nep-hrm New Economics Papers
on Human Capital and Human Resource Management
Issue of 2017‒01‒01
eight papers chosen by
Patrick Kampkötter
Eberhard Karls Universität Tübingen

  1. Teams in Relational Contracts By Kvaløy, Ola; Olsen, Trond E.
  2. Winners and losers of corporate tournaments By Ian Gregory- Smith; Peter Wright
  3. Diversity and Social Capital Within the Workplace: Evidence from Britain By Thomas Breda; Alan Manning
  4. Recruiting for Small Business Growth: Micro-level Evidence By Gidehag, Anton; Lodefalk, Magnus
  5. Do CEOs matter? Corporate performance and the CEO life cycle By Limbach, Peter; Schmid, Markus M.; Scholz-Daneshgari, Meik
  6. Are school-provided skills useful at work? Results of the Wiles test By Jacek Liwiński
  7. Helping with the Kids? How Family-Friendly Workplaces Affect Parental Well-Being and Behavior By Verena Lauber; Johanna Storck
  8. Are generalists beneficial to corporate shareholders? Evidence from sudden deaths By Betzer, André; Ibel, Maximilian; Lee, Hye Seung; Limbach, Peter; Salas, Jesus M.

  1. By: Kvaløy, Ola (UiS Business School, University of Stavanger); Olsen, Trond E. (Dept. of Business and Management Science, Norwegian School of Economics)
    Abstract: We analyze relational contracting between a principal and a team of agents where only aggregate output is observable. We deduce optimal team incentive contracts under di¤erent set of assumptions, and show that the principal can use team size and team composition as instruments in order to improve incentives. In particular, the principal can strengthen the agents' incentives by composing teams that utilize stochastic dependencies between the agents' outputs. We also show that more agents in the team may under certain conditions increase each team member's effort incentives, in particular if outputs are negatively correlated.
    Keywords: Relational contracts; team incentive scheme
    JEL: D00 D20 D21 D80 D86
    Date: 2016–12–16
  2. By: Ian Gregory- Smith (Department of Economics, University of Sheffield); Peter Wright (Department of Economics, University of Sheffield)
    Abstract: In a corporate tournament, executive directors are motivated by the prospect of promotion to CEO, with winners receiving large increases in remuneration. Tournament losers by contrast face a discrete loss in their valuation of their position, since the prospect of them becoming CEO is substantially reduced. We argue that this offers an opportunity to test the predictions of tournament theory by observing the quit behavior and the wages of the losing directors. We find a sharp increase in the likelihood that directors leave the firm. The directors who remain receive an increase in their remuneration following a rival’s promotion.
    Keywords: corporate succession, executive remuneration, tournament theory
    JEL: J30 J31 J32
    Date: 2016–12
  3. By: Thomas Breda; Alan Manning
    Abstract: This paper uses the British Workplace Employee Relations Survey to investigate the impact of gender and ethnic diversity on workers' level of trust in managers and the extent of identity with the values and objectives of the firm - dimensions of what we might call social capital within the workplace. These are both factors that one might expect to make firms more co-operative and, hence, productive. In contrast to much of the existing literature we pay particular attention to the estimation of causal effects, using an instrumental variable strategy. We find evidence that both women and minorities have higher levels of workplace trust and identity as individuals. But we also find evidence that a higher female share in the plant is associated with higher trust and identity (stronger for trust than identity) and that a higher minority share is associated lower trust and identity (stronger for identity than trust). However, in line with much of the literature, these results are not always significantly different from zero and they are sensitive to specification.
    Keywords: trust, identity, diversity, workplace
    JEL: M5
    Date: 2016–12
  4. By: Gidehag, Anton (Örebro University and HUI Research); Lodefalk, Magnus (The Ratio Institute)
    Abstract: We examine the link between new employees in leading positions and subsequent productivity in small- and medium-sized (SME) enterprises. Managers and professionals are likely to possess important tacit knowledge. They are also in a position to influence the employing firm. Exploiting rich and comprehensive panel data for Sweden in the 2001-2010 period and employing semi-parametric and quasi-experimental estimation techniques, we find that newly recruited leading personnel have a positive and statistically significant impact on the productivity of the hiring SME. Interestingly, our results suggest that professionals with experience from international firms and enterprise groups contribute the most to total factor productivity. Overall, the findings suggest the importance of mobility of leading personnel for productivity-enhancing knowledge spillovers to SMEs.
    Keywords: recruitment; knowledge spillovers; firm growth; productivity; SME
    JEL: D22 D24 D83 J24 J62
    Date: 2016–12–15
  5. By: Limbach, Peter; Schmid, Markus M.; Scholz-Daneshgari, Meik
