nep-hrm New Economics Papers
on Human Capital and Human Resource Management
Issue of 2014‒04‒11
fifteen papers chosen by
Tommaso Reggiani
University of Cologne

  1. Knowing that You Matter, Matters! The Interplay of Meaning, Monetary Incentives, and Worker Recognition By Kosfeld, Michael; Neckermann, Susanne; Yang, Xiaolan
  2. Motivational Capital and Incentives in Health Care Organizations By Mikel Berdud; Juan M. Cabasés Hita; Jorge Nieto
  4. A Pilot Inquiry on Incentives and Intrinsic Motivation in Health Care: the Motivational Capital Explained by Doctors By Mikel Berdud; Juan M. Cabasés Hita; Jorge Nieto
  5. Shared leadership and performance in distributed teams: An examination of mediating mechanisms By Nabila JAWADI; Likoebe M. MARUPING; Nabila BOUKEF CHARKI
  6. Peer Effects and Students’ Self-Control By Berno Buechel; Lydia Mechtenberg; Julia Petersen;
  7. Blissful Ignorance? A Natural Experiment on the Effect of Feedback on Students'Performance By Oriana Bandiera; Valentino Larcinese; Imran Rasul
  8. Do incentive systems spur work motivations of inventors in high-tech firms By Nathalie Lazaric; Alain Raybaut
  9. An Empirical Model of Wage Dispersion with Sorting By Jesper Bagger; Rasmus Lentz
  10. Trust-based Work-time and Product Improvements: Evidence from Firm Level Data By Olivier N. Godart; Holger Görg; Aoife Hanley
  11. Verification of Performance in Result-Based Financing (RBF): The Case of Burundi By Adrien Renaud
  12. Human Capital and Regional Development By Nicola Gennaioli; Rafael LaPorta; Florencio Lopez-de-Silanes; Andrei Shleifer
  13. Incentives and selection in promotion contests: Is it possible to kill two birds with one stone? By Rudi Stracke; Wolfgang Höchtl; Rudolf Kerschbamer; Uwe Sunde
  14. Shirking, Monitoring, and Risk Aversion By Seeun Jung; Kenneth Houngbedji
  15. Optimal prizes in dynamic elimination contests: Theory and experimental evidence By Rudi Stracke; Wolfgang Höchtl; Rudolf Kerschbamer; Uwe Sunde

  1. By: Kosfeld, Michael (Goethe University Frankfurt); Neckermann, Susanne (Erasmus University Rotterdam); Yang, Xiaolan (Zhejiang University)
    Abstract: We manipulate workers' perceived meaning of a job in a field experiment. Half of the workers are informed that their job is important, the other half are told that their job is of no relevance. Results show that workers exert more effort when meaning is high, corroborating previous findings on the relationship between meaning and work effort. We then compare the effect of meaning to the effect of monetary incentives and of worker recognition via symbolic awards. We also look at interaction effects. While meaning outperforms monetary incentives, the latter have a robust positive effect on performance that is independent of meaning. In contrast, meaning and recognition have largely similar effects but interact negatively. Our results are in line with image-reward theory (Bénabou and Tirole 2006) and suggest that meaning and worker recognition operate via the same channel, namely image seeking.
    Keywords: meaning, monetary incentives, worker recognition, field experiment
    JEL: C93 J33 M12 M52
    Date: 2014–03
  2. By: Mikel Berdud (Departamento de Economía-UPNA); Juan M. Cabasés Hita (Departamento de Economía-UPNA); Jorge Nieto (Departamento de Economía-UPNA)
    Abstract: This paper explores optimal incentive schemes in public health institutions when agents (doctors) are intrinsically motivated. We develop a principal-agent dynamic model with moral hazard in which agents’ intrinsic motivation could be promoted (crowding-in) by combining monetary and non-monetary rewards, but could also be discouraged (crowding-out) when the health manager uses only monetary incentives. We discuss the conditions under which investing in doctors’ motivational capital by the use of well designed nonmonetary rewards is optimal for the health organizations manager. Our results show that such investments will be more efficient than pure monetary incentives in the long run. We will also prove that when doctors are riskaverse, it is profitable for the health manager to invest in motivational capital.
