Workers Production among Giant U. S Corporation
A. Firm- specific and industry-specific factors differ among Giant Corporation in their dependency and productivity on profit margin. Firm-specific human capital, a patent, trademark, or brand names are firm-specific factors which could attribute to the differences. Profit margins and a sustainable competitive advantage are industry-specific factors which could attribute to the differences. Profit margins are strongly influenced by industry related factors. Better worker training and education makes happy employees want to stay and contribute to the firm. Dissatisfied workers tend to be less productive and will result in high turnover. High turnover leads to lost of legacy knowledge of the firm and higher training costs for new employees. Differences in employee productivity will be affected by differences in total assets per employee, worker education and training, the effectiveness of incentive compensation plans, bonuses, and the amount of employee stock ownership.
B. I think profit per employee is more sensitive to firm-specific factors than industry specific factors based on the information provided on Table 7.5. Opportunity cost is an enormous factor in an employee’s level of productivity. This is especially true for Revenue per Employee which is directly related to the Profits per Employee. Since the calculated t statistic of 8.22 ≻2.764 we can reject the hypothesis of no relation with a 99% confidence level. There is only a 1% chance that sales will fall outside of that range
Profit/Emp. = $1,269.016 + 0.220 Ind. Profit/Emp. + 0.084 Rev./Emp. + 0.004 Ass/Emp. (0.17) (2.33) (8.22) (1.20)
R² = 89.7%; F statistic = 75.48
Since the regression model is linear, the marginal effect of each independent variable (Industry Profit per Employee; Revenue per Employee; Assets per Employee) on the