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Title: The Effect of Adversity on Process Innovations
Authors: Dostie, Benoit
Jayaraman, Rajshri
Keywords: Process innovation
managerial incentives
efficiency
natural experiment
Issue Date: 2009-07
Series/Report no.: Cahiers du CIRPÉE;09-23
Abstract: This paper asks whether adversity spurs the introduction of process innovations and increases the use of managerial incentives by firms. Using a large panel data set of workplaces in Canada, our identification strategy relies on exogenous variation in adversity arising from increased border security along the 49th parallel following 9/11. Our longitudinal difference-in-differences estimates indicate that firms responded to adversity by introducing new or improved processes, but did not change their use of managerial incentives. These results suggest that the threat of bankruptcy may provide impetus for improving efficiency.
URI: https://depot.erudit.org/id/003087dd
Appears in Collections:Cahiers de recherche du CIRPÉE

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