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Reassessing the Productivity Impact of Employee Involvement and Financial Incentives

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Author Info
Elke Wolf
Thomas Zwick

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Abstract

Employee involvement and financial incentives are often praised as effective means for increasing firm productivity. We assess the productivity effects of these human resource practices by accounting for the main sources of estimation bias – unobserved heterogeneity and endogeneity – and by using representative establishment panel data for Germany. We show that employee involvement raises establishment productivity, but financial incentive systems do not. An important result is that accounting for unobserved heterogeneity and endogeneity reverses the conclusions on the estimated productivity effects obtained from simple cross-sectional regressions.

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Publisher Info
Article provided by LMU Munich School of Management in its journal Schmalenbach Business Review.

Volume (Year): 60 (2008)
Issue (Month): 2 (April)
Pages: 160-181
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Handle: RePEc:sbr:abstra:v:60:y:2008:i:2:p:160-181

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Related research
Keywords: High Performance Workplaces; Microeconometric Evaluation; Productivity;

Find related papers by JEL classification:
C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data
D23 - Microeconomics - - Production and Organizations - - - Organizational Behavior; Transaction Costs; Property Rights
D24 - Microeconomics - - Production and Organizations - - - Production; Capital and Total Factor Productivity; Capacity
M12 - Business Administration and Business Economics; Marketing; Accounting - - Business Administration - - - Personnel Management; Executive Compensation

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This page was last updated on 2010-1-2.

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