Dohmen, T.J. & Falk, A. (2011). Performance pay and multi-dimensional sorting: Productivity, preferences and gender. American Economic Review, 101, 556-59.
This paper studies the impact of incentives on worker self-selection in a controlled laboratory experiment. Subjects face the choice between a fixed and a variable payment scheme. Depending on the treatment, the variable payment is a piece rate, a tournament, or a revenue-sharing scheme. We find that output is higher in the variable-payment schemes compared to the fixed-payment scheme. This difference is largely driven by productivity sorting. In addition, different incentive schemes systematically attract individuals with different attitudes, such as willingness to take risks and relative self-assessment as well as gender, which underlines the importance of multidimensional sorting.
Raes, A., Heijltjes, M.G., Glunk, U. & Roe, R.A. (2011). The interface of top management team and middle managers: A process model. Academy of Management Review, 36(1), 102-126.
Moers, F. & Hoppe, F. (2011). The choice of different types of subjectivity in CEO annual bonus contracts. Accounting Review, 86(6), 223-246.
Schreurs, B., van Emmerik, IJ.H., Guenter, H., & Germeys, F. (forthcoming). A weekly diary study on the buffering role of social support in the relationship between job insecurity and employee performance. Human Resource Management.
Gennip, A.E., Segers, M.S.R. & Tillema, H. (2010). Peer assessment as a collaborative learning activity: The role of interpersonal variables and conceptions. Learning and Instruction, 20, 280-290.
The present study examined the role of interpersonal variables (psychological safety, value diversity, interdependence, and trust) and conceptions of peer assessment in vocational education. An intervention was conducted (N = 45) with a control group (N = 17), which indicated change in psychological safety, value diversity, and trust in the peer as an assessor. Furthermore, when comparing the intervention and control group, peer assessment contributed to psychological safety and lower value diversity. Perceived learning was predicted by value diversity and conceptions. Conceptions were predicted by psychological safety, value diversity, and trust in the self and in the peer as an assessor.
Akcomak, I.S. and B. ter Weel, 2009. “Social Capital, innovation and growth: Evidence from Europe“, European Economic Review, vol. 53, no. 5, pp. 544-567.
This paper investigates the interplay between social capital, innovation and per capita income growth in the European Union. We model and identify innovation as an important mechanism that transforms social capital into higher income levels. In an empirical investigation of 102 European regions in the period 1990-2002, we show that higher innovation performance is conducive to per capita income growth and that social capital affects this growth indirectly by fostering innovation. Our estimates suggest that there is no direct role for social capital to foster per capita income growth in our sample of European Union countries.
Bauer, R., M. Cosemans and P. Eichholtz, 2009. “”Option Trading and Individual Investor Performance””, Journal of Banking and Finance, vol. 33, no 4, pp. 731-746.
This paper examines the impact of option trading on individual investor performance. The results show that most investors incur substantial losses on their option investments, which are much larger than the losses from equity trading. We attribute the detrimental impact of option trading on investor performance to poor market timing that results from overreaction to past stock market returns. High trading costs further contribute to the poor returns on option investments. Gambling and entertainment appear to be the most important motivations for trading options while hedging motives only play a minor role. We also provide strong evidence of performance persistence among option traders.
Bauer, R., P. Eichholtz and N. Kok, 2009. “”Corporate Governance and Performance: The REIT Effect””, Real Estate Economics, vol. 38, no 1, pp. 1-29.
Real estate investment trusts (REITs) offer a natural experiment in corporate governance due to the fact that they leave little free cash flow for management, which reduces agency problems. We exploit a unique and leading corporate governance database to test whether corporate governance matters for the performance of U.S. REITs. We document for a sample including governance ratings of more than 220 REITs that firm value is significantly related to firm level governance for REITs with low payout ratios only. Repeating the analysis with the complete database that includes more than 5,000 companies and a control sample of firms with high corporate real estate ratios, we find a strong and significantly positive relation between our governance index and several performance variables, indicating that the partial lack of a relation between governance and performance in the real estate sector might be explained by a REIT effect.
