Organizational Hierarchies in the Slovenian Manufacturing Sector

Bonilla, Santiago and Polanec, Sašo (2020): Organizational Hierarchies in the Slovenian Manufacturing Sector. Forthcoming in:

Abstract

We study organizational hierarchies in a transition country. Using employer-employee matched data for a set of Slovenian manufacturing firms, we find strong support for the key hypotheses of the knowledge-based hierarchies proposed by Garicano (2000) and Caliendo and Rossi-Hansberg (2012). According to these theories, firms should organize in consecutively ordered layers with less hours and higher wages in higher layers. Following Caliendo, Monte, and Rossi-Hansberg (2015b), who were the first to test the predictions of knowledge-based theories of organizational hierarchies, we are able to directly compare our results to those obtained for French manufacturing firms. We find that Slovenian firms exhibit lower consistency with consecutive ordering of organizational layers, have on average fewer organizational layers and change them less frequently. We attribute lower organizational depth to the higher wage premia to workers in higher organizational layers, which is an implication of under-investment in human capital during the socialist era.

• Item Type: MPRA Paper
• Language: English
• Keywords: Organizational hierarchies, human capital, wages
• Subjects: D - Microeconomics > D2 - Production and Organizations > D21 - Firm Behavior: Theory; D - Microeconomics > D2 - Production and Organizations > D24 - Production ; Cost ; Capital ; Capital, Total Factor, and Multifactor Productivity ; Capacity; J - Labor and Demographic Economics > J2 - Demand and Supply of Labor > J24 - Human Capital ; Skills ; Occupational Choice ; Labor Productivity; J - Labor and Demographic Economics > J3 - Wages, Compensation, and Labor Costs > J31 - Wage Level and Structure ; Wage Differentials

References

T. Bartolj, A. Ahčan, A. Feldin, and S. Polanec. Evolution of private returns to tertiary education during transition: evidence from slovenia. Post-Communist Economies, 25(3): 407-424, 2013. P. Bastos, N. P. Monteiro, and O. R. Straume. Foreign acquisition and internal organization. Journal of International Economics, 114:143-163, 2018. N. Bloom, L. Garicano, R. Sadun, and J. Van Reenen. The distinct effects of information technology and communication technology on firm organization. Management Science, 60 (12):2859-2885, 2014. L. Caliendo and E. Rossi-Hansberg. The impact of trade on organization and productivity. The Quarterly Journal of Economics, 127(3):1393-1467, 2012. L. Caliendo, G. Mion, L. D. Opromolla, and E. Rossi-Hansberg. Productivity and organization in portuguese firms. Technical report, National Bureau of Economic Research, 2015a. L. Caliendo, F. Monte, and E. Rossi-Hansberg. The anatomy of french production hierarchies. Journal of Political Economy, 123(4):809{852, 2015b. L. Caliendo, F. Monte, and E. Rossi-Hansberg. Exporting and organizational change. Technical report, National Bureau of Economic Research, 2017. G. A. Calvo and S. Wellisz. Supervision, loss of control, and the optimum size of the firm. Journal of Political Economy, 86(5):943-952, 1978. C. Chen. Management quality and firm hierarchy in industry equilibrium. American Economic Journal: Microeconomics, 9(4):203-44, 2017. M. Cruz, M. Bussolo, and L. Iacovone. Organizing knowledge to compete: Impacts of capacity building programs on firm organization. Journal of International Economics, 111:1-20, 2018. C. Davidson, F. Heyman, S. Matusz, F. Sj�oholm, and S. C. Zhu. Global engagement and the occupational structure of firms. European Economic Review, 100:273-292, 2017. L. Garicano. Hierarchies and the organization of knowledge in production. Journal of Political Economy, 108(5):874-904, 2000. L. Garicano and E. Rossi-Hansberg. Organization and inequality in a knowledge economy. The Quarterly Journal of Economics, 121(4):1383{1435, 2006. L. Garicano and E. Rossi-Hansberg. Organizing growth. Journal of Economic Theory, 147(2): 623 656, 2012. M. Guadalupe and J. Wulf. The flattening firm and product market competition: The effect of trade liberalization on corporate hierarchies. American Economic Journal: Applied Economics, 2(4):105{27, 2010. A. Gumpert. The organization of knowledge in multinational firms. Journal of the European Economic Association, 16(6):1929-1976, 2018. R. Ke, J. Li, and M. Powell. Managing careers in organizations. Journal of Labor Economics, 36(1):197-252, 2018. K. J. Meagher. The impact of hierarchies on wages. Journal of Economic Behavior & Organization, 45(4):441-458, 2001. C. Shapiro and J. E. Stiglitz. Equilibrium unemployment as a worker discipline device. The American Economic Review, 74(3):433-444, 1984. G. Spanos. Organization and export performance. Economics Letters, 146:130-134, 2016. J. Tåg. Production hierarchies in sweden. Economics Letters, 121(2):210-213, 2013. J. Tåg, T. Åstebro, and P. Thompson. Hierarchies and entrepreneurship. European Economic Review, 89:129-147, 2016.