nep-hrm New Economics Papers
on Human Capital and Human Resource Management
Issue of 2016‒04‒16
fourteen papers chosen by
Patrick Kampkötter
Universität zu Köln

  1. Optimal Contracting with Subjective Evaluation: The Effects of Timing, Malfeasance and Guile By W. Bentley MacLeod; Teck Yong Tan
  2. The Production of Human Capital in Developed Countries: Evidence from 196 Randomized Field Experiments By Roland G. Fryer, Jr
  3. The impact of performance pay on sales and fundraising By Maurice J.G. Bun; Leo Huberts
  4. Gender Diversity in Senior Positions and Firm Performance; Evidence from Europe By Lone Engbo Christiansen; Huidan Lin; Joana Pereira; Petia Topalova; Rima Turk
  5. The Perception of Managers on the importance of a Work Life Balance Strategy: An Exploratory View By Priya Baguant
  6. To What Extent the Adoption of Innovative Human Resource Practices Is Explained by Top Management Support in Chinese SMEs By Yiyang Sun; Foteini Kravariti
  7. Innovation and Performance of Enterprises: The Case of SMEs in Vietnam By Vu, Hoang Nam; Doan, Quang Hung
  8. Money, Social Capital and Materialism. Evidence from Happiness Data By Piekalkiewicz, Marcin
  9. Service employees and self-verification: the roles of occupational stigma consciousness and core self-evaluations By Amanda Shantz; Jonathan E. Booth
  11. Ethnic homophily perceptions as an emergent IHRM challenge: evidence from firms operating in Sri Lanka during the ethnic conflict By Hyun-Jung Lee; Carol Reade
  12. How Important is the Type of Working Contract for Job Satisfaction of Agency Workers? By René Pettiliot
  13. Asymmetric information in external versus internal promotions By Bossler, Mario; Grunau, Philipp
  14. On the optimal use of correlated information in contractual design under limited liability By Daniel Danau; Analisa Vinella

  1. By: W. Bentley MacLeod; Teck Yong Tan
    Abstract: We introduce a general Principal-Agent model with subjective evaluation and malfeasance characterized by two-sided asymmetric information on performance that allows for an arbitrary information structure. Two generic contract forms are studied. An authority contract has the Principal reveal his information before the Agent responds with her information. Under such a contract, the Agent's compensation varies only with the Principal's information, while her information is used to punish untruthful behavior by the Principal. Conversely, a sales contract has the Agent reveal her information first. In this case, the Agent's performance incentives are affected by the information revealed by both parties. Because the Agent's information affects her compensation, the information revelation constraints are more complex under a sales contract, and provide a way to integrate Williamson's (1975) notion of guile into agency theory. We find that designing sales contracts for expert agents, such as physicians and financial advisors, are significantly more complex than designing optimal authority contracts.
    JEL: D86 J33 J41
    Date: 2016–04
  2. By: Roland G. Fryer, Jr
    Abstract: Randomized field experiments designed to better understand the production of human capital have increased exponentially over the past several decades. This chapter summarizes what we have learned about various partial derivatives of the human capital production function, what important partial derivatives are left to be estimated, and what – together – our collective efforts have taught us about how to produce human capital in developed countries. The chapter concludes with a back of the envelope simulation of how much of the racial wage gap in America might be accounted for if human capital policy focused on best practices gleaned from randomized field experiments.
    JEL: I0 J0 J38
    Date: 2016–03
  3. By: Maurice J.G. Bun; Leo Huberts (University of Amsterdam)
    Abstract: In recent years there has been wide criticism of bonuses and performance pay in different forms. This can often be traced back to the recent financial crisis. Empirical evidence on the effects of bonuses and performance related pay is increasing. We contribute to the discussion by analyzing the impact of changes in the payment structure of a large Dutch marketing company. Specifically, we investigate the consequences for company sales of higher fixed pay in combination with lower bonuses. Exploiting shift level data of individual workers we find that average productivity decreases when the pay structure shifts more to fixed pay. Further analysis shows that this is a pure incentive effect and not due to sorting.
