Institutional constraints on organizations: the case of Spanish car dealerships

Benito Arruñada, Luis Vázquez and Giorgio Zanarone
Additional contact information
Luis Vázquez: University of Salamanca, Salamanca, Spain, Postal: University of Salamanca, Salamanca, Spain
Giorgio Zanarone: Pompeu Fabra University, Barcelona, Spain, Postal: Pompeu Fabra University, Barcelona, Spain

Managerial and Decision Economics, 2009, vol. 30, issue 1, 15-26

Abstract: We study the effect of organizational choice and institutions on the performance of Spanish car dealerships. Using outlet-level data from 1994, we find that vertically integrated dealerships showed substantially lower labor productivity, higher labor costs and lower profitability than franchised ones. Despite these gaps in performance, no vertically integrated outlet was separated until 1994, yet the few outlets that were eventually separated systematically improved their performance. We argue that the conversion of integrated outlets into franchised ones involved significant transaction costs, due to an institutional environment favoring permanent, highly unionized employment relations. In line with this argument, we find that the observed separations occurred in distribution networks that underwent marked reductions in worker unionization rates, following the legalization of temporary labor contracts. Copyright © 2008 John Wiley & Sons, Ltd.

Date: 2009
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (7)

Downloads: (external link)
http://hdl.handle.net/10.1002/mde.1429 Link to full text; subscription required (text/html)

Related works:
Working Paper: Institutional constraints on organizations: The case of Spanish car dealerships (2007)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:wly:mgtdec:v:30:y:2009:i:1:p:15-26

DOI: 10.1002/mde.1429

Access Statistics for this article

Managerial and Decision Economics is currently edited by Antony Dnes

More articles in Managerial and Decision Economics from John Wiley & Sons, Ltd.
Bibliographic data for series maintained by Wiley Content Delivery ().