    Keywords: contracts, moral hazard, intrinsic motivation, crowding effects, motivational capital
    Date: 2014
  3. By: Backman, Mikaela (Jönköping International Business School, & Centre of Excellence for Science and Innovation Studies (CESIS)); Gabe, Todd (University of Maine); Mellander, Charlotta (Jönköping International Business School, & Centre of Excellence for Science and Innovation Studies (CESIS))
    Abstract: This paper examines the effects of human capital on the growth and survival of a large sample of Swedish businesses. Human capital is represented by conventional measures of the educational attainment and experience of an establishment’s workers, and skills-based measures of the types of occupations present in the company. Controlling for an establishment’s size and age, as well as its industry and region of location, we find that the human capital embodied in a company’s workers significantly affects its performance. The specific effects, however, depend on how human capital is measured and whether the analysis focuses on growth or survival.
    Keywords: Firm growth; firm survival; human capital; education; skills
    JEL: J21 J24 L25
    Date: 2014–03–25
  4. By: Mikel Berdud (Departamento de Economía-UPNA); Juan M. Cabasés Hita (Departamento de Economía-UPNA); Jorge Nieto (Departamento de Economía-UPNA)
    Abstract: Where the contracts are incomplete, the resulting co-ordination problems may be attenuated if workers are intrinsically motivated to do the work. It is established by theoretical and empirical literature that workers within public organizations are intrinsically motivated to exert effort doing the job and have a strong sense of social agents with the mission of providing collective goods to citizens and tax payers. This paper is an empirical pilot study in the health care sector using methods of Qualitative Analysis research. We run semistructured interviews á-la- Bewley to sixteen physicians of Navarre’s health Care Servicio Navarro de Salud-Osasunbidea (SNS-O). The objective of the work is twofold: first, to find empirical evidence about doctors’ non-monetary motives and second, to find evidence about how these non-monetary motives shape doctors’behavior. We formulate several testable hypotheses: (1) Doctors are intrinsically motivated agents, (2) Economic incentives and control policies may crowd- out intrinsic motivation and (3) Well designed incentives may crowd-in agents intrinsic motivation. Results confirm the hypotheses formulated above and coming from our theoretical findings [11], [12]. Finally, we also found empirical evidence of conflict between political advisors or health managers (principals) and physicians (agents). Results are a step forward in the optimal design of incentive schemes and policies which crowd in doctors’ intrinsic motivation.
    Keywords: qualitative research, interviews, intrinsic motivation, crowding effects
    JEL: D03 D86
    Date: 2014
  5. By: Nabila JAWADI; Likoebe M. MARUPING; Nabila BOUKEF CHARKI
    Abstract: Shared leadership has emerged as an important determinant of team performance. However, the efficacy of such leadership in facilitating effective performance in distributed contexts is little understood. We extend theory by examining how shared leadership influences performance in distributed teams. Specifically, we focus on spatial, temporal, and configurational aspects of dispersion and how shared leadership enables teams to overcome the barriers posed by these forms of dispersion. We conducted a five-month study of ten distributed teams to examine shared versus concentrated leadership. Results of the study suggest that highly distributed teams achieve high performance when leadership influence in team coordination and monitoring processes is distributed across multiple team members. In contrast shared and concentrated leadership both seemed to facilitate high performance in less distributed teams. Further, we found that shared leadership in coordination processes was particularly important in facilitating effective communication patterns and, ultimately, high performance. The implications of our findings for theory are discussed.
    Keywords: shared leadership, team dispersion, team performance, team processes, virtual interaction.
    Date: 2014–03–28
  6. By: Berno Buechel; Lydia Mechtenberg; Julia Petersen;
    Abstract: We conducted a multi-wave field experiment to study the interaction of peer effects and selfcontrol among undergraduate students. We use a behavioral measure of self-control based on whether students achieve study related goals they have set for themselves. We find that both self-control and the number of talented friends increase students’ performance. We then set out to test the theoretical prediction of Battaglini, Bénabou and Tirole (2005) that (only) sufficiently self-controlled individuals profit from interactions with peers. We find that peers with high self-control are more likely to connect to others, have a higher overall number of friends and have a higher number of talented friends. Moreover, positive news about self-controlled behavior of their peers increases students’ own perseverance. Hence, our findings are consistent with the model of Battaglini, Bénabou and Tirole. In addition, we find that female students are more likely to have high self-control, but do not outperform male students. One reason for this is that female students have a lower number of talented friends than their male counterparts, thereby profiting less from positive peer effects.
