nep-hrm New Economics Papers
on Human Capital and Human Resource Management
Issue of 2014‒03‒15
fourteen papers chosen by
Tommaso Reggiani
University of Cologne

  1. Person-Organization Fit and Incentives: A Causal Test By Andersson, Ola; Huysentruyt, Marieke; Miettinen, Topi; Stephan, Ute
  2. Self-Managed Working Time and Employee Effort: Microeconometric Evidence By Michael Beckmann; Thomas Cornelissen
  3. Do Loan Officers’ Incentives Lead to Lax Lending Standards? By Sumit Agarwal; Itzhak Ben-David
  4. Human well-being and in-work benefits: A randomized controlled trial By Dorsett, Richard; Oswald, Andrew J.
  5. Institutional quality mediates the effect of human capital on economic performance By Adams-Kane, Jonathon; Lim, Jamus Jerome
  6. Overcoming Moral Hazard with Social Networks in the Worksplace: An Experimental Approach By Dhillon, Amrita; Peeters, Ronald; Muge Yukse, Ayse
  7. The Magic of the New: How Job Changes Affect Job Satisfaction By Adrian Chadi; Clemens Hetschko
  8. Optimal Price-Setting in Pay for Performance Schemes in Health Care By Søren Rud Kristensen; Luigi Siciliani; Matt Sutton
  9. What factors predict how public sector projects perform ? a review of the World Bank's public sector management portfolio By Blum, Jurgen Rene
  10. Legitimacy, Communication and Leadership in the Turnaround Game By Jordi Brandts; David J. Cooper; Roberto A. Weber
  11. Institutions, Human Capital and Development By Daron Acemoglu; Francisco A. Gallego; James A. Robinson
  12. Academic peer effects with different group assignment policies : residential tracking versus random assignment By Garlick, Robert
  13. Strategy in practice: a quantitative approach to target setting By Fafaliou, Irene; Zervopoulos, Panagiotis
  14. Corporate Governance, Principal-Principal Agency Conflicts, and Disclosure By Chiraz Ben Ali

  1. By: Andersson, Ola (Research Institute of Industrial Economics (IFN)); Huysentruyt, Marieke (London School of Economics); Miettinen, Topi (Hanken School of Economics at HECER); Stephan, Ute (Aston Business School)
    Abstract: We investigate the effects of organizational culture and personal value orientations on performance under individual and team contest incentives. We develop a model of regard for others and in-group favoritism predicting interaction effects between organizational culture and personal values in the contest games. The predictions are tested in a computerized lab experiment with exogenous control of both organizational culture and incentives. In line with our theoretical model we find that prosocial (proself) orientated subjects exert more (less) effort in team contests in the primed prosocial organizational culture condition, relative to the neutrally primed baseline condition. Further, when the prosocial organizational culture is combined with individual contest incentives, prosocial subjects no longer outperform their proself counterparts. These findings provide a first, affirmative, causal test of person-organization fit theory. They also suggest the importance of a 'triple-fit' between personal preferences, organizational culture and incentive mechanisms for prosocially orientated individuals.
    Keywords: Tournaments; Organizational culture; Personal values; Person-organization fit; Teams; Economic incentives
    JEL: C91 D02 D23 J33 M52
    Date: 2014–02–27
  2. By: Michael Beckmann; Thomas Cornelissen
    Abstract: Based on German individual-level panel data, this paper empirically examines the impact of self-managed working time (SMWT) on employee effort. Theoretically, workers may respond positively or negatively to having control over their own working hours, depending on whether SMWT increases work morale, induces reciprocal work intensification, or encourages employee shirking. We find that SMWT employees exert higher effort levels than employees with fixed working hours, but after accounting for observed and unobserved characteristics and for endogeneity, there remains only a modest positive effect. This effect is mainly driven by employees who have a strong work ethic, suggesting that intrinsic motivation is complementary to SMWT. Moreover, reciprocal work intensification does not seem to be an important channel of providing extra effort. Finally, we find no SMWT effect among women with children in need of parental care indicating that these workers primarily choose SMWT to accommodate family obligations.
