TY - JOUR
T1 - Strategic alliance, agency problems, and labor investment efficiency
AU - Chen, Wenrui
AU - Chen, Zhiwu
AU - Qin, Ling
AU - Shan, Yaowen
AU - Xu, Weihang
PY - 2024/10
Y1 - 2024/10
N2 - Inter-firm strategic alliances, which are formed to facilitate resource allocation and improve efficiency, may also inadvertently lead to labor investment inefficiencies due to increased agency conflicts and managerial opportunism. Using a sample of Chinese firms, we find that strategic alliances significantly reduce labor investment efficiency by 4.5%. The reduction in labor investment efficiency takes the form of reduced revenue-generating capacity per unit of labor, overhiring of labor, and increased labor cost stickiness. Consistent with the agency view, we find that the negative effects of strategic alliances are more pronounced under weak corporate governance and high information asymmetry among alliance partners. Overall, the results highlight the complex dynamics of inter-firm strategic alliances and provide practical insights for improving labor investment efficiency in the context of inter-firm cooperation.
AB - Inter-firm strategic alliances, which are formed to facilitate resource allocation and improve efficiency, may also inadvertently lead to labor investment inefficiencies due to increased agency conflicts and managerial opportunism. Using a sample of Chinese firms, we find that strategic alliances significantly reduce labor investment efficiency by 4.5%. The reduction in labor investment efficiency takes the form of reduced revenue-generating capacity per unit of labor, overhiring of labor, and increased labor cost stickiness. Consistent with the agency view, we find that the negative effects of strategic alliances are more pronounced under weak corporate governance and high information asymmetry among alliance partners. Overall, the results highlight the complex dynamics of inter-firm strategic alliances and provide practical insights for improving labor investment efficiency in the context of inter-firm cooperation.
KW - Agency problems
KW - Informed decision making
KW - Labor investment efficiency
KW - Strategic alliances
UR - http://www.scopus.com/inward/record.url?scp=85195660219&partnerID=8YFLogxK
U2 - 10.1016/j.econmod.2024.106809
DO - 10.1016/j.econmod.2024.106809
M3 - Article
AN - SCOPUS:85195660219
SN - 0264-9993
VL - 139
JO - Economic Modelling
JF - Economic Modelling
M1 - 106809
ER -