nep-hrm New Economics Papers
on Human Capital and Human Resource Management
Issue of 2018‒04‒30
eleven papers chosen by
Patrick Kampkötter
Eberhard Karls Universität Tübingen

  1. The Impact of Management Practices on SME Performance By Forth, John; Bryson, Alex
  2. Career Risk and Market Discipline in Asset Management By Ellul, Andrew; Pagano, Marco; Scognamiglio, Annalisa
  3. Further Training and Affective Commitment By Grund, Christian; Titz, Krystina
  4. Managerial Risk Aversion and Accounting Conservatism By Larmande, François; Stolowy, Hervé
  5. Effort, inequality and cooperation: evidence from the lab By Kjetil Bjorvatn; Nicola Daniele Coniglio
  6. Relational Incentive Contracts and Performance Measurement. By Chi, Chang Koo; Olsen, Trond E.
  7. Pay for locally monitored performance? A welfare analysis for teacher attendance in Ugandan primary schools By Cilliers, Jacobus; Kasirye, Ibrahim; Leaver, Clare; Serneels, Pieter; Zeitlin, Andrew
  8. Measuring Costly Effort Using the Slider Task By Gill, David; Prowse, Victoria L.
  9. Leadership Experiences, Labor Market Entry, and Early Career Trajectories By Lundin, Martin; Nordström Skans, Oskar; Zetterberg, Pär
  10. Teacher Performance Pay in the United States: Incidence and Adult Outcomes By Bond, Timothy N.; Mumford, Kevin J.
  11. Why Women Don’t Ask: Gender Differences in Fairness Perceptions of Own Wages and Subsequent Wage Growth By Christian Pfeifer; Gesine Stephan

  1. By: Forth, John (National Institute of Economic and Social Research (NIESR)); Bryson, Alex (University College London)
    Abstract: We examine the impact of management practices on firm performance among SMEs in Britain over the period 2011-2014, using a unique dataset which links survey data on management practices with firm performance data from the UK's official business register. We find that SMEs are less likely to use formal management practices than larger firms, but that such practices have demonstrable benefits for those who use them, helping firms to grow and increasing their productivity. The returns are most apparent for those SMEs that invest in human resource management practices, such as training and performance-related pay, and those that set formal performance targets.
    Keywords: SMEs, small and medium-sized enterprises, employment growth, high-growth firms, productivity, workplace closure, management practices, HRM, recession
    JEL: L25 L26 M12 M52 M53
    Date: 2018–03
  2. By: Ellul, Andrew; Pagano, Marco; Scognamiglio, Annalisa
    Abstract: We establish that the labor market helps discipline asset managers via the impact of fund liquidations on their careers. Using hand-collected data on 1,948 professionals, we find that top managers working for funds liquidated after persistently poor relative performance suffer demotion entailing a yearly average compensation loss of $664,000. Scarring effects are absent when liquidations are preceded by normal performance or involve mid-level employees. Based on a model with moral hazard and adverse selection, we find that these results can be ascribed to reputation loss rather than bad luck. The findings suggest that performance-induced liquidations supplement compensation-based incentives.
    Keywords: asset managers; careers; Hedge Funds; market discipline; scarring effects
    JEL: G20 G23 J24 J62 J63
    Date: 2018–04
  3. By: Grund, Christian (RWTH Aachen University); Titz, Krystina (RWTH Aachen University)
    Abstract: We investigate the relation of further training and employees' affective commitment. In doing so, we distinguish between a support effect and a participation effect: On the one hand we analyze how a firm's general support for further training is associated with the affective commitment of their employees and on the other hand how individual participation in further training relates to affective commitment. Using the Linked Personnel Panel (LPP), which is a longitudinally linked employer-employee data set, we are able to control for several human resource management instruments additionally to the usual demographics and job characteristics. Moreover, the two-level structure of the data allows us to analyze the support effect from a firm's perspective and an individually perceived perspective. Results show that employees' participation in further training is positively related to affective commitment, but that a general perceived firm's support for personnel development mediates the positive relation of participation in further training and individual affective commitment. Furthermore, we find that the relation of perceived firm's interest in personnel development and affective commitment is increasing with years of schooling and decreasing with age.
