Instrumental Variable Estimates of the Effect of Management Practices on Firm Performance in Korean Firms
- Authors
- Chang, J.; Kang, Y.
- Issue Date
- Mar-2019
- Publisher
- Springer New York LLC
- Keywords
- Instrumental variables; Management practices; Organizational change; Total factor productivity
- Citation
- Journal of Labor Research, v.40, no.1, pp.106 - 125
- Journal Title
- Journal of Labor Research
- Volume
- 40
- Number
- 1
- Start Page
- 106
- End Page
- 125
- URI
- http://scholarworks.bwise.kr/ssu/handle/2018.sw.ssu/30688
- DOI
- 10.1007/s12122-018-9273-z
- ISSN
- 0195-3613
- Abstract
- Policy makers as well as entrepreneurs pay much attention to the success of firms. This is because the performance of firms can promote directly and indirectly the economic growth in a country. For instance, after financial crisis in 1997, the Korean economy experienced the rapid recovery. It is recognized that the improvement of firm performance has played a crucial role in such recovery. We focus on the determinants of improving the Korean firm total factor productivity (TFP) because TFP can explain performance not explained by inputs a firm employs. This paper suggests management practices as one of crucial factors to improve firm TFP. For empirical analysis, we use an instrumental variable approach by using a set of four firm-level instrumental variables including motivations for organizational change, large-scale organizational change, empowerment, and IT investment during the past organizational change. The results of the instrumental variable estimation show that better management practice leads to a higher level of firm TFP, statistically significantly; whereas the effect of management practices is statistically insignificant in the ordinary least square estimation. © 2018, Springer Science+Business Media, LLC, part of Springer Nature.
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