Do foreign owners favour short-term profit? Evidence from Germany

Dill, Verena; Jirjahn, Uwe; Smith, Stephen C.

doi:10.1093/cje/beu072

Cited by 19 publications

(15 citation statements)

References 57 publications

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“…The first model, in which we report the results for our control variables, shows that perceived short-term performance pressures are higher in companies in which labor productivity declined over the past two years, in line with past research (Souder & Shaver, 2010). We also find some evidence for the idea that foreign-owned firms exhibit greater attention towards short-term performance measures (Dill et al, 2016). Finally, we find that the function of the respondent is also associated with the extent to which short-term performance pressures are perceived: CEOs tend to perceive less short-term pressures than other managers, while managers of subsidiaries face greater pressures and thus give greater attention to short-term performance measures.…”

Section: Resultssupporting

confidence: 82%

“…We also include a dummy variable indicating that a firm is foreign owned, as past research shows that foreign owners tend to focus more on the short-term (Dill, Jirjahn, & Smith, 2016), which is probably related to information disadvantages concerning the local environment (Bae, Stulz, & Tan, 2008;Kang & Kim, 2010). The dummy variable is equal to one when the respondent indicated that the organization is (a subsidiary of) an international company.…”

Section: Control Variablesmentioning

confidence: 99%

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Impacts of power dynamics and gray markets on supply chains

Shao

Zhu

2020

International Journal of Production Economics

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Debates about short-termism in business tend to center around the role of shareholder pressures and managers' incentives, while the role of organizational structure remains understudied. In our paper, we adopt an attention-based lens to elucidate the role of organizational structure in directing the attention of management towards pressures for short-term results at the expense of the long term. Specifically, we argue that greater scale of operations, hierarchy, bureaucracy, and workforce flexibility reduce slack resources available to senior managers and increase the complexity of information presented to them in different ways. As a result, the senior managers shift their attention to short-term pressures, which are more easily understood, at the expense of attention for long-term considerations. Analysis based on a survey of senior managers in 3221 private firms in the Netherlands provides support for our arguments.

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Section: Resultssupporting

confidence: 82%

Section: Control Variablesmentioning

confidence: 99%

Impacts of power dynamics and gray markets on supply chains

Shao

Zhu

2020

International Journal of Production Economics

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“…This tendency is reinforced if the foreign parent company is more volatile and its managers have little interest in long‐term cooperation with the works council; and indeed there is evidence that foreign owners tend to operate with a shorter time horizon than domestic owners (Dill et al. ). The threat to transfer production abroad can effectively weaken the power of the council to cooperatively build high‐trust relationships and to realize mutual gains for the establishment and the employees.…”

Section: The German Experience With Work Councilsmentioning

confidence: 99%

Nonunion Employee Representation: Theory and the German Experience With Mandated Works Councils

Jirjahn

Smith

2018

Ann Public Coop Econ

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Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. Any opinions expressed in this paper are those of the author(s) and not those of IZA. Research published in this series may include views on policy, but IZA takes no institutional policy positions. The IZA research network is committed to the IZA Guiding Principles of Research Integrity. The IZA Institute of Labor Economics is an independent economic research institute that conducts research in labor economics and offers evidence-based policy advice on labor market issues. Supported by the Deutsche Post Foundation, IZA runs the world's largest network of economists, whose research aims to provide answers to the global labor market challenges of our time. Our key objective is to build bridges between academic research, policymakers and society. IZA Discussion Papers often represent preliminary work and are circulated to encourage discussion. Citation of such a paper should account for its provisional character. A revised version may be available directly from the author. Terms of use: Documents in JEL Classification:J50, M50

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“…A series of international studies show that foreign ownership is associated with an increased probability of firm closure (Bernard and Sjoeholm, 2003; Goerg and Strobl, 2003; Harris, 2009; Wagner and Weche Geluebcke, 2012), higher levels of outsourcing (Girma and Goerg, 2004), and a faster adjustment of employment (Fabbri et al, 2003; Navaretti et al, 2003). There is even evidence that firms with foreign ownership face pressure to maximize short-term profit (Dill et al, 2014; Liljeblom and Vaihekoski, 2010). These findings indicate that foreign-owned firms have a shorter time horizon implying that management may have little interest in long-term cooperation with the works council.…”

Section: Background Discussionmentioning

confidence: 99%

Foreign owners and the quality of industrial relations in Germany

Dill

Jirjahn

2016

Economic and Industrial Democracy

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Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. Terms of use: Documents in EconStor may Foreign Owners and the Quality of Industrial Relations in GermanyVerena Dill and Uwe Jirjahn University of Trier, GermanyAbstract: German works councils provide a highly developed mechanism for codetermination designed to increase trust and cooperation within firms. This study examines whether or not the functioning of works councils depends on the type of ownership. Comparing domestic-and foreign-owned firms in Germany, we find that works councils and managers in foreign-owned firms are less likely to cooperate. The finding fits the notion that the activities of foreign multinational companies can involve tensions with the institutional framework of the host country.JEL: F23, J50, J53.

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Do foreign owners favour short-term profit? Evidence from Germany

Cited by 19 publications

References 57 publications

Impacts of power dynamics and gray markets on supply chains

Impacts of power dynamics and gray markets on supply chains

Nonunion Employee Representation: Theory and the German Experience With Mandated Works Councils

Foreign owners and the quality of industrial relations in Germany

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