Management practices and productivity: Does employee representation play a moderating role?
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Date
2023
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Journal ISSN
Volume Title
Publisher
John Wiley & Sons Ltd
Abstract
Bloom and Van Reenen (2007) have suggested an index
of best management practices capturing three broad
areas: monitoring, targets and incentives. However, it is an
open question whether the functioning of these practices
depends on contextual factors. From a theoretical view point, the management practices involve both productive
and dysfunctional effects. We hypothesize that the relative
strength of these effects depends on the industrial relations
climate. Works councils help management practices live up
to their potential by building long-term employer-employee
cooperation. Our empirical analysis uses panel data from the
German Management and Organizational Practices survey
to examine this hypothesis. Applying a reformulated version
of the Mundlak estimator, we disentangle short-term and
sustaining productivity effects of the management prac tices. Our results show that the incidence of a works council
specifically strengthens the sustaining productivity effect of
the practices
Description
Keywords
monitoring, incentives, productivity