    Keywords: Self-managed working time, employee effort, reciprocity, work ethic, intrinsic motivation, family obligations, complementarity
    JEL: J24 J81 M50
    Date: 2014
  3. By: Sumit Agarwal; Itzhak Ben-David
    Abstract: We study a controlled corporate experiment in which loan officers’ compensation structure was altered from fixed salary to volume-based pay. The incentives increased aggressiveness of origination: higher origination rates (+31%), larger loan sizes (+15%), and higher default rates (+28%). Under the incentive system, loan officers have greater influence on loan approval decisions; however, their recommendations do not convey more information. Poor loan performance is caused by lax approval and aggressive loan terms, and is more likely to occur among end-of-month originations, male loan officers, and tenured loan officers. About 10% of the loans under the incentive system are likely to have negative net present value.
    JEL: G01 G21
    Date: 2014–02
  4. By: Dorsett, Richard (National Institute of Economic and Social Research); Oswald, Andrew J. (University of Warwick)
    Abstract: Many politicians believe they can intervene in the economy to improve people’s lives. But can they? In a social experiment carried out in the United Kingdom, extensive in-work support was randomly assigned among 16,000 disadvantaged people. We follow a sub-sample of 3,500 single parents for 5 ensuing years. The results reveal a remarkable, and troubling, finding. Long after eligibility had ceased, the treated individuals had substantially lower psychological well-being, worried more about money, and were increasingly prone to debt. Thus helping people apparently hurt them. We discuss a behavioral framework consistent with our findings and reflect on implications for policy.
    Keywords: Well-Being
    Date: 2014
  5. By: Adams-Kane, Jonathon; Lim, Jamus Jerome
    Abstract: This paper considers the relationship between institutional quality, educational outcomes, and economic performance. More specifically, it seeks to establish the linkages by which government effectiveness affects per capita income, via its mediating effect on human capital formation. The empirical approach adopts a two-stage strategy that estimates national-level educational production functions that include government effectiveness as a covariate, and then uses these estimates as instruments for human capital in cross-country regressions of per capita income. The results identify a significant and positive effect of human capital on per capita income levels, and partially resolves the inconsistency between macro- and micro-level studies of the effect of human capital on income. The results also remain robust to alternative specifications, extension to a panel setting, subsamples of the data, and fully endogenous institutions.
    Keywords: Economic Theory&Research,Governance Indicators,Emerging Markets,National Governance,Debt Markets
    Date: 2014–02–01
  6. By: Dhillon, Amrita (Kings College, London); Peeters, Ronald (Maastrict); Muge Yukse, Ayse (Maastrict)
    Abstract: The use of social networks in the workplace has been documented by many authors, although the reasons for their widespread prevalence are less well known. In this paper we present evidence based on a lab experiment that suggests quite strongly that social networks are used by employers to reduce worker moral hazard. We capture moral hazard with a dictator game between the referrer and worker. The worker chooses how much to return under dierent settings of social proximity. Social proximity is captured using Facebook friendship information gleaned anonymously from subjects once they have been recruited. Since employers themselves do not have access to social connections, they delegate the decision to referrers who can select among workers with dierent degrees of social proximity to themselves. We show that employers choose referrals over anonymous hiring relatively more when they know that the referrer has access to friends, and are willing to delegate more often when the social proximity between referrer and worker is potentially higher. In keeping with this expectation, referrers also choose workers with a greater social proximity to themselves and workers who are closer to referrers indeed pay back more to the referrer. The advantage of the lab setting is that we can isolate directed altruism as the only reason for these results.
    Keywords: Eciency wage contracts, Moral hazard, Dictator game, Referrals, Altruism, Reciprocity, Directed altruism, Social proximity, Facebook, Experiment, Social networks, Strength of ties, Spot market.
