nep-hrm New Economics Papers
on Human Capital and Human Resource Management
Issue of 2017‒04‒02
nine papers chosen by
Patrick Kampkötter
Eberhard Karls Universität Tübingen

  1. What Drives Differences in Management? By Nicholas Bloom; Erik Brynjolfsson; Lucia Foster; Ron Jarmin; Megha Patnaik; Itay Saporta-Eksten; John Van Reenen
  2. Prizes versus Contracts as Incentives for Innovation By Che, Yeon-Koo; Iossa, Elisabetta; Rey, Patrick
  3. The Impact of Mentoring and Helping Relationships in the Informal Process of Employee Branding: Construction of the Measuring Instrument By Andrea Sousa; João Thomaz; Paulo Ferreira; Fátima Jorge; Eulália Santos
  4. Negotiating the Gender Wage Gap By Stevens, Katrien; Whelan, Stephen
  5. The Pros and Cons of Workplace Tournaments By Roman M. Sheremeta; Timothy W. Shields
  6. Is Distance Dead? Face-to-Face Communication and Productivity in Teams By Diego Battiston; Jordi Blanes i Vidal; Tom Kirchmaier
  7. The Effect of Hiring Top Workers on Productivity: What is the Role of Absorptive Capacity? By Lodefalk, Magnus; Tang, Aili
  8. Estimating the relationship between skill and overconfidence By Feld, Jan; Sauermann, Jan; De Grip, Andries
  9. Does Managerial Experience Affect Strategic Change? By Matte Hartog; Frank Neffke

