Community Norms and Organizational Practices: The Legitimization of Wage Arrears in Russia, 1992-1999

John Earle, Andrew Spicer () and Klara Sabirianova Peter ()
Additional contact information
Andrew Spicer: University of California, Riverside

No 1006, IZA Discussion Papers from Institute of Labor Economics (IZA)

Abstract: What role do community norms play in the diffusion and persistence of new organizational practices? We explore this question through an examination of the widespread practice of wage arrears, the late and non-payment of wages, in Russia during the 1990s. Existing research on wage arrears most often examines this practice as a means of flexible wage adjustment under difficult economic conditions. We develop an alternative theory that explains wage arrears through their acceptance as a legitimate form of organizational behavior within local communities. Our empirical analysis finds some support for the neoclassical position that wage arrears reflect adjustment to negative shocks, but this perspective fails to account for a number of important facts, including a high level of arrears among apparently successful firms. In contrast, our results find strong support for the institutional perspective. The statistical analysis demonstrates powerful and robust community effects both in firm adoption of this practice, controlling for firm performance, liquidity, and fixed firm effects, and in workers’ reaction to arrears, through their quit (exit) and strike (voice) behavior.

Keywords: organizational practices; Russia; arrears; sociology; institutions; legitimacy; norms (search for similar items in EconPapers)
JEL-codes: A12 A14 B52 J30 L14 O17 P31 P37 (search for similar items in EconPapers)
Pages: 50 pages
Date: 2004-02
New Economics Papers: this item is included in nep-cbe and nep-cis
References: View references in EconPapers View complete reference list from CitEc
Citations:

Published - revised version published as 'The Normalization of Deviant Organizational Practices: Wage Arrears in Russia, 1991-98' in: Academy of Management Journal, 2010, 53 (2), 218 - 237

Downloads: (external link)
https://docs.iza.org/dp1006.pdf (application/pdf)

Related works:
Working Paper: Community Norms and Organizational Practices: The Legitimization of Wage Arrears in Russia, 1992-1999 (2004)
Working Paper: Community Norms and Organizational Practices: The Legitimization of Wage Arrears in Russia, 1992-1999 (2003)
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:iza:izadps:dp1006

Ordering information: This working paper can be ordered from
IZA, Margard Ody, P.O. Box 7240, D-53072 Bonn, Germany

Access Statistics for this paper

More papers in IZA Discussion Papers from Institute of Labor Economics (IZA) IZA, P.O. Box 7240, D-53072 Bonn, Germany. Contact information at EDIRC.
Bibliographic data for series maintained by Holger Hinte ().