Public utility obstacles and labor productivity growth: The moderating effect of national culture

Abstract

Operational challenges arising from public utility obstacles are widespread globally, leading to production disruptions, decreased sales, and escalated logistics costs, ultimately contributing to a decline in firm labor productivity growth. Despite the criticality of this issue, there is a scarcity of studies in the field of operations management that investigate factors capable of mitigating these adverse impacts. Taking power outages and transportation obstacles as pivotal examples, our study aims to examine whether national culture can moderate the impact of public utility obstacles on firm labor productivity growth. To achieve this objective, we conduct an empirical analysis using a multi-country dataset from the World Bank Enterprises Survey, which covers detailed firm-level information across 28 industries in 41 countries, with a total of 17,227 firm-year observations. Our findings indicate that the detrimental effects of power outages and transportation obstacles on firm labor productivity growth are contingent on various dimensions of national culture. Specifically, cultural power distance and uncertainty avoidance would amplify the negative impact of power outages, whereas long-term orientation would alleviate this impact. Meanwhile, individualism and masculinity can help mitigate the adverse effects of transportation obstacles. Our results provide valuable insights for managers.