2021
DOI: 10.3390/su13147864
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Labor Contracts, Wages and SME Failure

Abstract: Although employment protection and employee remuneration has been shown to affect many aspects of a firm’s performance, evidence of their ability to explain firm failure is very limited. This paper examines the effect of different types of labor contracts and wages on the probability of corporate failure between 2012 and 2019 using a sample of 29,596 Belgian SMEs. Using discrete time hazard regression models, we find that the use of contract types with lower employment protection and paying lower wages are sig… Show more

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Cited by 3 publications
(3 citation statements)
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“…Literature [13] mentions that improvements in the legal environment may better protect investors in specialized assets and provide them with stronger incentives to invest in specialization, thus contributing to an increase in the overall level of specialization in the economy and an increase in labor productivity. Literature [14] examines the impact of different types of labor contracts and wages on the probability of firm failure between 2012 and 2019 and finds that using contract types with lower employment protection and paying lower wages are significant predictors of failure. Literature [15] investigated that firms should develop organizational values and management processes oriented towards prudent management of resources, practice corporate thrift, and develop multi-synchronicity as core factors in fostering corporate citizenship behaviors.…”
Section: Introductionmentioning
confidence: 99%
“…Literature [13] mentions that improvements in the legal environment may better protect investors in specialized assets and provide them with stronger incentives to invest in specialization, thus contributing to an increase in the overall level of specialization in the economy and an increase in labor productivity. Literature [14] examines the impact of different types of labor contracts and wages on the probability of firm failure between 2012 and 2019 and finds that using contract types with lower employment protection and paying lower wages are significant predictors of failure. Literature [15] investigated that firms should develop organizational values and management processes oriented towards prudent management of resources, practice corporate thrift, and develop multi-synchronicity as core factors in fostering corporate citizenship behaviors.…”
Section: Introductionmentioning
confidence: 99%
“…Certain time agreements are better known as contracts or non-permanent work agreements (Oliskevych & Tokarchuk, 2018). Employment agreements can be used to provide legal protection to workers within the time limit of employment ( Dewaelheyns et al, 2021). The presence of a work agreement can avoid the company's arbitrariness in carrying out continuous work or permanent/permanent work (Maltseva et al, 2021).…”
Section: Introduction and Brief Literature Reviewmentioning
confidence: 99%
“…Employment or work reorganization experienced at the employee or organizational level affects the level of employee confidence. Reform and implementation of laws for companies and individuals cannot anticipate changes in job protection (Dewaelheyns et al, 2021). New labour laws that include additional or amended legal requirements sometimes come into effect, and these new laws can also pose challenges for companies (Zhuang & Yu, 2021).…”
Section: Introduction and Brief Literature Reviewmentioning
confidence: 99%