    Keywords: Self-control, Peer Influence, Social Networks, Goals, Time preferences, Procrastination, Willpower, School Performance, Experiment
    JEL: C93 D85 I21 J24
    Date: 2014–04
  7. By: Oriana Bandiera; Valentino Larcinese; Imran Rasul
    Abstract: We provide evidence on whether providing university students with feedback on their past exam performance affects their future exam performance. Our identification strategy exploits a natural experiment in a leading UK university where different departments have historically different rules on the provision of feedback to their students. We find the provision of feedback has a positive effect on students’ subsequent test scores: the mean impact corresponds to 13% of a standard deviation in test scores. The impact of feedback is stronger for more able students and for students who have less information to start with about the academic environment, while no subset of individuals is found to be discouraged by feedback. Our findings suggest that students have imperfect information on how their effort translates into test scores and that the provision of feedback might be a cost?effective means to increase students' exam performance. Keywords: feedback, incentives, students' performance, university education.
    Date: 2014
  8. By: Nathalie Lazaric (GREDEG - Groupe de Recherche en Droit, Economie et Gestion - CNRS : UMR7321 - Université Nice Sophia Antipolis (UNS)); Alain Raybaut (GREDEG - Groupe de Recherche en Droit, Economie et Gestion - Université Nice Sophia Antipolis (UNS) - CNRS : UMR6227)
    Abstract: In this article, we explore the potential tensions between the incentive systems of group of inventors and knowledge diversity in a high tech firm.
    Keywords: Work motivation, groups of inventors, knowledge diversity, Knowledge creation
    Date: 2014
  9. By: Jesper Bagger (Royal Holloway, University of London); Rasmus Lentz (University of Wisconsin-Maddison)
    Abstract: This paper studies wage dispersion in an equilibrium on-the-job-search model with endogenous search intensity. Workers differ in their permanent skill level and firms differ with respect to productivity. Positive (negative) sorting results if the match production function is supermodular (submodular). The model is estimated on Danish matched employer-employee data. We find evidence of positive assortative matching. In the estimated equilibrium match distribution, the correlation between worker skill and firm productivity is 0.12. The assortative matching has a substantial impact on wage dispersion. We decompose wage variation into four sources: Worker heterogeneity, firm heterogeneity, frictions, and sorting. Worker heterogeneity contributes 51% of the variation, firm heterogeneity contributes 11%, frictions 23%, and finally sorting contributes 15%. We measure the output loss due to mismatch by asking how much greater output would be if the estimated population of matches were perfectly positively assorted. In this case, output would increase by 7.7%.
    Keywords: Sorting, Worker heterogeneity, Firm heterogeneity, On-the-job search, Wage dispersion, Matched employer-employee data
    JEL: J24 J33 J62 J63 J64
    Date: 2014–04–01
  10. By: Olivier N. Godart; Holger Görg; Aoife Hanley
    Abstract: 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
    Keywords: Trust based work time, innovation, firm performance
    JEL: M1 M5 L2
    Date: 2014–04
  11. By: Adrien Renaud
    Abstract: Paying health facilities incentives based on their performance is one form of results-based financing (RBF). Verification of the performance of the providers is a vital part of RBF program implementation. Burundi was one of the first African countries to introduce performance-based financing (PBF). The PBF scheme is implemented in the whole country and is led by the Ministry of Health (MoH). It pays incentives based on quantity of services provided as well as a quality of care component. This study describes the methods used for verification in Burundi, which include monthly verification of the quantity and technical quality of services provided on a quarterly basis; semiannual patient tracing and assessment of patient satisfaction; and counter-verification of the information provided by these three mechanisms. The results of verification are presented and it discusses obstacles to verification, how they have been addressed, and the challenges ahead. The case study is part of a broader analysis, which includes multiple country case examples, to expand knowledge about the verification process and practices to address the design and implementation needs of RBF programs.
