indicate the existence of connections between organizational characteristics and organizational outcomes, with organizational career planning and managing as a mediating variable. The outcomes consist of objective measures, management and environment perceptions and employees' attitudes towards the organization.

On the effectiveness of individual wage incentive plans in manufacturing firms

This study was designed to investigate individual wage incentive plans (IWIPs) in manufacturing industry. Two sets of hypotheses were formulated. The first dealt with certain characteristics, primarily organizational, that distinguish firms with IWIPs from those that did not introduce such plans. The second proposed certain correlates of the effectiveness of IWIPs. These hypotheses were tested in a random probability sample (n = 80) of manufacturing firms in Israel. In each firm, at least two management representatives were interviewed. The analyses were all conducted at the firm level. Firms with IWIPs (n = 60) were found to be larger and older relative to those without such plans. No difference was observed in the extent to which these two groups of firms used other types of wage incentives (e.g. group incentives). The second set of hypotheses was tested only in the subsample of firms with IWIPs. As expected, in this subsample a firm's labour productivity (mean level = 121 per cent) was closely related ...

High tech and productivity: Evidence from Israeli industrial firms

The main purpose of this study is to characterize and analyze high technology industrial firms. A technology index is constructed and used to classify firms. The largest concentration of hightech firms is Israel is found in electronics and transport equipment industries, and the lowest in textiles and clothing. High-tech firms appear to be more productive, more export-oriented, pay higher wages, and earn higher rates of return than low-tech firms. The fact that high-tech firms in Israel are export-oriented is shown to be consistent with the international trade theories of comparative advantage and strategic rent-seeking.

Human resources management and organizational effectiveness: High technology entrepreneurial startup firms in israel

AbstractHuman Resource (HR) researchers have a tendency to generalize their results and prescriptions across a wide range of organizations without regard to possible contingencies. This can be dangerous. This article demonstrates the nature of the difficulties that can arise in two ways. First, by comparing hypotheses concerning the relationships between HR policies and practices and firm performance derived from the high‐tech and entrepreneurial literatures, and highlighting the inconsistencies. Second, by testing the applicability of these hypotheses to a hybrid form of organization, namely, the high‐tech entrepreneurial startup firm. The results show some support for the high‐tech model, and more limited support for the entrepreneurial model, suggesting the need for more contingency‐based notions of HR strategy. Implications are drawn for both research and practice.

The Export Behavior of Small and Medium-Sized Israeli Manufacturers

Seventy-five small and medium-sized Israeli firms were surveyed with the aim of determining what factors discriminate between successful and less successful exporters. Success was defined by "stage of export development"; three stages were identified:"partially interested,""growing" and "successful." Using stage of development as a dependent variable (export behavior), the findings suggest that the ability to command the necessary resources for an export campaign, the expectation of export benefits and the perception of export risk are among the determinants of success.

The R&D performance through time of young, high-technology firms: Methodology and an illustration

This paper summarizes the pilot stage of a microeconomic study of the innovation performance through time of young, high-technology Israeli firms. It reports some results for a successful firm designing, producing and selling electronic instruments and systems. The paper begins by surveying some of the difficulties surrounding the collection and organization of data on R&D projects. One of them concerns the definition of the ‘Unit for Analysis’ - the R&D project. Three criteria are suggested for dividing the stream for innovative activities into R&D projects, and these are applied to group the tens of products, accessories and systems included in the analysis into nine projects. The paper subsequently defines a measure of “direct” project performance or profitability estimate - discounted operating profits per unit of fixed costs - and provides estimates based on R&D and sales data for the products of each project. The final sections analyze the variation of project profitability through time. The increasing profitability observed across generations of a product class is attributed to the adaptability of the firm to changes in the environment, particularly to the availability of new technology which requires the swift design and sale of more complex products. The qualitative history of the various projects suggests that this adaptability is due, to a large extent, to the skills, infrastructure and reputation of the firm accumulated from prior projects, i.e. that the “indirect” profitability of the latter is high. Some estimates of the indirect profitability of early projects are presented. A comparison of the spin-off mechanisms observed in the firm analyzed with those observed in firms of other industries is also undertaken.

The Impact of Inflation on the Profits of Listed Firms in Israel

The Impact of Inflation on the Profits of Listed Firms in Israel

Taxation of Small Firms in Israel

Taxation of Small Firms in Israel