Time requirements for administrative activities; an investigation into firm size effects

Abstract

This paper examines the assumption that activity time is independent of firm size (measured by the number of employees). Existing theories on (dis)economies of scale and scope and wage differentials are unclear on what to expect. For relatively complex activities such as becoming familiar with information obligations or checking agreements and declarations, the activity time might be related to the number of employees. For activities such as receiving, copying and sending information and documents, no theoretical arguments have been identified that suggest a firm-size effect. For the empirical examination of the existence of a relationship between firm size and activity time, data is used that were gathered in two projects applying the MISTRAL approach. This results in a dataset with information on many different activities, with only a few observations for each activity. By using a relative measure for activity time, observations for different activities can be combined in the analysis. To this end, relative activity time is defined as the ratio between the measured activity time and the standardized activity time for a certain activity. The empirical results suggest that, within the examined policy areas, firm size has no noticeable relationship with activity times. First of all, there exists no significant difference in average relative activity time between firms of different size classes. There are also no significant correlations between these variables. Next, these results are confirmed by regression analysis, where relative activity time is estimated as a function of firm size and other variables that might be of influence on activity time (such as experience of employees, the presence of a specific department for administrative activities, and whether additional adaptations and/or computations are required for a specific activity). Relative activity time tends to be higher for activities that require additional adaptations, but is independent of the size of the firm.