Job Security and Product Market Competition

Esther Gal-Or ()

Journal of Economics & Management Strategy, 1992, vol. 1, issue 2, 313-37

Abstract: In the present paper, we relate the extent of job security offered to incumbent managers to the extent of competition among firms in the product market, where the extent of job security is measured by the probability that an incumbent manager continues to be employed by his current firm and the extent of competition is measured by the degree of differentiation between competing brands. We demonstrate that when competition between firms intensifies and "on-the-job training" is relatively more conducive to reducing the variable costs of production, firms tend to offer reduced (increased) job security to incumbent managers, provided that the degree of differentiation between competing products is sufficiently large (small), respectively. If "on-the-job training" is relatively more conducive to reducing the fixed costs of production, however, the previous result is reversed. Copyright 1992 by MIT Press.

Date: 1992
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