The firm. Techno-organizational changes, industrial relations and performances. An enquiry on Reggio Emilia local industrial system

It is not unknown that the evolution of firm theories has been developed along a path paved by an increasing awareness of the organizational structure importance. From the early “neoclassical” conceptualizations that intended the firm as a rational actor whose aim is to produce that amount of output, given the inputs at its disposal and in accordance to technological or environmental constraints, which maximizes the revenue (see Boulding, 1942 for a past mid century state of the art discussion) to the knowledge based theory of the firm (Nonaka & Takeuchi, 1995; Nonaka & Toyama, 2005), which recognizes in the firm a knnowledge creating entity, with specific organizational capabilities (Teece, 1996; Teece & Pisano, 1998) that allow to sustaine competitive advantages. Tracing back a map of the theory of the firm evolution, taking into account the several perspectives adopted in the history of thought, would take the length of many books. Because of that a more fruitful strategy is circumscribing the focus of the description of the literature evolution to one flow connected to a crucial question about the nature of firm’s behaviour and about the determinants of competitive advantages. In so doing I adopt a perspective that allows me to consider the organizational structure of the firm as an element according to which the different theories can be discriminated. The approach adopted starts by considering the drawbacks of the standard neoclassical theory of the firm. Discussing the most influential theoretical approaches I end up with a close examination of the knowledge based perspective of the firm. Within this perspective the firm is considered as a knowledge creating entity that produce and mange knowledge (Nonaka, Toyama, & Nagata, 2000; Nonaka & Toyama, 2005). In a knowledge intensive organization, knowledge is clearly embedded for the most part in the human capital of the individuals that compose such an organization. In a knowledge based organization, the management, in order to cope with knowledge intensive productions, ought to develop and accumulate capabilities that shape the organizational forms in a way that relies on “cross-functional processes, extensive delayering and empowerment” (Foss 2005, p.12). This mechanism contributes to determine the absorptive capacity of the firm towards specific technologies and, in so doing, it also shape the technological trajectories along which the firm moves. After having recognized the growing importance of the firm’s organizational structure in the theoretical literature concerning the firm theory, the subsequent point of the analysis is that of providing an overview of the changes that have been occurred at micro level to the firm’s organization of production. The economic actors have to deal with challenges posed by processes of internationalisation and globalization, increased and increasing competitive pressure of less developed countries on low value added production activities, changes in technologies and increased environmental turbulence and volatility. As a consequence, it has been widely recognized that the main organizational models of production that fitted well in the 20th century are now partially inadequate and processes aiming to reorganize production activities have been widespread across several economies in recent years. Recently, the emergence of a “new” form of production organization has been proposed both by scholars, practitioners and institutions: the most prominent characteristic of such a model is its recognition of the importance of employees commitment and involvement. As a consequence it is characterized by a strong accent on the human resource management and on those practices that aim to widen the autonomy and responsibility of the workers as well as increasing their commitment to the organization (Osterman, 1994; 2000; Lynch, 2007). This “model” of production organization is by many defined as High Performance Work System (HPWS). Despite the increasing diffusion of workplace practices that may be inscribed within the concept of HPWS in western countries’ companies, it is an hazard, to some extent, to speak about the emergence of a “new organizational paradigm”. The discussion about organizational changes and the diffusion of HPWP the focus cannot abstract from a discussion about the industrial relations systems, with a particular accent on the employment relationships, because of their relevance, in the same way as production organization, in determining two major outcomes of the firm: innovation and economic performances. The argument is treated starting from the issue of the Social Dialogue at macro level, both in an European perspective and Italian perspective. The model of interaction between the social parties has repercussions, at micro level, on the employment relationships, that is to say on the relations between union delegates and management or workers and management. Finding economic and social policies capable of sustaining growth and employment within a knowledge based scenario is likely to constitute the major challenge for the next generation of social pacts, which are the main social dialogue outcomes. As Acocella and Leoni (2007) put forward the social pacts may constitute an instrument to trade wage moderation for high intensity in ICT, organizational and human capital investments. Empirical evidence, especially focused on the micro level, about the positive relation between economic growth and new organizational designs coupled with ICT adoption and non adversarial industrial relations is growing. Partnership among social parties may become an instrument to enhance firm competitiveness. The outcome of the discussion is the integration of organizational changes and industrial relations elements within a unified framework: the HPWS. Such a choice may help in disentangling the potential existence of complementarities between these two aspects of the firm internal structure on economic and innovative performance. With the third chapter starts the more original part of the thesis. The data utilized in order to disentangle the relations between HPWS practices, innovation and economic performance refer to the manufacturing firms of the Reggio Emilia province with more than 50 employees. The data have been collected through face to face interviews both to management (199 respondents) and to union representatives (181 respondents). Coupled with the cross section datasets a further data source is