Flexible production and entry: institutional, technological, and organizational determinants

Belenzon, Sharon, Bennett, Victor and Patacconi, Andrea (2019) Flexible production and entry: institutional, technological, and organizational determinants. Strategy Science, 4 (3). pp. 193-216. ISSN 2333-2077

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Abstract

Academics, the media, and policymakers have all raised concerns about the implications of human workers being replaced by machines or software. Few have discussed the implications of the reverse: firms’ ability to replace capital with workers. We show that this flexibility can help new firms overcome uncertainty and increase entrepreneurial entry. We develop a simple real options model where permissive labor regulations allow firms to take advantage of capital-labor substitutability by replacing ‘rigid’ capital with ‘flexible’ labor. The model highlights institutional, technological, and organizational preconditions to using this flexibility. Using a large and comprehensive dataset on entry by standalone firms and group affiliates, we provide evidence in support of the model.

Item Type:	Article
Faculty \ School:	Faculty of Social Sciences > Norwich Business School
UEA Research Groups:	Faculty of Social Sciences > Research Groups > Strategy and Entrepreneurship Faculty of Social Sciences > Research Groups > Responsible Business Regulation Group
Depositing User:	LivePure Connector
Date Deposited:	08 Jan 2020 04:21
Last Modified:	22 Oct 2022 05:39
URI:	https://ueaeprints.uea.ac.uk/id/eprint/73515
DOI:	10.1287/stsc.2019.0081

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