    Keywords: commitment, further training, signalling, linked employer-employee data
    JEL: M53 M12 J24
    Date: 2018–03
  4. By: Larmande, François; Stolowy, Hervé
    Abstract: This paper investigates the link between one managerial characteristic, the degree of risk aversion, and accounting conservatism. Two models are analyzed, one where the degree of conservatism is chosen by the principal (Board) and accounting information is used for stewardship, and a second where the principal delegates the choice of the degree of conservatism to the manager and accounting information is primarily used for investment efficiency. We show in the first model that higher risk aversion reduces the demand for conservatism from a stewardship point of view. In the second model, we show that delegation is an optimal way for the principal of committing to conservative reporting. Hiring a more risk-averse manager lowers the cost of implementing this conservative reporting. The two models provide opposite predictions for the association between managerial risk aversion and the degree of conservatism. Empirical evidence favors the second model’s prediction. The paper suggests that managers with specific characteristics and incentive contracts might be endogenously chosen by the firm to implement an ex-ante optimal degree of conservatism.
    Keywords: Accounting Conservatism; Risk Aversion; Limited Liability; Reporting Bias; Principal-Agent Theory; Stewardship; Investment Efficiency
    JEL: D82 D86 G30 M41 M51 M52
    Date: 2017–06–01
  5. By: Kjetil Bjorvatn (NHH, Norwegian School of Economics); Nicola Daniele Coniglio (Università degli Studi di Bari "Aldo Moro")
    Abstract: We investigate the impact of inequality on cooperation using a linear public good game and focusing on heterogeneity in the source of income, where some participants work for their endowment (“workers”) while others do not (“non-workers”). The key finding of our paper is that cooperation is higher when workers are grouped with other workers, and we provide evidence that the underlying mechanism for this result is a higher degree of altruism between workers. Our results thus lend support to the concerns that inequality may have detrimental effects on economic efficiency.
    Keywords: public goods; inequality; source of income heterogeneity
    JEL: F1 O1 O3
    Date: 2018–04
  6. By: Chi, Chang Koo (Dept. of Economics, Norwegian School of Economics and Business Administration); Olsen, Trond E. (Department of Business and Management Science)
    Abstract: This paper analyzes relational contracts under moral hazard. We first show that if the available information (signal) about effort satisfies a generalized monotone likelihood ratio property, then irrespective of whether the first-order approach (FOA) is valid or not, the optimal bonus scheme takes a simple form. The scheme rewards the agent a fixed bonus if his performance index exceeds a threshold, like the FOA contract of Levin (2003), but the threshold can be set differently. We next derive a sufficient and necessary condition for non-verifiable information to improve a relational contract. Our new informativeness criterion sheds light on the nature of an ideal performance measure in relational contracting.
    Keywords: Relational contracts; non-verifiable performance measures; first-order approach; bonus scheme; informativeness criterions
    JEL: D80 D86 L14
    Date: 2018–04–20
  7. By: Cilliers, Jacobus; Kasirye, Ibrahim; Leaver, Clare; Serneels, Pieter; Zeitlin, Andrew
    Abstract: To achieve the twin objectives of incentivizing agent performance and providing information for planning purposes, public sector organizations often rely on reports by local monitors that are costly to verify. Received wisdom has it that attaching financial incentives to these reports will result in collusion, and undermine both objectives. Simple bargaining logic, however, suggests the reverse: pay for locally monitored performance could incentivize desired behavior and improve information. To investigate this issue, we conducted a randomized controlled trial in Ugandan primary schools that explored how incentives for teachers could be designed when based on local monitoring by head teachers. Our experiment randomly varied whether head teachers' reports of teacher attendance were tied to teacher bonus payments or not. We find that local monitoring on its own is ineffective at improving teacher attendance. However, combining local monitoring with finanacial incentives leads to both an increase in teacher attendance (by 8 percentage points) and an improvement in the quality of information. We also observe substantial gains in pupil attainment, driven primarily by a reduction in dropouts. By placing a financial value on these enrollment gains, we demonstrate that pay for locally monitored performance passes both welfare and fiscal sustainability tests.