constituted by longitudinal balance sheets (1994-2004). Collecting reliable data that in turn provide reliable results needs always a great effort to which are connected uncertain results. Data at micro level are often subjected to a trade off: the wider is the geographical context to which the population surveyed belong the lesser is the amount of information usually collected (low level of resolution); the narrower is the focus on specific geographical context, the higher is the amount of information usually collected (high level of resolution). For the Italian case the evidence about the diffusion of HPWP and their effects on firm performances is still scanty and usually limited to local level studies (Cristini, et al., 2003). The thesis is also devoted to the deepening of an argument of particular interest: the existence of complementarities between the HPWS practices. It has been widely shown by empirical evidence that when HPWP are adopted in bundles they are more likely to impact on firm’s performances than when adopted in isolation (Ichniowski, Prennushi, Shaw, 1997). Is it true also for the local production system of Reggio Emilia? The empirical analysis has the precise aim of providing evidence on the relations between the HPWS dimensions and the innovative and economic performances of the firm. As far as the first line of analysis is concerned it must to be stressed the fundamental role that innovation plays in the economy (Geroski & Machin, 1993; Stoneman & Kwoon 1994, 1996; OECD, 2005; EC, 2002). On this point the evidence goes from the traditional innovations, usually approximated by R&D investment expenditure or number of patents, to the introduction and adoption of ICT, in the recent years (Brynjolfsson & Hitt, 2000). If innovation is important then it is critical to analyse its determinants. In this work it is hypothesised that organizational changes and firm level industrial relations/employment relations aspects that can be put under the heading of HPWS, influence the propensity to innovate in product, process and quality of the firm. The general argument may goes as follow: changes in production management and work organization reconfigure the absorptive capacity of the firm towards specific technologies and, in so doing, they shape the technological trajectories along which the firm moves; cooperative industrial relations may lead to smother adoption of innovations, because not contrasted by unions. From the first empirical chapter emerges that the different types of innovations seem to respond in different ways to the HPWS variables. The underlying processes of product, process and quality innovations are likely to answer to different firm’s strategies and needs. Nevertheless, it is possible to extract some general results in terms of the most influencing HPWS factors on innovative performance. The main three aspects are training coverage, employees involvement and the diffusion of bonuses. These variables show persistent and significant relations with all the three innovation types. The same do the components having such variables at their inside. In sum the aspects of the HPWS influence the propensity to innovate of the firm. At the same time, emerges a quite neat (although not always strong) evidence of complementarities presence between HPWS practices. In terns of the complementarity issue it can be said that some specific complementarities exist. Training activities, when adopted and managed in bundles, are related to the propensity to innovate. Having a sound skill base may be an element that enhances the firm’s capacity to innovate. It may enhance both the capacity to absorbe exogenous innovation and the capacity to endogenously develop innovations. The presence and diffusion of bonuses and the employees involvement also spur innovative propensity. The former because of their incentive nature and the latter because direct workers participation may increase workers commitment to the organizationa and thus their willingness to support and suggest inovations. The other line of analysis provides results on the relation between HPWS and economic performances of the firm. There have been a bulk of international empirical studies on the relation between organizational changes and economic performance (Black & Lynch 2001; Zwick 2004; Janod & Saint-Martin 2004; Huselid 1995; Huselid & Becker 1996; Cappelli & Neumark 2001), while the works aiming to capture the relations between economic performance and unions or industrial relations aspects are quite scant (Addison & Belfield, 2001; Pencavel, 2003; Machin & Stewart, 1990; Addison, 2005). In the empirical analysis the integration of the two main areas of the HPWS represent a scarcely exploited approach in the panorama of both national and international empirical studies. As remarked by Addison “although most analysis of workers representation and employee involvement/high performance work practices have been conducted in isolation – while sometimes including the other as controls – research is beginning to consider their interactions” (Addison, 2005, p.407). The analysis conducted exploiting temporal lags between dependent and covariates, possibility given by the merger of cross section and panel data, provides evidence in favour of the existence of HPWS practices impact on firm’s economic performance, differently measured. Although it does not seem to emerge robust evidence on the existence of complementarities among HPWS aspects on performances there is evidence of a general positive influence of the single practices. The results are quite sensible to the time lags, inducing to hypothesize that time varying heterogeneity is an important factor in determining the impact of organizational changes on economic performance. The implications of the analysis can be of help both to management and local level policy makers. Although the results are not simply extendible to other local production systems it may be argued that for contexts similar to the Reggio Emilia province, characterized by the presence of small and medium enterprises organized in districts and by a deep rooted unionism, with strong supporting institutions, the results and the implications here obtained can also fit well. However, a hope for future researches on the subject treated in the present work is that of collecting good quality information over wider geographical areas, possibly at national level, and repeated in time. Only in this way it is possible to solve the Gordian knot about the linkages between innovation, performance, high performance work practices and industrial relations.

