
	Schmalenbach Business Review

zfbf

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sbr is the international edition of the zfbf, the oldest and most prestigious German journal of business.

International changes and developments within the last 20 years have basically influenced the current thinking in business.

zfbf has been essential reading for those who want to keep abreast of the time.

Now the widely recognised and well-established journal, the zfbf, quarterly reviews both the academic understanding and the professional practice of business in english.

sbr January 2010

	Rent Seeking, Employment Security, and Works Councils: Theory and Evidence for Germany Michael Beckmann / Silvia Föhr / Matthias Kräkel We highlight two effects of a works council that seem contradictory: the rent-seeking effect, which claims that a works council is set up by the workers to extract large rents from their employer, and the employment-security effect, which asserts that a works council is founded if the firm is financially stressed and workers are afraid of being dismissed. Since firms realize large rents only in good financial situations, there is a strict trade-off between both effects. We derive both the rent-seeking and the employment-security effects theoretically, then test our theoretical approach with German firm-level data. Our econometric analysis clearly supports the rent-seeking effect, but not the employment-security effect. pp. 2 - 40

	Discussion of “Rent Seeking, Employment Security, and Works Councils: Theory and Evidence for Germany” Leonhard Knoll What is today’s best known management book? A quarter of a century ago, In Search of Excellence by Thomas Peters and Robert H. Waterman may have been the answer most frequently given. The authors identified corporate culture as a driving force of a company’s performance and presented what looked like empirical evidence for their approach. Only a few years later, many of Peters and Waterman’s favorite corporations had lost most of their luster. Both academics and practitioners began to wonder whether that causality needed to be turned on its head, since expensive components of corporate culture increasingly seemed to be a consequence of past success that often caused future corporate performance to deteriorate. pp. 41 - 44

	The Link between Job Security and Wages: A Comparison Between Germany and the UK Dominik Hübler / Olaf Hübler We examine the wage effects of perceived and objective job security in Germany and the UK, and find that job security influences the wage development in both countries. We find that British workers react slightly more strongly to perceived security signals, and that the objective job security effect is also stronger in the UK. We find that there is a secondary labor market in Germany characterized by temporary contracts and low pay, but only limited evidence of this division in the UK. Changes in perceived job security are a factor in determining the change in wages. pp. 45 - 67

	Discussion of “The Link between Job Security and Wages: A Comparison Between Germany and the UK” Oliver Landmann There can be no doubt that job security and wages are intimately linked. From the point of view of workers, they both are desirable attributes of a job. From the point of view of employers, they both are costly to provide. On the level of the economy at large, they are joint outcomes of supply- and demand-side influences, including productivity, structural change, and the institutional settings of the labor market. Hübler and Hübler (2009) have written a thorough paper in which they seek to establish the empirical relation between the two variables, using data from Germany and the UK. They mobilize a broad array of econometric tests and methods and devote great attention to measurement issues, particularly those that pertain to job security (or insecurity). For a wide range of objective and subjective measures of job security, and with both German and UK data, they find strong support for the idea that higher job security, by strengthening the bargaining position of workers, leads to higher wages (the “bargaining hypothesis”). Additional issues addressed in the paper include differences between Germany and the UK and asymmetries in the response of wages to positive and negative changes of the job security measure. pp. 68 - 72

	Profit Sharing and Employment Stability Lutz Bellmann / Iris Möller We investigate the effect of profit sharing on establishments’ hirings, layoffs, and quits. Our principal argument is that profit sharing increases wage flexibility and also aligns wages with a changing marginal revenue product. Because employment stability makes their human capital investment more profitable and increases labor productivity and morale, firms might choose to adopt profit-sharing schemes. Our empirical analysis is based on the IAB Establishment Panel. We estimate cross-section time-series regressions and apply state-of-the-art matching estimators that explicitly account for observed and unobserved heterogeneity. In the regressions we find a significantly positive effect of profit sharing on hirings and a significantly negative effect on layoffs, but the results obtained by the matching estimators are not significant. pp. 73 - 92

	Discussion of “Profit Sharing and Employment Stability” Heinz Rehkugler The article by Bellmann and Moeller offers an interesting and innovative approach to investigating how profit sharing in German companies affects employment stability, following the famous Weitzman (1984) share economy model. The paper is innovative, first, because the authors base their research on a broad data set (the IAB Establishment Panel), which comprises all German companies that have established a profit-sharing scheme; and second, because the authors’ empirical research is concentrated not only on cross-sectional time series regressions, but also uses matching methods. pp. 93 - 95

Preview of the next issue of zfbf
February 2010

The Sales Force as a Driver of Store Brand Market Success – An Empirical Investigation of Informal Incentives
Wieseke, Jan
Kraus, Florian
Rajab, Thomas

Recommendation Intention and Customer Value
Schmitt, Philipp
Meyer, Steffen
Skiera, Bernd

The Value of Tax Loss Carryforwards
Piehler, Maik
Schwetzler, Bernhard

Management of Vertical Innovation Networks in the Industrial Goods Sector – Results of an Empirical Investigation
Huber, Frank
Fischer, Bettina
Herrmann, Andreas

Preview of the next issue of zfbf
March 2010

Dysfunctions in R&D Coopetitions: Safeguards and Performance Impact
Walter, Sascha G.
Müller, Dirk
Walter, Achim

Internal Promotion versus External Recruitment of Topmanagers in Germany
Zimmermann, Stefan

Fringe Benefit Tax – An Attractive Option
Voßmerbäumer, Jan

Financing Decisions of Entrepreneurs in Small and Medium-sized Enterprises – Determinants of Debt Financing of German SMEs
Börner, Christoph
Grichnik, Dietmar
Reize, Frank

sbr January 2010

Rent Seeking, Employment Security, and Works Councils: Theory and Evidence for Germany

Discussion of “Rent Seeking, Employment Security, and Works Councils: Theory and Evidence for Germany”

The Link between Job Security and Wages: A Comparison Between Germany and the UK

Discussion of “The Link between Job Security and Wages: A Comparison Between Germany and the UK”

Profit Sharing and Employment Stability

Discussion of “Profit Sharing and Employment Stability”