Business groups’ internal labour markets and SME labour productivity

Abstract Labour market regulation constrains small and medium-sized enterprises’ (SMEs) ability to minimize redundant labour. However, it is often neglected that many SMEs might circumvent these constraints by accessing a business group’s internal labour (ILM). In this study, we analyse whether with ILM access—i.e., an increasing number of sister group companies in the same subnational region-industry—enjoy productivity premium potential depends on bargaining power Because intra-group reallocation personnel involves substantial changes employment conditions, argue value access be reduced when workers high as they can oppose or demand significant compensation. Using panel 119,801 European during 2011–2019 (639,675 firm-year observations), find show relatively higher productivity. Further, our findings suggest those contexts associated lower power.