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  • The impact of foreign demand shocks on organizational hierarchies
    Bonilla, Santiago ; Polanec, Sašo
    According to the theory of knowledge-based hierarchies, a sufficiently large change in firm size should induce firms to change their organizational structure by adding or dropping organizational ... layers. In open economies one of the main determinants of firm size is the volume of foreign sales, and its changes may also trigger reorganizations. However, changes in foreign sales are not driven by foreign demand shocks alone, but also by firm characteristics like productivity and quality, which in theory confound both foreign sales and organizational structure. We construct a set of Bartik-type measures of exogenous foreign demand shocks, and test whether firms respond to these shocks by changing their hierarchical structure. For this purpose, we combine transaction-level trade data and employer-employee data for a set of Slovenian manufacturing firms that were engaged in exporting during the 1998-2011 period. While we find a positive relationship between changes in actual exports growth and number of organizational layers, we find no evidence that exogenous foreign demand shocks lead to adding or dropping organizational layers.
    Source: The world economy. - ISSN 0378-5920 (Vol. 47, iss. 4, Apr. 2024, str. 1741-1767)
    Type of material - article, component part ; adult, serious
    Publish date - 2024
    Language - english
    COBISS.SI-ID - 166763011
    DOI

source: The world economy. - ISSN 0378-5920 (Vol. 47, iss. 4, Apr. 2024, str. 1741-1767)
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