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Trust-based Work-time and Product Improvements: Evidence from Firm Level Data

  • Olivier N. Godart
  • Holger Görg
  • Aoife Hanley

We explore whether the introduction of trust based working hours is related to the subsequent innovation performance of firms. Employing a panel data set of over 5,000 German establishments, we implement a propensity score matching approach where we only consider firms that did not use trust based work contracts initially. Our results show that firms which adopt such contracts tend to be between 11 to 14 percent more likely to improve products. These results hold when we control for another form of flexible time work arrangements, namely working time accounts. Thus, the positive relationship between the adoption of trust based working hours and innovation seems to be driven by the degree of control and self-management over working days, rather than by merely allowing time flexibility

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Paper provided by Kiel Institute for the World Economy in its series Kiel Working Papers with number 1913.

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Length: 30 pages
Date of creation: Apr 2014
Date of revision:
Handle: RePEc:kie:kieliw:1913
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  1. Holger Görg & Michael Henry & Eric Strobl, 2008. "Grant Support and Exporting Activity," The Review of Economics and Statistics, MIT Press, vol. 90(1), pages 168-174, February.
  2. Nick Bloom & Raffaella Sadun & John Van Reenen, 2009. "The Organization of Firms Across Countries," CEP Discussion Papers dp0937, Centre for Economic Performance, LSE.
  3. Matthias Arnold, Jens & Javorcik, Beata S., 2009. "Gifted kids or pushy parents? Foreign direct investment and plant productivity in Indonesia," Journal of International Economics, Elsevier, vol. 79(1), pages 42-53, September.
  4. Spyros Arvanitis, 2005. "Modes of labor flexibility at firm level: Are there any implications for performance and innovation? Evidence for the Swiss economy," Industrial and Corporate Change, Oxford University Press, vol. 14(6), pages 993-1016, December.
  5. Howitt, Peter & Griffith, Rachel & Aghion, Philippe & Blundell, Richard & Bloom, Nick, 2005. "Competition and Innovation: An Inverted-U Relationship," Scholarly Articles 4481507, Harvard University Department of Economics.
  6. Guido W. Imbens, 2004. "Nonparametric Estimation of Average Treatment Effects Under Exogeneity: A Review," The Review of Economics and Statistics, MIT Press, vol. 86(1), pages 4-29, February.
  7. Dennis J. Snower & Alessio J. G. Brown & Christian Merkl, 2009. "Globalization and the Welfare State: A Review of Hans-Werner Sinn's Can Germany Be Saved?," Journal of Economic Literature, American Economic Association, vol. 47(1), pages 136-58, March.
  8. Nick Bloom & John Van Reenen, 2010. "Human resource management and productivity," LSE Research Online Documents on Economics 28730, London School of Economics and Political Science, LSE Library.
  9. repec:oup:qjecon:v:117:y:2002:i:1:p:339-376 is not listed on IDEAS
  10. repec:oup:restud:v:64:y:1997:i:4:p:605-54 is not listed on IDEAS
  11. T. Alexandra Beauregard & Lesley C. Henry, 2009. "Making the link between work-life balance practices and organizational performance," LSE Research Online Documents on Economics 25224, London School of Economics and Political Science, LSE Library.
  12. Haibo Zhou & Ronald Dekker & Alfred Kleinknecht, 2011. "Flexible labor and innovation performance: evidence from longitudinal firm-level data," Industrial and Corporate Change, Oxford University Press, vol. 20(3), pages 941-968, June.
  13. Nick Bloom & Tobias Kretschmer & John Van Reenen, 2011. "Are family-friendly workplace practices a valuable firm resource?," LSE Research Online Documents on Economics 33892, London School of Economics and Political Science, LSE Library.
  14. repec:oup:qjecon:v:120:y:2005:i:2:p:701-728 is not listed on IDEAS
  15. Michael Beckmann & Istvàn Hegedüs, 2011. "Trust-Based Working Time and Organizational Performance: Evidence from German Establishment-Level Panel Data," Working papers 2011/13, Faculty of Business and Economics - University of Basel.
  16. Wouter Dessein & Tano Santos, 2006. "Adaptive Organizations," Journal of Political Economy, University of Chicago Press, vol. 114(5), pages 956-985, October.
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