  1. By: Nicholas Bloom; Erik Brynjolfsson; Lucia Foster; Ron Jarmin; Megha Patnaik; Itay Saporta-Eksten; John Van Reenen
    Abstract: Partnering with the Census we implement a new survey of "structured" management practices in 32,000 US manufacturing plants. We find an enormous dispersion of management practices across plants, with 40% of this variation across plants within the same firm. This management variation accounts for about a fifth of the spread of productivity, a similar fraction as that accounted for by R&D, and twice as much as explained by IT. We find evidence for four "drivers" of management: competition, business environment, learning spillovers and human capital. Collectively, these drivers account for about a third of the dispersion of structured management practices. Any opinions and conclusions expressed herein are those of the authors and do not necessarily represent the views of the U.S. Census Bureau. All results have been reviewed to ensure that no confidential information was disclosed.
    Keywords: management, productivity, competition, learning
    JEL: L2 M2 O32 O33
    Date: 2017–03
  2. By: Che, Yeon-Koo; Iossa, Elisabetta; Rey, Patrick
    Abstract: Procuring an innovation involves motivating a research effort to generate a new idea and then implementing that idea effciently. If research efforts are unverifiable and implementation costs are private information, a trade-ooff arises between the two objectives. The optimal mechanism resolves the tradeoff via two instruments: a monetary prize and a contract to implement the project. The optimal mechanism favors the innovator in contract allocation when the value of innovation is above a certain threshold, and handicaps the innovator in contract allocation when the value of innovation is below that threshold. A monetary prize is employed as an additional incentive but only when the value of innovation is suffciently high.
    Keywords: Contract rights; Inducement Prizes; innovation; Procurement and R&D.
    JEL: D44 D82 H57 O31 O38 O39
    Date: 2017–03
  3. By: Andrea Sousa (Universidade de Évora and CEFAGE-UE, Portugal); João Thomaz (GP2/CIn/UFPE and ISLA, Instituto Superior de Gestão e Administração de Leiria, Portugal); Paulo Ferreira (Escola Superior Agrária de Elvas, Inst. Politécnico de Portalegre and CEFAGE-UE, Portugal); Fátima Jorge (Universidade de Évora and CICP, Portugal); Eulália Santos (CIDMA, University of Aveiro, Portugal)
    Abstract: The process of employee branding (EeB), according to Miles and Mangold (2004; 2005) promotes and strengthen the psychological contract between employees and the organization by increasing and maximizing the employees’ sense of commitment and loyalty. The object of this research focuses on the measurement of the impact of mentoring and helping relationships in the informal process of EeB, with a focus on People and on an integrated vision of the Human Resources Management and Organizational Behavior, based on the exchange ratio of Relationship Marketing. With the introduction of a new variable (mentoring and helping relationships), this article focuses on the construction of the measuring instrument and the confirmation of its validity and reliability, in order to measure the involvement and internalization of the “effect of employee brand” in organizations.
    Keywords: employee branding, human resources management, relationship marketing, mentoring and helping relationships, measuring instrument.
    JEL: M12 M54
    Date: 2016
  4. By: Stevens, Katrien; Whelan, Stephen
    Abstract: There is some evidence that gender differences exist in the propensity to negotiate and outcomes from negotiation. Evidence from the psychology and management literatures suggest that relative to males, females are less likely to initiate negotiation and in the event of negotiation, ask for and receive less. This paper examines the propensity of males and females to negotiate over pay, the wage outcomes resulting from negotiation and its impact on the gender wage gap in a non-experimental setting. Using a unique Australian dataset we find evidence that females are less likely than males to have the opportunity to negotiate over pay in their jobs. However, conditional on the opportunity to negotiate, they are no less likely to actually negotiate their pay. Further, while negotiation is associated with higher wage outcomes, females do not fare worse than males in the event of negotiation.
    Keywords: negotiation; gender; wage differentials; labor market
    Date: 2016–01
  5. By: Roman M. Sheremeta (Weatherhead School of Management, Case Western Reserve University and Economic Science Institute, Chapman University); Timothy W. Shields (Argyros School of Business and Economics, Chapman University and Economic Science Institute, Chapman University)
    Abstract: We investigate the behavior of information providers (underwriters) and users (investors) in a controlled laboratory experiment where underwriters have incentives to deceive and investors have incentives to avoid deception. Participants play simultaneously as underwriters and investors in one-shot information transmission games. The results of our experiment show a significant proportion of both deceptive and non-deceptive underwriters. Despite the presence of deceptive underwriters, investors are receptive to underwriters’ reports, gleaning information content, albeit overly optimistic. Within our sample, deception by underwriters and reception by investors are the most profitable strategies. Moreover, participants who send deceptive reports to investors, but at the same time are receptive to reports of underwriters, earn the highest payoffs. These results call into question the characterization of duped investors being irrational.
    Keywords: experiment, strategic communication, risk, deception, investment advice
    Date: 2017
  6. By: Diego Battiston; Jordi Blanes i Vidal; Tom Kirchmaier
    Abstract: Has technology made face-to-face communication redundant? We investigate using a natural experiment in an organisation where a worker must communicate complex electronic information to a colleague. Productivity is higher when the teammates are (exogenously) in the same room and, inside the room, when their desks are closer together. We establish face-to-face communication as the main mechanism, and rule out alternative channels such as higher effort by co-located workers. The effect is stronger for urgent and complex tasks, for homogeneous workers, and for high pressure conditions. We highlight the opportunity costs of face-to-face communication and their dependence on organisational slack.
    Keywords: teamwork, face-to-face communication, distance, organisations
    JEL: D23 M11
    Date: 2017–03
  7. By: Lodefalk, Magnus (Örebro University School of Business); Tang, Aili (Örebro University School of Business)
    Abstract: We examine heterogeneous productivity effects of hiring top workers on small and medium-sized enterprises, using longitudinal employer-employee data. We find the productivity effect to be stronger for firms with higher absorptive capacity in terms of having a well-educated workforce, being in a knowledge-intensive industry or performing R&D. Technological laggards within an industry benefit more strongly from hiring top workers if their workforce is more well-educated.
    Keywords: recruitment; knowledge spillover; firm growth; productivity; SME; absorptive capacity
    JEL: D22 D24 D83 J24 J62
    Date: 2017–03–24
  8. By: Feld, Jan; Sauermann, Jan; De Grip, Andries
    Abstract: The Dunning–Kruger effect states that low performers vastly overestimate their performance while high performers more accurately assess their performance. Researchers usually interpret this empirical pattern as evidence that the low skilled are vastly overconfident while the high skilled are more accurate in assessing their skill. However, measurement error alone can lead to a negative relationship between performance and overestimation, even if skill and overconfidence are unrelated. To clarify the role of measurement error, we restate the Dunning–Kruger effect in terms of skill and overconfidence. We show that we can correct for bias caused by measurement error with an instrumental variable approach that uses a second performance as instrument. We then estimate the Dunning–Kruger effect in the context of the exam grade predictions of economics students, using their grade point average as an instrument for their exam grade. Our results show that the unskilled are more overconfident than the skilled. However, as we predict in our methodological discussion, this relationship is significantly weaker than ordinary least squares estimates suggest.
    Keywords: Dunning–Kruger effect, Overconfidence, Judgment error, Measurement error, Instrumental variable,
    Date: 2017
  9. By: Matte Hartog (Harvard University - Harvard Kennedy School (HKS)); Frank Neffke (Harvard University - Harvard Kennedy School (HKS))
    Abstract: To what extent is strategic change driven by new managers? We investigate this by analyzing industry switching rates of establishments after new managers have been recruited. We use matched employer-employee data of the workforce of Sweden between 1993 and 2010. Our identification strategy relies on the exogenous departures of managers and a local supply shift instrument to predict the background of a new manager. Hiring new managers as such does not seem to affect strategic change. However, new managers from unrelated industries significantly increase the likelihood that the establishment changes its main activity. Moreover, these activities tend to be closely related to the new manager’s prior background. Hence, managers not only influence the strategic direction of the establishment that hired them, but the fact that they tend to steer establishments into industries in which they had previously worked suggests that managerial skills and know-how are to some extent industry specific.
    Date: 2017–03

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