    Date: 2016–01–14
  4. By: Lone Engbo Christiansen; Huidan Lin; Joana Pereira; Petia Topalova; Rima Turk
    Abstract: This paper examines the link between gender diversity in senior corporate positions and financial performance of 2 million companies in Europe. We document a positive association between corporate return on assets and the share of women in senior positions and establish two potential channels through which gender diversity may affect firm performance. The positive correlation is more pronounced in, first, sectors where women form a larger share of the labor force (such as the services sector) and, second, where complementarities in skills and critical thinking are in high demand (such as high-tech and knowledge-intensive sectors).
    Keywords: Euro Area;Gender diversity, senior management, firm performance, gender, women, female intensity, labor force, productivity, General, Economics of Gender, Public Policy, Personnel Economics: General,
    Date: 2016–03–07
  5. By: Priya Baguant (University of Sharjah)
    Abstract: The concept of Work Life Balance has grown in importance in organizations. The challenges of long working hours, work life conflict and social strains are that employees and employers in modern organizations are trying to strike a balance.Purpose: the purpose of this paper is to investigate the perception of managers on the importance of having a work life balance strategy. The perception of the manager of a start up and that of an established company is analysed.Design: The study carried out was based on in depth interviews and thus of a qualitative nature. The interviews were semi structured and captured the perception of the managers on the types of work life conflict that arose in the organization, the types of policies implemented to restore a work life balance, the extent to which dissatisfaction could be removed by deling with work life balance. Findings: The managers interviewed were very clear on the benefits of having a work life balance strategy, the imbalance is a matter of concern and it leads to high level of dissatisfaction, according to the managers. The younger workers, having less ommitments outside work, have the urge to do well and to move up in their career and are thus more willing to have a work weighting heavier in their life. However the existence of work life balance strategy will regulate their lives in the long term. The older workers are more concern about being able to meet commitments outside work and perceive a work life balance strategy as a must for any organization.Originality: This work is investigating a pertinent human resources issue in organizations. The importance of policies and practices of work life balance have been evaluated and it suggests that there may be a need for regulations. This area of research is still to be fully explored and the work undertaken is a stepping stone for further work.
    Keywords: Perception, Work life conflict, work life balance
  6. By: Yiyang Sun (The University of Manchester); Foteini Kravariti (The University of Manchester)
    Abstract: This study focuses on innovative human resource practices (HRPs) in SMEs. It investigates whether top management support influences the decision to adopt HRPs and the degree of their implementation under the umbrella of management innovation. A quantitative data analysis is utilised in order to explore this topic among 185 SMEs in China by testing research hypotheses stemming from existing literature conclusions. The results demonstrate that there is a positive relationship between top management support and key innovative HRPs. Additionally, top management support significantly contributes to the adoption of extensive training and development followed by pay based on performance appraisal, job security and sophisticated selection. Given that all research hypotheses are statistically confirmed, we conclude that top management support can be an influential factor with regard to the adoption of innovative HRPs in SMEs. Hence, we suggest that the management innovation perspective as a theoretical underpinning is beneficial in determining motivational factors which shape the types of innovative HRPs adopted, and thus have a potential impact on organizational performance.
    Keywords: HRM, innovative HRPs, management innovation, top management support, SMEs, Chinese SMEs
  7. By: Vu, Hoang Nam; Doan, Quang Hung
    Abstract: Innovation is widely recognized as a key determinant of enterprise performance. It is, however, not clear how innovation affects performance of small-and-medium enterprises (SMEs) in transition economies. Based on data collected from surveys of SMEs in Vietnam from 2005 to 2011 this study shows that the human capital of owners/managers of SMEs, the quality of workers, and public physical infrastructure positively affect innovation and the performance of SMEs. More importantly, the study finds that innovation in products, production process, and marketing is a decisive factor for higher performance of SMEs in Vietnam.