    Date: 2014
  7. By: Adrian Chadi (Institute for Labour Law and Industrial Relations in the EU, University of Trier); Clemens Hetschko (School of Business and Economics, Freie Universitaet Berlin)
    Abstract: We investigate a crucial event for job satisfaction: changing the workplace. For representative German panel data, we show that the reason why the previous employment ended is strongly linked to the satisfaction with the new job. When workers initiate a change of employer, they experience relatively high job satisfaction, though only in the short-term. To test causality, we exploit plant closure as exogenous trigger of job switching and find no causal effect of job changes on job satisfaction. Our findings concern research on workers' well-being as well as labor market and human resource policies.
    Keywords: job satisfaction, job changes, new job, honeymoon-hangover effect, plant closure
    JEL: I31 J28 J63 M50
    Date: 2014–05
  8. By: Søren Rud Kristensen; Luigi Siciliani; Matt Sutton
    Abstract: The increased availability of process measures implies that quality of care is in some areas de facto verifiable. Optimal price-setting for verifiable quality is well-described in the incentive-design literature. We seek to narrow the large gap between actual price-setting behaviour in Pay-For-Performance schemes and the incentive literature. We present a model for setting prices for process measures of quality and show that optimal prices should reflect the marginal benefit of health gains, providers’ altruism and the opportunity cost of public funds. We derive optimal prices for processes incentivised in the Best Practice Tariffs for emergency stroke care in the English National Health Service. Based on published estimates, we compare these to the prices set by the English Department of Health. We find that actual tariffs were lower than optimal, relied on an implausibly high level of altruism, or implied a lower social value of health gains than previously used.
    Keywords: Pay For Performance; provider behaviour; optimal price-setting
    JEL: D82 I11 I18 L51
    Date: 2014–02
  9. By: Blum, Jurgen Rene
    Abstract: This paper uses regression analysis to identify which country context, reform content, process, and project management variables predict the performance of public sector management projects, as measured by the Independent Evaluation Group's project outcome ratings. The paper draws on data from a large sample of World Bank public sector management projects that were approved between 1990 and 2013. It contributes to an emerging literature that uses cross-country regressions to analyze public sector management reform patterns. The findings suggest that political context factors have a greater impact on the performance of public sector management projects than on other projects. Specifically, public sector management projects perform better in countries with democratic regimes than autocratic ones. They fare better in the presence of programmatic political parties and in more aid-dependent countries. Project managers'subjective risk assessments predict performance in public sector management operations better than objective risk indicators. These findings suggest that the performance of public sector management projects would benefit from a better alignment of project design with political context and from a more open dialogue about risk between task team leaders and management.
    Keywords: Banks&Banking Reform,Public Sector Management and Reform,Housing&Human Habitats,Poverty Monitoring&Analysis,Development Economics&Aid Effectiveness
    Date: 2014–03–01
  10. By: Jordi Brandts; David J. Cooper; Roberto A. Weber
    Abstract: We study the effectiveness of leaders for inducing coordinated organizational change to a more efficient equilibrium, i.e., a turnaround. We compare communication from leaders to incentive increases and also compare the effectiveness of randomly selected and elected leaders. While all interventions yield shifts to more efficient equilibria, communication from leaders has a greater effect than incentives. Moreover, leaders who are elected by followers are significantly better at improving their group's outcome than randomly selected ones. The improved effectiveness of elected leaders results from sending more performance-relevant messages. Our results are evidence that the way in which leaders are selected affects their legitimacy and the degree to which they influence followers. Finally, we observed that a combination of factors- incentive increases and elected leaders-yield near universal turnarounds to full efficiency.
