Do innovative workplace practices foster mutual gains? Evidence from Croatia

There is abundant evidence that innovative work practices (IWPs) of various kinds, such as teams, quality control circles, no-layoff policies, job rotation, and employee ownership, have spread rapidly in developed market economies during the past thirty years or so. Between 1983 and 1993,Freeman, Kleiner, and Cheri (2000)report survey evidence that the number of nonmonetary incentive programs offered by firms increased by 500% in the United States. Similar trends appear to be at work in other countries including the United Kingdom, Japan (e.g.,Kato, 2000), Denmark (e.g.,Datta Gupta, & Eriksson, 2004), and Finland (e.g.,Kalmi & Kauhanen, 2008). Whereas the corresponding evidence for transition economies is much slimmer, the available evidence is also suggestive that such practices are limited though spreading.1Unsurprisingly, both theoretical and an empirical literature have appeared to examine the impact of IWPs on both business performance and employee outcomes. As different scholars from diverse fields in the broad area of industrial relations have applied varying approaches to explore several research questions, those literatures have grown rapidly. At the same time, while it is clear that analytical work of the kind is becoming commonplace for advanced economies, work that focuses on developing and transition economies is very slim. As it is important to determine whether findings for firms in advanced market economies carry over to other economies, the first contribution of this chapter is to extend the geographical coverage of the empirical literature. This we do by assembling and analyzing new survey data set for a large Croatian manufacturing firm with our chapter perhaps representing one of the first such investigations for a former communist economy.