Bauer,R., Derwall, J., Hanna, D., 2009. Employee Relations and Credit Risk. Working paper
Consistent with the theory that human capital management influences organizational performance and risk, we find that employee relations explain the cross-sectional variation in credit risk. We construct an aggregate measure for the quality of employeerelations based on the firm’s engagement in employment practices and policies, and document that firms with stronger employee relations enjoy a statistically andeconomically lower cost of debt financing, higher credit ratings, and lower firm-specific risk. These findings are robust to the inclusion of a comprehensive set of controls and to alternative explanations.
Boone, C., Hendriks, W., 2009. Top management team diversity and firm performance: Moderators of functional-background and locus-of-control diversity. Management Science. 55 (2), p. 165-180.
Past research on the relationship between top management team (TMT) compositional diversity and organizational performance has paid insufficient attention to the nature of TMT team processes in interaction with TMT diversity. We fill this gap by studying how three team mechanisms (collaborative behavior, accurate information exchange, and decision-making decentralization) moderate the impact of TMT diversity on financial performance of 33 information technology firms. We focus on two fundamentally different forms of TMT diversity: functional-background (FB) and locus-of-control (LOC). We argue that the former has the potential to enhance decision quality and organizational performance, whereas the latter might trigger relational conflict, and is, therefore, potentially detrimental to firm effectiveness. The ultimate aim of our study is to analyze which team processes help to transform distributed FB knowledge into high-quality decisions and organizational effectiveness, and which help avoid the potential detrimental effects of LOC diversity. We find that a TMTâ€™s collaborative behavior and information exchange are necessary conditions to unleash the performance benefits of FB diversity, but do not interact with LOC diversity. In addition, decentralized decision making spurs the effectiveness of functionally diverse teams, while at the same time reinforces the negative consequences of LOC diversity on firm performance.
Curvers, F., M. Hensen, D. Bongaerts, 2009. The delimitation and coherence of functional and administrative regions, Regional Studies, Vol. 43, pp. 19-31.
Delimitation and coherence of functional and administrative regions, Regional Studies. The paper tests whether functional regions in the Netherlands show more labour market coherence between the municipalities included in them than the Dutch administrative regions. It turns out that regional disparities are not significantly smaller within functional than within administrative regions with respect to income level, housing prices, employment rate, and unemployment rate. It is argued that the numerous functional delimitations of the labour market that have been made for many countries in other studies are only useful for policy-making if they clearly outperform the administrative delimitations with respect to some relevant indicators of labour market coherence or regional disparities.
Gorlich, D. and A. de Grip, 2009. Human capital depreciation during hometime, Oxford Economic Papers, vol. 61, pp. 98-121.
We estimate human capital depreciation rates during career interruptions due to family reasons (parental leave and household time) in male- and female-dominated occupations. If human capital depreciation due to family related career breaks is lower in female than in male occupations, this can explain occupational sex segregation because women will take the costs of future breaks into account when optimizing their lifetime earnings. We find that short-run depreciation rates in high-skilled occupations are significantly lower in female than in male occupations. In low-skilled occupations, there is no evidence of this difference. Our findings support the self-selection hypothesis with respect to occupational sex segregation in the more skilled jobs, i.e. high-skilled women might deliberately choose female occupations because of the lower short-term wage penalties for family-related career interruptions.
Borghans, L., A.L. Duckworth, J.J. Heckman and B. ter Weel, 2008. The economics and psychology of personality traits,”” Journal of Human Resources, vol. 43, no. 4.
This paper explores the interface between personality psychology and economics. We examine the predictive power of personality and the .stability of personality traits over the life cycle. We develop .simple analytical frameworks for interpreting the evidence in personality psychology and suggest promising avenues for future research.
