Reassessing the Impact of High Performance Workplaces

Abstract

Die Discussion Papers dienen einer möglichst schnellen Verbreitung von neueren Forschungsarbeiten des ZEW. Die Beiträge liegen in alleiniger Verantwortung der Autoren und stellen nicht notwendigerweise die Meinung des ZEW dar.Discussion Papers are intended to make results of ZEW research promptly available to other economists in order to encourage discussion and suggestions for revisions. The authors are solely responsible for the contents which do not necessarily represent the opinion of the ZEW.Download this ZEW Discussion Paper from our ftp server:ftp://ftp.zew.de/pub/zew-docs/dp/dp0207.pdf Non-technical summaryInnovative personnel measures that increase involvement, qualification and motivation of (non-managerial) employees (so-called high performance workplaces or just HPW) were extolled as an efficient means to increase firm productivity. The theoretical literature further stresses the complementarities between these measures. In practice, it is however noticeable that some measures, such as profit sharing or employee share ownership have been adopted by a small minority of firms. Despite the supposed complementarities, only very few firms use the full set of measures or combinations of some measures. Some authors point to the fact that extensive organizational changes or incentive contracts may not necessarily provide the expected results, but may even impair employee satisfaction and hence firms' performance. Other reasons for the finding that the incidence of high performance workplaces is smaller than the theoretical literature suggests could be the high implementation costs, employee resistance against innovations and last but not least small and uncertain productivity effects.The empirical evidence on the productivity effects of HPW is not clear either. While a couple of papers find significant and durable positive effects of HPW on productivity, several studies are rather sceptical about the productivity impacts. The differences between the results may be due to measurement problems, limited and deliberately chosen samples of firms, and the fact that most studies analyse different sets of personnel measures. We show that unobserved heterogeneity among firms and endogeneity of the management practices may affect the conclusions substantially. While unobserved heterogeneity is corrected for in several studies, the endogeneity problem is ignored in most analyses. The vast majority of the empirical studies on the productivity effects of HPW refers to Anglo-Saxon countries, whereas the evidence for Germany is very scarce.The original contribution of our paper is that we simultaneously account for both unobserved heterogeneity and endogeneity using representative and very detailed establishment panel data for Germany from 1996 to 2000. We find that firms often introduce specific related bundles of individual HPW measures. One common set of measures includes the reduction of hierarchies and the introduction of team-work and independent work groups (denoted here as "organizational changes"). The other (some...

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Workers into Managers - Developing Leadership Competence of Production Unit Managers

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How to Limit Discrimination? Analyzing the Effects of Innovative Workplace Practices on Intra-Firm Gender Wage Gaps Using Linked Employer-Employee Data

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