Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/182016 
Year of Publication: 
2018
Series/Report no.: 
ZEW Discussion Papers No. 18-034
Publisher: 
Zentrum für Europäische Wirtschaftsforschung (ZEW), Mannheim
Abstract: 
In this study we use import penetration as a proxy for foreign competition in order to empirically analyze (1) the impact of foreign competition on managerial compensation, (2) differences in the impact between Germany and the U.S. and (3) whether the impact of import penetration is driven by implied efficiency effects. We use data from the manufacturing industry covering the period from 1984-2010 for Germany respectively 1992-2011 for the U.S. and apply system GMM in order to solve potential endogeneity problems. It turns out that foreign competition leads to an increase of average per capita executive compensation in both countries. The impact of foreign competition on payperformance sensitivity differs between the U.S. and Germany. A differentiation between imported intermediates (efficient sourcing strategy) and final inputs (competition) reveals that the impact of import penetration is not biased by efficiency effects.
Subjects: 
Foreign Competition
Outsourcing
Managerial Incentives
International Comparison
System GMM
JEL: 
F16
F14
G30
J33
Document Type: 
Working Paper

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