Institutional constraints on organizations: The case of Spanish car dealerships

Benito Arruñada, Luis Vázquez and Giorgio Zanarone

Economics Working Papers from Department of Economics and Business, Universitat Pompeu Fabra

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 verticallyintegrated dealerships showed substantially lower labor productivity, higher labor costs and lower profitability than franchised ones. Despite these gaps in performance, no verticallyintegrated 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.

Keywords: Vertical integration; ownership; distribution; networks; franchising (search for similar items in EconPapers)
JEL-codes: D23 L14 L22 L81 (search for similar items in EconPapers)
Date: 1999-01, Revised 2007-06
New Economics Papers: this item is included in nep-eff
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
https://econ-papers.upf.edu/papers/348.pdf Whole Paper (application/pdf)

Related works:
Journal Article: Institutional constraints on organizations: the case of Spanish car dealerships (2009)
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:upf:upfgen:348

Access Statistics for this paper

More papers in Economics Working Papers from Department of Economics and Business, Universitat Pompeu Fabra
Bibliographic data for series maintained by ( this e-mail address is bad, please contact ).