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Labor Unions and Firm Performance: The Case of Major Customers

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Title: Labor Unions and Firm Performance: The Case of Major Customers
Authors: Chen, Gary
Judd, J. Scott
Pandit, Shailendra
Keywords: Labor Unions
Firm Performance
Major Customers
Supply Chain Disruptions
Issue Date: 31 Aug 2017
Abstract: This study investigates the relation between supplier unionization and sales to major customers. We argue that major customers shift purchases away from suppliers that unionize to avoid potential supply chain disruptions and present findings consistent with this argument. Our results are robust to endogeneity concerns from difference-in-differences and regression discontinuity research designs. Further, higher switching costs mitigate the decline in sales to major customers. Finally, we document that subsequent to unionization, major customers begin purchasing from additional suppliers and consequently suppliers’ customer concentration declines. These findings suggest that employees’ efforts to unionize can adversely affect their firm’s relationships with their major customers.
Description: Inquiries about this document can be made to
Appears in Collections:12 Financial: Labor Unions / Debt Financing / Political Connections / Information Risk (FAR4)

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