    Keywords: Leadership, Job Selection, Coordination Failure,Experiments, Communication
    JEL: C72 C92 D83
    Date: 2014–03–10
  11. By: Daron Acemoglu; Francisco A. Gallego; James A. Robinson
    Abstract: In this paper we revisit the relationship between institutions, human capital and development. We argue that empirical models that treat institutions and human capital as exogenous are misspecified both because of the usual omitted variable bias problems and because of differential measurement error in these variables, and that this misspecification is at the root of the very large returns of human capital, about 4 to 5 times greater than that implied by micro (Mincerian) estimates, found in some of the previous literature. Using cross-country and cross-regional regressions, we show that when we focus on historically-determined differences in human capital and control for the effect of institutions, the impact of institutions on long-run development is robust, while the estimates of the effect of human capital are much diminished and become consistent with micro estimates. Using historical and cross-country regression evidence, we also show that there is no support for the view that differences in the human capital endowments of early European colonists have been a major factor in the subsequent institutional development of these polities.
    JEL: I25 O10 P16
    Date: 2014–02
  12. By: Garlick, Robert
    Abstract: This paper studies the relative academic performance of students tracked or randomly assigned to South African university dormitories. Tracked or streamed assignment creates dormitories where all students obtained similar scores on high school graduation examinations. Random assignment creates dormitories that are approximately representative of the population of students. Tracking lowers students'mean grades in their first year of university and increases the variance or inequality of grades. This result is driven by a large negative effect of tracking on low-scoring students'grades and a near-zero effect on high-scoring students'grades. Low-scoring students are more sensitive to changes in their peer group composition and their grades suffer if they live only with low-scoring peers. In this setting, residential tracking has undesirable efficiency (lower mean) and equity (higher variance) effects. The result isolates a pure peer effect of tracking, whereas classroom tracking studies identify a combination of peer effects and differences in teacher behavior across tracked and untracked classrooms. The negative pure peer effect of residential tracking suggests that classroom tracking may also have negative effects unless teachers are more effective in homogeneous classrooms. Random variation in peer group composition under random dormitory assignment also generates peer effects. Living with higher-scoring peers increases students'grades and the effect is larger for low-scoring students. This is consistent with the aggregate effects of tracking relative to random assignment. However, using peer effects estimated in randomly assigned groups to predict outcomes in tracked groups yields unreliable predictions. This illustrates a more general risk that peer effects estimated under one peer group assignment policy provide limited information about how peer effects might work with a different peer group assignment policy.
    Keywords: Tertiary Education,Secondary Education,Teaching and Learning,Primary Education,Educational Sciences
    Date: 2014–02–01
  13. By: Fafaliou, Irene; Zervopoulos, Panagiotis
    Abstract: An extended quality-driven efficiency-adjusted data envelopment analysis (QE-DEA) method is developed to measure the performance of service units. Performance is measured based on efficiency and users’ satisfaction. The extended QE-DEA method identifies as benchmarks only units that are qualified both in efficiency and satisfaction and ensures that all of the units will be qualified in both dimensions of performance when their performance becomes maximal. If there are efficient units which fail to provide satisfactory services, an adjustment procedure is applied to their outputs before the assessment of the units’ performance. Optimal output targets that lead every unit to maximal performance are defined by the extended QE-DEA. The presented expression relaxes the main assumption of the original QE-DEA method that is the fixed weights between original and adjusted outputs. The extended expression is applied to fifty public one-stop shops.
    Keywords: Data envelopment analysis; performance management; efficiency; satisfaction; target setting; trade-off
    JEL: C6 C61 M2
    Date: 2014–01–04
  14. By: Chiraz Ben Ali
    Abstract: Disclosure could mitigate the weakness of institutional context in protecting investors by reducing information asymmetry. This study examines a set of corporate governance features that influence disclosure quality in a context of of principal-principal conflicts and poor investor protection. Using a sample of French firms, our results show that minority expropriation risk harms disclosure quality. We find that disclosure is negatively associated with ownership concentration, major shareholder voting rights, the existence of double voting rights and family control. The results obtained also evidence a positive relationship between disclosure quality and the existence of executive stock option plans giving support that this mechanism plays a key role in corporate transparency. This study adds to the research on principal-principal conflicts and contributes to the controversial debate on stock-options efficiency.
    Keywords: Corporate governance, Disclosure, Principal-principal conflicts
    Date: 2014–02–25

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