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The Effect of Enhancing Workers’ Employability on Small and Medium Enterprises: Evidence from Spain

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  • P. Arocena
  • Imanol Núñez
  • Mikel Villanueva

Abstract

In this paper, we analyse the effect of promoting workers’ employability on labour productivity. To this end, we adapt a simple efficiency-wage model that includes the employer’s decision on the provision of opportunities for enhancing workers’ employment prospects in a context of job insecurity. We show that (i) by facilitating workers’ employability, the firm increases its labour productivity; and (ii) the higher the job uncertainty the higher the productivity gains due to the increase in employability. One of the advantages of our model is that it is simply enough to allow us to formulate two testable hypotheses, namely (i) the increase of jobs’ potential to enhance workers’ employability results in higher level of workers’ effort, and (ii) the provision of employability is more profitable for small and medium enterprises (SMEs) than for large firms. More precisely, SMEs should obtain higher effort levels from employees by fostering workers’ employability than large firms. We provide some evidence supporting these hypotheses from a highly representative sample of Spanish manufacturing firms. Copyright Springer 2007

Suggested Citation

  • P. Arocena & Imanol Núñez & Mikel Villanueva, 2007. "The Effect of Enhancing Workers’ Employability on Small and Medium Enterprises: Evidence from Spain," Small Business Economics, Springer, vol. 29(1), pages 191-201, June.
    • Handle: RePEc:kap:sbusec:v:29:y:2007:i:1:p:191-201
    DOI: 10.1007/s11187-006-6712-7
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    Cited by:

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    2. Ritter-Hayashi, D. & Knoben, Joris & Vermeulen, P.A.M., 2018. "Success Belongs to the Flexible Firm : How Labor Flexibility Can Retain Firm Innovativeness in Times of Downsizing," Other publications TiSEM 749e1bae-6946-40cb-a5fc-e, Tilburg University, School of Economics and Management.
    3. Beldina Owalla & Cristian Gherhes & Tim Vorley & Chay Brooks, 2022. "Mapping SME productivity research: a systematic review of empirical evidence and future research agenda," Small Business Economics, Springer, vol. 58(3), pages 1285-1307, March.
    4. Joaquín Camps & Antonio Majocchi, 2010. "Learning Atmosphere and Ethical Behavior, Does It Make Sense?," Journal of Business Ethics, Springer, vol. 94(1), pages 129-147, June.
    5. Pascual Ivars, Jose Vicente & Comeche Martínez, Jose Manuel, 2015. "The effect of high performance work systems on small and medium size enterprises," Journal of Business Research, Elsevier, vol. 68(7), pages 1463-1465.

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    More about this item

    Keywords

    employability; worker effort; SMEs; Spain; J24; J31; M21;
    All these keywords.

    JEL classification:

    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • M21 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Economics - - - Business Economics

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