    Keywords: Innovation, SMEs, Vietnam
    JEL: D22 J54 L11 L25 O3
    Date: 2015–01
  8. By: Piekalkiewicz, Marcin
    Abstract: Are unhappiness, high concern for money and scarcity of social capital different faces of the same phenomenon? Economists tend to treat these variables as distinct correlates of well-being. On the contrary, positive psychologists argue that they all relate to materialism, a system of personal values ascribing great importance in life to extrinsic motivations and low priority to intrinsic motivations. Using data from two European cross-sectional surveys and the German Socio-Economic Panel, I test the hypothesis that material interests, proxied by the effects of individual and reference income on well-being, are associated with low levels of social capital. The results suggest that people with scarce social capital tend to have greater material interests, whereas the negative effect of income comparisons on well-being is eliminated for individuals exhibiting the highest levels of social capital. The implication of such finding is that promoting social capital reduces people's material concerns and has positive impact on their well-being. The results from a country-level analysis additionally show that, since social capital moderates the importance of income for well-being on individual level, the well-being gap between income groups is significantly smaller in countries with higher social capital.
    Keywords: subjective well-being,life satisfaction,social capital,materialism,relative income,social comparisons,happiness inequality
    JEL: D31 I31 Z13
    Date: 2016–03–23
  9. By: Amanda Shantz; Jonathan E. Booth
    Abstract: Despite the growing number and importance of service occupations, we know little about how jobholders’ perceptions of societal stigmas of service jobs influence their identification with and attitudes towards work. The present study presents a framework that accords key roles to research on occupational stigma consciousness and the verification of employees’ self-views (i.e. core self-evaluations) to understand employees’ responses to occupational stigmatization. Survey responses from call center employees revealed a negative relationship between occupational stigma consciousness and occupational identification and work meaningfulness and a positive relationship between occupational stigma consciousness and organizational production deviant behaviors for employees who have a positive self-view. Opposite patterns of results surfaced for employees who have a lower positive self-view.
    Keywords: occupational stigma consciousness; core self-evaluations; occupation identification; work meaningfulness; organizational production deviant behaviors
    JEL: J50
    Date: 2014–12
  10. By: Chantal Rootman (Nelson Mandela Metropolitan University); Janine Krüger (Nelson Mandela Metropolitan University); Tony Matchaba-hove (Nelson Mandela Metropolitan University)
    Abstract: The financial services industry plays a dominant role in promoting economic growth and providing employment. Financial services offered within this industry are highly sort after by the public, and the services offered require high levels of employee-client interaction. Given the importance of this particular industry and the high level of employee-client interaction required in the financial services industry, it is important for employees to be satisfied with their working environments. The motivational factors contributing towards employee satisfaction need to be determined. Therefore, the primary objective of this study is to investigate the influence of selected motivational factors on employee satisfaction within the financial services industry. A questionnaire was used in an empirical investigation to gather the responses of 254 financial services employees in Nelson Mandela Bay, South Africa. The questionnaires were subjected to various statistical analyses and significant relationships were found among the independent (management feedback, employee participation as well as job interest and importance) and dependent (employee satisfaction) variables. The implementation of this study’s recommendations may lead to improved employee satisfaction within the industry that could lead to increased levels of client satisfaction. In addition, the business performance of financial service providers may improve if they employ more satisfied employees. To conclude, proactive identification of the correct motivational factors may assist financial service providers to positively influence employee satisfaction levels.
    Keywords: financial services; motivational factors; employee satisfaction
    JEL: L89 J24
  11. By: Hyun-Jung Lee; Carol Reade
    Abstract: Ethnic conflict is a defining characteristic of the post-Cold War era and is prevalent particularly in emerging economies, areas of increasing interest to multinational enterprises. Yet little is known about the international human resource management challenges arising from such societal context. Utilizing social identity theory, we propose that ethnic homophily perceptions in the workplace – an employee's assessment that colleagues prefer working with ethnically similar others – is a reflection of the societal context and can be detrimental to the organization if not managed appropriately. We investigate whether contact theory offers insights to manage such perceptions. Drawing on a sample of 550 managers in Sri Lanka during a period of protracted ethnic conflict, we found that employee sensitivity to ethnic conflict in the societal context is positively related to ethnic homophily perceptions in the workplace, and that both ethnic diversity in workgroups and quality of work relationships serve to reduce perceptions of ethnic homophily.
