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Reassessing the Productivity Impact of Employee Involvement and Financial Incentives

Elke Wolf and Thomas Zwick ()

Schmalenbach Business Review (sbr), 2008, vol. 60, issue 2, 160-181

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.

Keywords: High Performance Workplaces; Microeconometric Evaluation; Productivity (search for similar items in EconPapers)
JEL-codes: C23 D23 D24 M12 (search for similar items in EconPapers)
Date: 2008
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Handle: RePEc:sbr:abstra:v:60:y:2008:i:2:p:160-181