    Abstract: We examine how CEOs' impact on firm value varies over time. We document a hump-shaped relation between CEO tenure and firm value which is subject to meaningful variation depending on industry dynamics, the business cycle, and CEOs' adaptability to changes. Semi-parametric estimations, stock returns to sudden deaths and to takeover announcements, as well as tests for extrapolation, survivor-ship, and endogenous CEO-firm matching and turnover confirm our results. They suggest that a considerable fraction of high-tenure CEOs is no longer the optimal match for their firms which seem to have difficulties, due to governance rather than labor market frictions, replacing incumbent CEOs.
    Keywords: CEO adaptability,(within-)CEO heterogeneity,CEO tenure,CEO term limits,environmental dynamics,firm value,investments
    JEL: G30 G34 J24
    Date: 2016
  6. By: Jacek Liwiński (Faculty of Economic Sciences, University of Warsaw)
    Abstract: Although it has been over 40 years since labour economists started testing human capital vs. signalling explanation of the wage premium from education, the debate is still going on and authors keep on proposing new methods of testing. The human capital theory postulates that investment in education enhances the productive capacity of individuals, while according to the signalling hypothesis the value of a graduation diploma follows from the fact that it signals innate abilities of its holder. We apply the approach proposed by Wiles to test for the signalling hypothesis and, in particular, to find out if there is a positive relation between education and productivity. For this purpose, we construct a job match index based on information if school provided knowledge and skills are useful at work and the job performed is relevant to the field of study. Then we check if the quality of job matching is related to wages of graduates in Poland. To answer this question, a wage equation was estimated using OLS on the basis of data from a representative, nationwide tracer survey of Poles who left secondary schools or graduated from higher education institutions over the period of 1998-2005. We find out that knowledge and skills acquired in the course of formal education bring wage benefits only to university graduates. Besides, this group receives a wage premium, which may be attributed to their high innate abilities. In sum, the outcomes are consistent with the weak signalling hypothesis, since they show that tertiary education signals a high level of innate abilities and at the same time it provides knowledge and skills which enhance individual productivity at work. However, the role of tertiary education differs significantly by fields of study – graduating from programs that provide soft skills has a positive impact on productivity, while hard-applied skills acquired in the course of university studies have a strong signalling nature. Besides, we find evidence of the strong signalling hypothesis with regard to the secondary vocational schools leavers.
    Keywords: education, human capital, signalling, job matching, wage equation
    JEL: I26 J24 J31
    Date: 2016
  7. By: Verena Lauber; Johanna Storck
    Abstract: Despite political efforts, balancing work and family life is still challenging. This paper provides novel evidence on the effect of firm level interventions that seek to reduce the work-life conflict. The focus is on how a specific workplace policy, namely childcare support, affects the well-being, working time, and caring behavior of mothers with young children. We exploit the fact that since the mid 2000s an increasing number of employers have become proactive and implemented more family-friendly workplaces. These changes over time allow us to identify causal effects of childcare support using a difference-in-differences approach combined with matching. Based on a large panel dataset on families with children in Germany (FiD), we find evidence pointing to welfare enhancing effects of childcare support, as it strongly increases both childcare satisfaction and job satisfaction. In particular mothers who worked limited hours before the introduction, possibly due to constraints, increase their working time and use formal care more intensively. Satisfaction levels are also more strongly affected if mothers are career-orientated. In comparison, flexible work schedules, another family-friendly policy, only affect job satisfaction. Paternal well-being and behavior is not affected by the workplace policy.
    Keywords: Family-friendly workplace policies, well-being, work-life balance, difference-in-differences, matching
    JEL: I31 J13 J22 J28
    Date: 2016
  8. By: Betzer, André; Ibel, Maximilian; Lee, Hye Seung; Limbach, Peter; Salas, Jesus M.
    Abstract: This study documents a positive, economically meaningful impact of executives' general managerial skills on shareholder value. Examining 171 sudden executive deaths over thirty years, we find that a one-standard-deviation increase in the general ability index corresponds to at least a 1.5 percentage point decrease in abnormal stock returns to death announcements. Generalists are found to be significantly more valuable for firms with fewer growth prospects where difficult tasks (e.g., restructurings) need to be performed and adaptations to changing business environments become necessary. Our results provide a market-based explanation for the documented generalist hiring premium and the increasing share of generalists.
    Keywords: executive heterogeneity,managerial work experience,firm value
    JEL: G30 G34 J24
    Date: 2016

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