Premium
Does Ownership Matter? Empirical Evidence from the German Wine Industry
Author(s) -
Frick Bernd
Publication year - 2004
Publication title -
kyklos
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.766
H-Index - 58
eISSN - 1467-6435
pISSN - 0023-5962
DOI - 10.1111/j.0023-5962.2004.00258.x
Subject(s) - german , productivity , competition (biology) , wine , quality (philosophy) , business , appeal , production (economics) , empirical evidence , control (management) , capital (architecture) , industrial organization , economics , marketing , microeconomics , management , law , macroeconomics , ecology , philosophy , biology , political science , history , physics , archaeology , epistemology , optics
SUMMARY There is widespread belief among economists that the separation of ownership and control tends to reduce the performance of companies while competition tends to improve it. Irrespective of their theoretical appeal these assumptions have not been tested very often. Using an unbalanced panel of about 300 German wineries (compiled from four different editions of a highly respected and widely used wine guide), the paper shows that firms run by ‘managing directors’ produce higher quality and more expensive wines than otherwise identical owner‐managed firms. Since firms have identical production functions and due to the intense competition in the sector under consideration it is very likely that differences in human capital explain the observed productivity differences.