    Keywords: Performance pay; Monitoring; Campbell's law; Field experiment; Education; Welfare; Uganda.
    JEL: D61 H52 I25 O15
    Date: 2018–04
  8. By: Gill, David (Purdue University); Prowse, Victoria L. (Purdue University)
    Abstract: Using real effort to implement costly activities increases the likelihood that the motivations that drive effort provision in real life carry over to the laboratory. However, unobserved differences between subjects in the cost of real effort make quantitative prediction problematic. In this paper we present the slider task, which was designed by us to overcome the drawbacks of real effort tasks. The slider task allows the researcher to collect precise and repeated observations of effort provision from the same subjects in a short time frame. The resulting high-quality panel data allow sophisticated statistical analysis. We illustrate these advantages in two ways. First, we show how to use panel data from the slider task to improve precision by controlling for persistent unobserved heterogeneity. Second, we show how to estimate effort costs at the subject level by exploiting within-subject variation in incentives across repetitions of the slider task. We also provide z-Tree code and practical guidance to help researchers implement the slider task.
    Keywords: experimental methodology, real effort, effort provision, cost of effort, slider task, design of laboratory experiments, unobserved heterogeneity
    JEL: C91 C13
    Date: 2018–03
  9. By: Lundin, Martin (Uppsala University); Nordström Skans, Oskar (Uppsala University); Zetterberg, Pär (Uppsala University)
    Abstract: Matching archive data on election discontinuities to register data on labor market trajectories we estimate the causal effects of being elected into Swedish student union councils on subsequent labor market careers. Marginally elected students are much more likely to have a rapid transition into employment. Effects are not confined to establishments, organizations or industries where previous candidates are employed, suggesting that the benefits are general in nature. Elected representatives have higher labor earnings within three years, but not thereafter. Overall, leadership experiences before labor market entry boost individuals' early careers, whereas mid-term outcomes are unaffected.
    Keywords: extracurricular activities, earnings, higher education
    JEL: I23 J24
    Date: 2018–03
  10. By: Bond, Timothy N. (Purdue University); Mumford, Kevin J. (Purdue University)
    Abstract: This paper estimates the effect of exposure to teacher pay-for-performance programs on adult outcomes. We construct a comprehensive data set of schools which have implemented teacher performance pay programs across the United States since 1986, and use our data to calculate the fraction of students by race in each grade and in each state who are affected by a teacher performance pay program in a given year. We then calculate the expected years of exposure for each race-specific birth state-grade cohort in the American Community Survey. Cohorts with more exposure are more likely to graduate from high school and earn higher wages as adults. The positive effect is concentrated in grades 1-3 and on programs that targeted schools with a higher fraction of students who are eligible for free and reduced lunch.
    Keywords: teacher performance pay, adult outcomes
    JEL: I24 J24
    Date: 2018–03
  11. By: Christian Pfeifer; Gesine Stephan
    Abstract: The authors analyze gender differences in fairness perceptions of own wages and subsequent wage growth. The main finding is that women perceive their wage more often as fair if controls for hourly wage rates, individual and job-related characteristics are taken into account. Furthermore, the gender difference is more pronounced for married than for single women. This points to the fact that social norms, gender roles, and gender identity are at least partly responsible for the gap in fairness perceptions. Further analysis shows that individuals, who perceive their wage as unfair, experience larger wage growth in subsequent years. An explanation would be that a wage perceived as unfair triggers negotiations for a better wage or induces individuals to search for better paid work. Thus, differences in wage perceptions can contribute to explain the nowadays still persistent gender wage gap.
    Keywords: gender differences, fairness, social norms, wages, wage growth
    JEL: J16 J31 J71 A12
    Date: 2018

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