Management Practices and Productivity: Does Employee Representation Play a Moderating Role?

Gio, 27/10/2022 - 12:00 / 13:30

403, Viale Romania

Speaker: Jens Mohrenweiser , Bournemouth University

(coauthored with U. Jirjahn & M.C. Laible)


Bloom and Van Reenen (2007) have developed an index of best management practices capturing three broad areas: monitoring, targets and incentives. Using panel data from the German Management and Organizational Practices survey, this study examines whether the productivity effect of the management practices depends on nonunion employee representation. Applying a reformulated version of the Mundlak estimator, we disentangle the effect of introduced and sustained practices. While the introduction of management practices has a similar effect in all firms, the incidence of a works council specifically strengthens the sustaining productivity effect of the management practices. This conforms to theoretical considerations that management practices can involve both incentives and disincentives. The relative strength of the incentives and disincentives depends on the industrial relations climate. Works councils help management practices live up to their potential by building long-term employer-employee cooperation.