Intangible resources and organization capital: measurement and economic evaluation

Intangible resources have raised the interests of scholars from different research areas due to their importance as crucial factors for firm performance; yet, contributions to this field still lack a theoretical framework. This research analyses the state-of-the-art results reached in the literature concerning intangibles, their main features and evaluation problems and models. In search for a possible theoretical framework, the research draws a kind of indirect analysis of intangibles through the theories of the firm, their critic and developments. The heterodox approaches of the evolutionary theory and resource-based view are indicated as possible frameworks. Based on this theoretical analysis, organization capital (OC) is identified, for its features, as the most important intangible for firm performance. Empirical studies on the relationship intangibles-firm performance have been sporadic and have failed to reach firm conclusions with respect to OC; in the attempt to fill this gap, the effect of OC is tested on a large sample of European firms using the Compustat Global database. OC is proxied by capitalizing an income statement item (Selling, General and Administrative expenses) that includes expenses linked to information technology, business process design, reputation enhancement and employee training. This measure of OC is employed in a cross-sectional estimation of a firm level production function - modeled with different functional specifications (Cobb-Douglas and Translog) - that measures OC contribution to firm output and profitability. Results are robust and confirm the importance of OC for firm performance.

Valutazione delle politiche di sviluppo locale: una comparazione internazionale

Lo sviluppo locale rappresenta, non solo per gli economisti, un tema di analisi sempre più rilevante sia al livello istituzionale che al livello scientifico. La complessità degli aspetti inerenti lo sviluppo locale richiede il coinvolgimento di diverse discipline, in ambito economico, politico, sociale e ambientale e di tutti i livelli istituzionali. Parallelamente è cresciuta l’esigenza di processi valutativi coerenti e sistematici, basati su di un numero sempre maggiore di strumenti e metodologie di valutazione. Dall’orientamento della Commissione Europea emerge del resto con sempre maggiore evidenza il binomio fra politica di sviluppo locale e valutazione, che coinvolge i diversi livelli di governo. Il presente lavoro realizza un quadro delle politiche di sviluppo locale, partendo dal livello europeo fino ad arrivare al livello locale, ed una successiva analisi di metodologie e strumenti di valutazione consolidati e di frontiera. La considerazione della valutazione come strumento strategico per le politiche di sviluppo locale trova applicazione nella realizzazione di una analisi comparativa di due aree di montagna. Tali aree, identificate nell’Appennino Bolognese e nell’area montana della Contea di Brasov in Romania, pur collocate in paesi a diverso livello di sviluppo, risultano confrontabili, in termini di similitudini e criticità, al fine di trarre considerazioni di policy inerenti il disegno di adeguate politiche di riqualificazione, mettendo in luce l’importanza del processo valutativo e la necessità di contribuire a diffondere una vera e propria cultura della valutazione.

Rimesse e sviluppo locale nel sistema migratorio del Golfo Persico

The thesis concerns, from an economic and institutional point of view, the migration process in connection with development issues, focusing on the Middle East and North Africa region. Adopting a south-south perspective of migration flows, which is focusing on migration from the Maghreb and Mashreq towards the GCC, the research focuses on the linkage between migration and local development (LED), considering the economic implication that temporary migration flows (trough physical and human capital accumulation) have for the labour exporting countries of the region. Since south-south migration flows are both temporary and skilled, the research points out that return migrants from the GCC can have a significant impact for the growth of recipient countries, as they transfer capital through remittances on regular basis and, once back, they can use human capital acquired abroad to promote economic initiatives. Starting from the descriptive analysis on international migration flows (from an historical to a systemic point of view), and focusing on the patterns of people movements in the Gulf Migration System and on the role remittances have in the region as a strategy for both household survival and local development, the research considers the economics of migrant remittances from a micro and macro perspective and the main direct and indirect effects that remittances have on the local communities. The review of the economic literature on international remittances and on local development shows how migration is an alternative strategy of financing local economic development (LED) especially for low-middle income countries (among them the Maghreb countries). The linkage between return migration, remittances, human capital formation and the promotion of local development in the Egyptian case is the focus of the empirical investigation.

