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Study Reveals How Right-to-Work Laws Impact Store Openings

Newswise - WASHINGTON, DC, June 8, 2011 - A new study in the June issue of the American Sociological Review found evidence of how businesses engage in regulatory arbitrage and make decisions about where to open stores based on states' regulatory policies. The study explored various states' right-to-work (RTW) laws and Walmart store openings from 1998 through 2005. It discovered that Walmart was more likely to propose new stores in RTW states near the borders of non-RTW states, and to open those stores even in the face of protests, than the company was to do so on the borders in neighboring non-RTW states.

RTW laws prohibit unions and employers from entering agreements that make union membership a condition of employment. Twenty-two of 50 US states have variations of right-to-work laws. Under regulatory arbitrage, if regulatory polices do not suit business firms' interests, they will locate their operations in pro-business states, creating an incentive for other states to become pro-business.

"This is interesting because Walmart is not unionized," noted Professor Paul Ingram of Columbia Business School. "We take this as an indication that RTW states are perceived to have more business-friendly policies, and Walmart prefers to do business in these states."

The American Sociological Association (www.asanet.org), founded in 1905, is a non-profit membership association dedicated to serving sociologists in their work, advancing sociology as a science and profession, and promoting the contributions to and use of sociology by society. The American Sociological Review is the ASA's flagship journal.

Led by Dean Glenn Hubbard, the Russell L. Carson Professor of Finance and Economics, Columbia Business School is at the forefront of management education for a rapidly changing world. The school's cutting-edge curriculum bridges academic theory and practice, equipping students with an entrepreneurial mindset to recognize and capture opportunity in a competitive business environment. Beyond academic rigor and teaching excellence, the school offers programs that are designed to give students practical experience making decisions in real-world environments. The school offers MBA and Executive MBA (EMBA) degrees, as well as non-degree Executive Education programs. For more information, visit www.gsb.columbia.edu.

The research article described above is available by request for members of the media. For a copy of the full study, contact Daniel Fowler, ASA's Media Relations and Public Affairs Officer, at (202) 527-7885 or pubinfo@asanet.org.

For more information about the study, members of the media can also contact Sona Rai, Senior Media Relations Officer, Columbia Business School, at (212) 854 - 5955 or sr2763@columbia.edu.

Source: NewsWise