Firm Performance, Worker Commitment and Loyalty

Using matched employer-employee level data drawn from the UK Workplace and Employee Relations Survey, we explore the influence of worker commitment and loyalty on firm level labour productivity and financial performance. Our empirical findings suggest that worker commitment and loyalty enhance both labour productivity and financial performance at the firm level thereby highlighting a hitherto neglected conduit for improved firm performance. Using employee level data, we also explore the determinants of worker commitment and loyalty in order to ascertain how such attachments to the firm may be engendered. In general, our employee level analysis suggests that it is firm level characteristics (such as appraisal schemes, supervision, suspensions and redundancies) that influence attachments to the firm. Such findings suggest that firms may be able to exert some influence over the loyalty and commitment of its workforce, which, in turn, may affect firm performance

HR Practices and Customer Satisfaction: The Mediating Link of Commitment

This research examined organizational commitment as a mediator between HR practices and customer satisfaction of 35 job groups from 13 service firm business units. Both commitment level and consensus were predicted to influence customer satisfaction. Results found that commitment level mediated the relationship between HR practices and customer satisfaction

Walking the Talk: The Impact of High Commitment Values and Practices on Technology Start-ups

We examine the impact of high commitment work systems (HCWS) on high-technology start-ups. We differentiate two components of a HCWS: the human resource practices and the espoused values of the firm\u27s leadership and demonstrate that both are associated with an increased likelihood of IPO and a decreased likelihood of firm failure. Importantly, there are interactions between practices and values such that the benefit of one tends to amplify the other. Implications of these interactions for future research on high commitment work systems are discussed

Dynamic Duopoly with Intertemporal Capacity Constraints

We analyze strategic firm behavior in settings where the production stage is followed by several periods during which only sales take place. We analyze the dynamics of the market structure, the development of prices and sales over time, and the implications for profits and consumer surplus. Two specific settings are analyzed. In the first, a firm can commit up-front to a sales strategy that does not depend on the actual sales of its competitor. In this case there is a unique Nash equilibrium and price increases over time. In the second setting,there is no commitment and firms can adjust their sales in response to observed supply of their competitor in the previous period. It is shown that in this case a subgame perfect Nash equilibrium does not always exist. Equilibria can have surprising features. For some parameter constellations, price may decrease over time. It is also possible that the firm increases its pro�t by destroying some of its production. When firms have equal size, the equilibrium outcome is the same in both the commitment and the non-commitment setting. In general, the setting without commitment is bene�cial to the larger firm, whereas the setting with commitment leads to higher pro�ts for the smaller firm.mathematical economics;

Rent Seeking and Judicial Bias in Weak Legal Systems

We model rent seeking in litigation in weak legal systems as a Tulloch contest in which litigators may seek to influence the court directly through bribery as well as through the merit of the legal case that they bring. If the local firm has a competitive advantage in influencing the court then there is a strategic asymmetry between the players: the local firm regards expenditure by the foreign firm as a strategic complement, but the foreign firm regards local expenditure as a strategic substitute. This leads to different attitudes to commitment: the local firm would like to commit to a high level of effort to influence the court, the foreign firm to a low one. There is also an asymmetry in the commitment technology. It is not easy to commit to a low level of bribery, but it is feasible to commit to a high one: once a payment is made it cannot easily be recovered. We model the interaction as a two stage game: the players simultaneously commit to a minimum level of effort, then they play a simultaneous Tulloch influence game. We find a continuum of equilibria. An equilibrium selection argument selects a unique equilibrium that is outcome equivalent to the Stackelberg equilibrium of a simple Tulloch contest in which the local firm moves first. We thus find an argument for endogenous timing: the local firm moves first and secures a first mover advantage.judicial corruption, Tulloch contest, strategic asymmetry, commitment games, endogenous timing

Committing to transparency to resist corruption

This paper examines firms' incentives to commit to a transparent behavior (that precludes bribery) in a competitive procedure modeled as an asymmetric information beauty contest managed by a corrupt agent. In his evaluation of firms' offers for a public contract the agent has some discretion to favor a firm in exchange of a bribe. It is shown that a conditional commitment mechanism can eliminate corruption when it is pure extortion. Otherwise, when corruption can affect allocation and the market's profitability is small, a low quality firm may prefer not to commit. In that situation, the existence of a separating equilibrium in which only the high quality firms commit is guaranteed when commitment decisions are kept secret, but requires some conditions on firms' beliefs when commitment decisions are publicly announced. Generally, a unilateral commitment mechanism that rewards commitment with a bonus performs less well. A mechanism combining both conditional commitment and a bonus has the potential to fully eliminate corruption.commitment ; bribery ; competitive procedures ; transparency

Equilibrium Mode of Competition in Unionized Oligopolies: Do Unions Act as Commitment Devices to Cournot Outcomes?

In contrast with previous studies, we postulate that there is no ex-ante commitment over the type of contract (i.e., price or quantity) which a firm offers consumers. In the context of a unionized symmetric duopoly we instead argue that the mode of competition which in equilibrium emerges is the one that entails the most beneficial outcome for both the firm and its labour union, in each firm/union pair, given the choice of the rival pair. Our findings suggest that monopoly unions with risk-averse/neutral members may effectively act as commitment devices driving firms to the symmetric Cournot mode of competition.Oligopoly, Monopoly unions, Equilibrium mode of competition

How Must a Lawyer Be? A Response to Woolley and Wendel

In Legal Ethics and Moral Character, 23 GEO. J. LEGAL Ethics, Alice Woolley and W. Bradley Wendel argue that theories of legal ethics may be evaluated by examining the kind of person a lawyer must be to conform to the normative demands of the theory. In their words, theories of legal ethics musts answer questions not only of what a lawyer must do, but how a lawyer must be. Woolley and Wendel examine three theories of legal ethics—those of Charles Fried, William Simon, and myself—and conclude that the theories they discuss impose demands on agency that are not realistic, functional, or desirable. On behalf of Simon’s theory and my own—both of which are “high commitment” accounts of legal ethics—I respond to all three criticisms. Neither theory is unrealistic in the sense of requiring impossible things of lawyers. If the charge of unrealism means only that the theory sometimes requires lawyers to take difficult or uncomfortable stances, I argue that this counts as a legitimate criticism only if the theory’s prescriptions are doubtful on independent moral grounds. To the criticism that high-commitment ethical theories are not functional, I observe that Woolley and Wendel identify functionality with fitting comfortably into law firm culture. In response, I suggest that if ethical conduct places a lawyer at odds with law firm culture that should count as a criticism of the law firm rather than the lawyer’s theory of ethics; in any case, Woolley and Wendel have wrongly presupposed that the high-commitment lawyer is working in a setting of low-commitment lawyers rather than other high commitment lawyers. Finally, I argue that Woolley and Wendel are incorrect to believe that the character traits required for high-commitment legal practice are undesirable because they would lead lawyers to buck the system when they should not do so

Endogenous Price Commitment, Sticky and Leadership Pricing: Evidence from the Italian Petrol Market

This article studies dynamic pricing strategies in the Italian gasoline market before and after the market leader unilaterally announced its commitment to adopt a sticky-pricing policy. Using daily Italian firm level prices and weekly average EU prices, we show that the effect of the new policy was twofold. First, it facilitated price alignment and coordination on price changes. After the policy change, the observed pricing pattern shifted from cost-based to sticky-leadership pricing. Second, using a dif-in-dif estimation and a synthetic control group, we show that the causal effect of the new policy was to significantly increase prices through sticky-leadership pricing. Our paper highlights the importance of price-commitment by a large firm in order to sustain (tacit) collusion