The gender wage gap in developing and transition countries

The aim of my dissertation is to study the gender wage gap with a specific focus on developing and transition countries. In the first chapter I present the main existing theories proposed to analyse the gender wage gap and I review the empirical literature on the gender wage gap in developing and transition countries and its main findings. Then, I discuss the overall empirical issues related to the estimation of the gender wage gap and the issues specific to developing and transition countries. The second chapter is an empirical analysis of the gender wage gap in a developing countries, the Union of Comoros, using data from the multidimensional household budget survey “Enquete integrale auprès des ménages” (EIM) run in 2004. The interest of my work is to provide a benchmark analysis for further studies on the situation of women in the Comorian labour market and to contribute to the literature on gender wage gap in Africa by making available more information on the dynamics and mechanism of the gender wage gap, given the limited interest on the topic in this area of the world. The third chapter is an applied analysis of the gender wage gap in a transition country, Poland, using data from the Labour Force Survey (LSF) collected for the years 1994 and 2004. I provide a detailed examination of how gender earning differentials have changed over the period starting from 1994 to a more advanced transition phase in 2004, when market elements have become much more important in the functioning of the Polish economy than in the earlier phase. The main contribution of my dissertation is the application of the econometrical methodology that I describe in the beginning of the second chapter. First, I run a preliminary OLS and quantile regression analysis to estimate and describe the raw and conditional wage gaps along the distribution. Second, I estimate quantile regressions separately for males and females, in order to allow for different rewards to characteristics. Third, I proceed to decompose the raw wage gap estimated at the mean through the Oaxaca-Blinder (1973) procedure. In the second chapter I run a two-steps Heckman procedure by estimating a model of participation in the labour market which shows a significant selection bias for females. Forth, I apply the Machado-Mata (2005) techniques to extend the decomposition analysis at all points of the distribution. In Poland I can also implement the Juhn, Murphy and Pierce (1991) decomposition over the period 1994-2004, to account for effects to the pay gap due to changes in overall wage dispersion beyond Oaxaca’s standard decomposition.

Population ageing, longevity and migration: an overlapping generations approach

The silent demographic revolution characterizing the main industrialized countries is an unavoidable factor which has major economic, social, cultural and psychological implications. This thesis studies the main consequences of population ageing and the connections with the phenomenon of migration, The theoretical analysis is developed using Overlapping Generations Models (OLG). The thesis is divided in the following four chapters: 1) “A Model for Determining Consumption and Social Assistance Demand in Uncertainty Conditions”, focuses on the relation between demographic impact and social insurance and proposes the institution of a non selfsufficiency fund for the elderly. 2) "Population Ageing, Longevity and Health", analyzes the effects of health investment on intertemporal individual behaviour and capital accumulation. 3) "Population Ageing and the Nursing Flow", studies the consequences of migration in the nursing sector. 4) "Quality of Multiculturalism and Minorities' Assimilation", focuses on the problem of assimilation and integration of minorities.

Essays on firm efficiency with imperfectly competitive input markets: an empirical analysis

In the thesis I exploit an empirical analysis on firm'’s productivity. I relate the efficiency at plant level with the input market features and I suggest an estimation technique for production function that takes into account firm'’s liquidity constraints. The main results are three. When I consider services as inputs for manufacturing firm’'s production process, I find that more competition in service sector affects positively plant’s productivity and export decision. Secondly liquidity constraints are important for the calculation of firm'’s productivity because they are a second source of firm's heterogeneity. Third liquidity constraints are important for firm'’s internationalization

Non-Linear Pricing in Imperfectly Competitive Markets

This thesis is dedicated to the analysis of non-linear pricing in oligopoly. Non-linear pricing is a fairly predominant practice in most real markets, mostly characterized by some amount of competition. The sophistication of pricing practices has increased in the latest decades due to the technological advances that have allowed companies to gather more and more data on consumers preferences. The first essay of the thesis highlights the main characteristics of oligopolistic non-linear pricing. Non-linear pricing is a special case of price discrimination. The theory of price discrimination has to be modified in presence of oligopoly: in particular, a crucial role is played by the competitive externality that implies that product differentiation is closely related to the possibility of discriminating. The essay reviews the theory of competitive non-linear pricing by starting from its foundations, mechanism design under common agency. The different approaches to model non-linear pricing are then reviewed. In particular, the difference between price and quantity competition is highlighted. Finally, the close link between non-linear pricing and the recent developments in the theory of vertical differentiation is explored. The second essay shows how the effects of non-linear pricing are determined by the relationship between the demand and the technological structure of the market. The chapter focuses on a model in which firms supply a homogeneous product in two different sizes. Information about consumers' reservation prices is incomplete and the production technology is characterized by size economies. The model provides insights on the size of the products that one finds in the market. Four equilibrium regions are identified depending on the relative intensity of size economies with respect to consumers' evaluation of the good. Regions for which the product is supplied in a single unit or in several different sizes or in only a very large one. Both the private and social desirability of non-linear pricing varies across different equilibrium regions. The third essay considers the broadband internet market. Non discriminatory issues seem the core of the recent debate on the opportunity or not of regulating the internet. One of the main questions posed is whether the telecom companies, owning the networks constituting the internet, should be allowed to offer quality-contingent contracts to content providers. The aim of this essay is to analyze the issue through a stylized two-sided market model of the web that highlights the effects of such a discrimination over quality, prices and participation to the internet of providers and final users. An overall welfare comparison is proposed, concluding that the final effects of regulation crucially depend on both the technology and preferences of agents.