    Keywords: contact theory; emerging economies; ethnic conflict; homophily perceptions; social identity theory; Sri Lanka
    JEL: J50
    Date: 2015–06
  12. By: René Pettiliot
    Abstract: Previous research has found that agency workers are less satisfied with their job than regular workers on a permanent contract. All these studies have in common that they treat agency workers as a homogeneous group; that is, they did not consider the contract type agency workers hold. This paper analyzes whether differences in job satisfaction can be explained by the contract type using data from the German Socio-Economic Panel. The analysis leads to three main results. First, differences in job satisfaction cannot be explained by the contract type. Second, agency workers on a permanent contract are significantly less satisfied with their job than regular workers on the same contract. Third, agency workers on a fixed-term contract do not differ in reported job satisfaction from regular workers on both fixed-term and permanent contracts. These findings give rise to the hypothesis that as a policy instrument agency employment appears to be well-suited for short-term periods, but it should be prevented that workers are persistently employed in such a work arrangement.
    Keywords: Job satisfaction, temporary agency employment, fixed-term contracts, permanent contracts
    JEL: C23 I31 J28 J41
    Date: 2016
  13. By: Bossler, Mario (Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany]); Grunau, Philipp (Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany])
    Abstract: "Individuals have two possible channels through which to obtain a managerial position: external and internal promotions. Employing the revised German Employment Register, we compare external and internal promotions by using multinomial logit regressions while accounting for workplace heterogeneity. Individual characteristics are hypothesized to exert differential effects because of their observability within and across workplaces. We find that actual working hours are a more important source of information for internal versus external promotions. By contrast, formal vocational degrees and initial job task complexity, which are also externally observed, are a relatively more important signal for external promotions. Consistent with statistical discrimination, women and foreigners face a more pronounced disadvantage in external promotions. For women, this differential effect is fully driven by promotions to executive positions characterized by high task complexity. Moreover, actual working hours show a strong positive interaction effect on women's prospects of promotion." (Author's abstract, IAB-Doku) ((en))
    Keywords: beruflicher Aufstieg - Determinanten, interner Arbeitsmarkt, zwischenbetriebliche Mobilität, Beschäftigtenstatistik, Führungskräfte, Berufsnachwuchs, berufliche Qualifikation, Arbeitszeit, Beförderung, Tätigkeitsmerkmale, Frauen, Ausländer, Entscheidungsfindung, Personalauswahl
    JEL: J41 J70 M12 M51
    Date: 2016–03–31
  14. By: Daniel Danau (Normandie Université, UNICAEN, CREM CNRS, France); Analisa Vinella (Università degli Studi di Bari "Aldo Moro", Italy)
    Abstract: Riordan and Sappington (JET, 1988) show that in an agency relationship in which the type of the agent is correlated with a signal that is observed publicly ex post, the principal may attain first best (full surplus extraction and efficient output levels) if she offers the agent a lottery such that each type is rewarded for one signal realization and punished equally for all the others. Gary-Bobo and Spiegel (RAND, 2006) show that this kind of lottery is most likely to be locally incentive-compatible when the agent is protected by limited liability. In this paper we investigate how the principal should construct the lottery to attain not only local but also global incentive-compatibility. We first assess that the main issue with global incentive-compatibility rests with intermediate types being potentially attractive reports to both lower- and higher-order types. We then show that a lottery including three (rather than two) levels of profit is most likely to be globally incentive-compatible under limited liability, if local incentive constraints are strictly satisfied. We identify conditions under which first best is implemented and pin down the optimal distortions when those conditions are violated. In particular, when the first-best allocation is locally but not globally incentive-compatible, output distortions are induced but no information rent is conceded to the agent.
    Keywords: Incentive compatibility; Limited liability; Correlated signals; Conditional probability; Full-rank condition
    JEL: D82
    Date: 2016–03

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