The Effect of Adversity on Process Innovations and Managerial Incentives

Benoit Dostie () and Rajshri Jayaraman ()
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Rajshri Jayaraman: European School of Management and Technology (ESMT)

No 4261, IZA Discussion Papers from Institute for the Study of Labor (IZA)

Abstract: This paper asks whether adversity spurs the introduction of process innovations and increases the use of managerial incentives by firms. Using a large panel data set of workplaces in Canada, our identification strategy relies on exogenous variation in adversity arising from increased border security along the 49th parallel following 9/11. Our longitudinal difference-in-differences estimates indicate that firms responded to adversity by introducing new or improved processes, but did not change their use of managerial incentives. These results suggest that the threat of bankruptcy may provide impetus for improving efficiency.

Keywords: process innovation; managerial incentives; efficiency; natural experiment (search for similar items in EconPapers)
JEL-codes: L20 O31 M52 J33 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-bec, nep-cse and nep-lab
Date: 2009-06
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Related works:
Working Paper: The Effect of Adversity on Process Innovations and Managerial Incentives (2009)
Working Paper: The Effect of Adversity on Process Innovations and Managerial Incentives (2009)
Working Paper: The Effect of Adversity on Process Innovations and Managerial Incentives (2009)
Working Paper: The Effect of Adversity on Process Innovations and Managerial Incentives (2009)
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