Do employee-friendly practices affect inventory leanness?

Hamdi Ben-Nasr and Mohamed Goaied

Applied Economics, 2025, vol. 57, issue 43, 6869-6883

Abstract: We examine the impact of employee-friendly practices (i.e. employment quality, training and development, and employee turnover) on inventory leanness. We use the Empirical Leanness Indicator (ELI) as a proxy for inventory leanness. We employ OLS estimates to estimate our regressions while controlling for country, industry, and year-fixed effects and clustering standard errors at the firm level. We use alternative approaches to address endogeneity issues, such as the instrumental variable and the Heckman two-stage approaches. Our results suggest that employee-friendly practices improve inventory leanness. Our findings suggest that firms should invest in employee-friendly practices. This policy implication is of paramount importance for firms with more employees working in roles involving inventory (as opposed to automation or non-labour methods) and in environments with high dynamism and complexity. We also suggest that reputation mediates the relationship between employee-friendly practices and inventory leanness.

Date: 2025
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DOI: 10.1080/00036846.2024.2386861

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