scholarly journals The Flattening Firm and Product Market Competition: The Effect of Trade Liberalization on Corporate Hierarchies

2010 ◽  
Vol 2 (4) ◽  
pp. 105-127 ◽  
Author(s):  
Maria Guadalupe ◽  
Julie Wulf
Keyword(s):  
Organizational Structure ◽  
Trade Liberalization ◽  
Organizational Design ◽  
Natural Experiment ◽  
Causal Effect ◽  
Market Competition ◽  
Product Market ◽  
Product Market Competition ◽  
Division Managers

This paper establishes a causal effect of product market competition on various characteristics of organizational design. Using a unique panel dataset on firm hierarchies of large US firms (1986–1999) and a quasi-natural experiment (trade liberalization), we find that competition leads firms to flatten their hierarchies: firms reduce the number of positions between the CEO and division managers, and firms increase the number of positions reporting directly to the CEO. The results illustrate how firms redesign their organizational structure through a set of complementary choices in response to changes in their environment. We discuss several possible interpretations of these changes. (JEL D23, F13, G34, M12, M51)

scholarly journals Competition Policy and Exit Rates: Evidence from Switzerland

2005 ◽  
Vol 4 (1) ◽  
Author(s):  
Stefan Buehler ◽  
Christian Kaiser ◽  
Franz Jaeger
Keyword(s):  
Competition Policy ◽  
Natural Experiment ◽  
Market Competition ◽  
Product Market ◽  
Product Market Competition ◽  
Exporting Firms ◽  
Antitrust Legislation ◽  
Exit Probability ◽  
Exit Probabilities ◽  
The Impact

Abstract This paper provides evidence on the relation between the intensity of product-market competition and the probability of exit. We adopt a natural experiment approach to analyze the impact of a tightening of Swiss antitrust legislation on exit probabilities. Based on a sample of more than 68,000 firms from all major sectors of the Swiss economy, we find that the exit probability of non-exporting firms increased significantly, whereas the exit probability of exporting firms remained largely unaffected. Our results support the notion that there is a positive relationship between the intensity of product-market competition and the probability of exit.

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