TY  - RPRT
        AU  - Earle, John S.
AU  - Spicer, Andrew
AU  - Peter, Klara Sabirianova
        TI  - Community Norms and Organizational Practices: The Legitimization of Wage Arrears in Russia, 1992-1999
        PY  - 2004/Feb/
        PB  - Institute of Labor Economics (IZA)
        CY  - Bonn
        T2  - IZA Discussion Paper
        IS  - 1006
        UR  - https://www.iza.org/index.php/publications/dp1006
        AB  - What role do community norms play in the diffusion and persistence of new organizational
practices? We explore this question through an examination of the widespread practice of
wage arrears, the late and non-payment of wages, in Russia during the 1990s. Existing
research on wage arrears most often examines this practice as a means of flexible wage
adjustment under difficult economic conditions. We develop an alternative theory that
explains wage arrears through their acceptance as a legitimate form of organizational
behavior within local communities. Our empirical analysis finds some support for the
neoclassical position that wage arrears reflect adjustment to negative shocks, but this
perspective fails to account for a number of important facts, including a high level of arrears
among apparently successful firms. In contrast, our results find strong support for the
institutional perspective. The statistical analysis demonstrates powerful and robust
community effects both in firm adoption of this practice, controlling for firm performance,
liquidity, and fixed firm effects, and in workers’ reaction to arrears, through their quit (exit) and
strike (voice) behavior.

        KW  - organizational practices
KW  - Russia
KW  - arrears
KW  - sociology
KW  - institutions
KW  - legitimacy
KW  - norms
        ER  -