    Keywords: Caesarean section, Circumcision, cleanliness, clinical guidelines, confidentiality, description, districts, domain, domains, e-mail, family planning, fraud, health care ... See More + health care provider, health care providers, Health Centers, Health Centres, health expenditure, health facilities, Health indicators, Health Management, health providers, health sector, health services, health system, health system performance, HIV, hospital services, Hospitalization, Hospitals, Human Development, income, Information System, inhabitants, institution, integration, life expectancy, material, medicine, morality, mortality, Nurses, nursing, Nutrition, patient, patient satisfaction, patients, performances, physician, Physicians, pilot project, pilot projects, pregnancy, Pregnant woman, pregnant women, provider payment, Public Health, quality of health, quality of health care, quality of services, refugees, registries, regulatory system, reliability, Result, results, supervision, surgery, technical assistance, telephone, tetanus, training workshops, trainings, treatment, tuberculosis, under-five mortality, user, vaccination, VERIFICATION, verifications, web, workers
    Date: 2013–07–01
  12. By: Nicola Gennaioli; Rafael LaPorta; Florencio Lopez-de-Silanes; Andrei Shleifer
    Abstract: We investigate the determinants of regional development using a newly constructed database of 1569 sub-national regions from 110 countries covering 74 percent of the world’s surface and 96 percent of its GDP. We combine the cross-regional analysis of geographic, institutional, cultural, and human capital determinants of regional development with an examination of productivity in several thousand establishments located in these regions. To organize the discussion, we present a new model of regional development that introduces into a standard migration framework elements of both the Lucas (1978) model of the allocation of talent between entrepreneurship and work, and the Lucas (1988) model of human capital externalities. The evidence points to the paramount importance of human capital in accounting for regional differences in development, but also suggests from model estimation and calibration that entrepreneurial inputs and human capital externalities are essential for understanding the data.
  13. By: Rudi Stracke; Wolfgang Höchtl; Rudolf Kerschbamer; Uwe Sunde
    Abstract: This paper investigates whether a designer can improve both the incentive provision and the selection performance of a promotion contest by making the competition more (or less) dynamic. A comparison of static (one-stage) and dynamic (two-stage) contests reveals that this is not the case. A structural change that improves the performance in one dimension leads to a deterioration in the other dimension. This suggests that modifications of the contest structure are an alternative to strategic handicaps. A key advantage of structural handicaps over participant-specific ones is that the implementation of the former does not require prior identification of worker types.
    Keywords: Promotion Contests, Heterogeneity, Incentives, Selection, Handicapping
    JEL: M52 J33
    Date: 2014–03
  14. By: Seeun Jung (PSE - Paris-Jourdan Sciences Economiques - CNRS : UMR8545 - École des Hautes Études en Sciences Sociales (EHESS) - École des Ponts ParisTech (ENPC) - École normale supérieure [ENS] - Paris - Institut national de la recherche agronomique (INRA), EEP-PSE - Ecole d'Économie de Paris - Paris School of Economics - Ecole d'Économie de Paris); Kenneth Houngbedji (PSE - Paris-Jourdan Sciences Economiques - CNRS : UMR8545 - École des Hautes Études en Sciences Sociales (EHESS) - École des Ponts ParisTech (ENPC) - École normale supérieure [ENS] - Paris - Institut national de la recherche agronomique (INRA), EEP-PSE - Ecole d'Économie de Paris - Paris School of Economics - Ecole d'Économie de Paris)
    Abstract: This paper studies the effect of risk aversion on effort under different monitoring schemes. It uses a theoretical model which relaxes the assumption of agents being risk neutral, and investigates changes of effort as monitoring varies. The predictions of the theoretical model are tested using an original experimental setting where the level of risk aversion is measured and monitoring rates vary exogenously. Our results show that shirking decreases with risk aversion and monitoring. Moreover, monitoring is more effective to curtail shirking behaviors for subjects who are less risk averse.
    Keywords: Risk aversion
    Date: 2014–03
  15. By: Rudi Stracke; Wolfgang Höchtl; Rudolf Kerschbamer; Uwe Sunde
    Abstract: This paper investigates the implications of different prize structures on effort provision in dynamic (two-stage) elimination contests. Theoretical results show that, for risk-neutral participants, a structure with a single prize for the winner of the contest maximizes total effort, while a structure with two appropriately chosen prizes (a runner-up prize and a final prize) ensures incentive maintenance across stages. In contrast, a structure with two prizes may dominate a winner-takes-all contest in both dimensions if participants are risk-averse. Evidence from laboratory experiments is largely consistent with these predictions, suggesting that contest design should account for risk attitudes of participants.
    Keywords: Dynamic Contests, Multiple Prizes, Risk Aversion, Experiment, Over-provision
    JEL: C72 D72 J33
    Date: 2014–03

This nep-hrm issue is ©2014 by Tommaso Reggiani. It is provided as is without any express or implied warranty. It may be freely redistributed in whole or in part for any purpose. If distributed in part, please include this notice.
General information on the NEP project can be found at For comments please write to the director of NEP, Marco Novarese at <>. Put “NEP” in the subject, otherwise your mail may be rejected.
NEP’s infrastructure is sponsored by the School of Economics and Finance of Massey University in New Zealand.