Organizational behaviour and firm performance: A study of Italian retail industry

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Abstract

There is a growing consensus among scholars that the liberalization of shop opening hours increases revenues and creates jobs. While this is probably true, prior literature does not provide evidence on the risks of this kind of liberalization on the reduction of firm performance, and how firms in the retail industry manage the risk of underperformance. In fact, although theory establishes a direct link between increasing of shop opening hours with revenues and employment, it is challenging to rule out how firms react to this and if there are effects on firm performance. While several studies on firms’ strategic choices on opening hours have recently been released, no empirical studies provide evidence on firm performance following a change in the regulation of shop opening hours. The study contributes to the literature adding evidence on consequences on firm performance, an aspect generally not analysed by prior scholars in this field. We explore the effects of extended shopping hours on performance faced by firms operating in retail industries. To this purpose, we collected data about a large sample of limited liability companies in Italy, where a reform was issued in 2012 to boost the economy even through liberalization of shop opening hours. Using data of Italian firms operating in the retail industries, we find that reducing restrictions on shopping hours increases revenues and personnel costs. Interestingly, our model predicts that the deregulation of shopping hours involves firm lower performance.

Keywords: Retail Industry, Deregulation, Performance, Firm Behaviour, Employment

Authors’ individual contribution: The Author is responsible for all the contributions to the paper according to CRediT (Contributor Roles Taxonomy) standards.

Declaration of conflicting interests: The Author declares that there is no conflict of interest.

JEL Classification: J3, M1, M4

Received: 05.01.2021
Accepted: 24.02.2021
Published online: 26.02.2021

How to cite this paper: Savio, R. (2021). Organizational behaviour and firm performance: A study of Italian retail industry. Risk Governance and Control: Financial Markets & Institutions, 11(1), 49-60. https://doi.org/10.22495/rgcv11i1p4