Borghans, L., B. ter Weel and B.A. Weinberg, 2008. Interpersonal styles and labor market outcomes, Journal of Human Resources, vol. 43, no. 4.
This paper develops a framework of the role of interpersonal interactions in the labor market. Effective interpersonal Interactions involve caring and directness. The ability to perform these tasks varies with personality and the importance of these tasks varies across jobs. An assignment model shows that people are most productive in jobs that match their style. An oversupply of one attribute relative to the other reduces wages for people who are better with the attribute in greater supply. We present evidence that youth sociability affects job assignment in adulthood. The returns to interpersonal interactions are consistent with the assignment model.
Borghans, L., H. Meijers and B. ter Weel, 2008. The role of noncognitive skills in explaining cognitive test scores, Economic Inquiry, vol. 46, no. 1, pp. 2-12.
This article examines whether noncognitive skills”measured both by personality traits and by economic preference parametersâ€”influence cognitive testsperformance. The basic idea is that noncognitive skills might affect the effort people put into a test to obtain good results. We experimentally varied the rewards for questions in a cognitive test to measure to what extent people are sensitive to financial incentives. To distinguish increased mental effort from extra time investments, we also varied the questionstime constraints. Subjects with favorable personality traits such as high performance motivation and an internal locus of control perform relatively well in the absence of rewards, consistent with a model in which trying as hard as you can is the best strategy. In contrast, favorable economic preference parameters (low discount rate, low risk aversion) are associated with increases in time investments when incentives are introduced, consistent with a rational economic model in which people only invest when there are monetary returns. The main conclusion is that individual behavior at cognitive tests depends on noncognitive skills.
De Grip, A., Bosma, H., Willems, D, Van Boxtel, M., 2008. Job-worker Mismatch and Cognitive Decline, Oxford Economic Papers, 60, 237-253.
We have used longitudinal test data on various aspects of people’s cognitive abilities to analyse whether overeducated workers are more vulnerable to a decline in their cognitive abilities, and undereducated workers are less vulnerable. We found that a job-worker mismatch induces a cognitive decline with respect to immediate and delayed recall abilities, cognitive flexibility and verbal fluency. Our findings indicate that, to some extent, it is the adjustment of the ability level of the overeducated and undereducated workers that adjusts initial job-worker mismatch. This adds to the relevance of preventing overeducation, and shows that being employed in a challenging job contributes to workersâ€™ cognitive resilience.
Solinger, O., van Olffen, W., Roe, R., 2008. Beyond the Three-Component Model of Organizational Commitment. Journal of Applied Psychology, 93(1), p70-83.
This article offers a conceptual critique of the three-component model (TCM) of organizational commitment (Allen & Meyer, 1990) and proposes a reconceptualization based on standard attitude theory. The authors use the attitude behavior model by Eagly and Chaiken (1993) to demonstrate that the TCM combines fundamentally different attitudinal phenomena. They argue that general organizational commitment can best be understood as an attitude regarding the organization, while normative and continuance commitment are attitudes regarding specific forms of behavior (i.e., staying or leaving). The conceptual analysis shows that the TCM fails to qualify as general model of organizational commitment but instead represents a specific model for predicting turnover. The authors suggest that the use of the TCM be restricted to this purpose and that Eagly and Chaikenâ€™s model be adopted as a generic commitment model template from which a range of models for predicting specific organizational behaviors can be extracted. Finally, they discuss the definition and measurement of the organizational commitment attitude. Covering the affective, cognitive, and behavioral facets of this attitude helps to enhance construct validity and to differentiate the construct from other constructs.
Ter Weel, B., 2008. The noncognitive determinants of labor-market and behavioral outcomes, Journal of Human Resources, vol. 43, no. 4, pp. 729-737.
Bruggen, A. and F. Moers., 2007. The role of financial incentives and social incentives in multi-task settings, Journal of Management Accounting Research, Vol. 19, pp. 25-50.
In this paper, we investigate the role of financial incentives and social incentives in multi-task settings where the agent makes an effort-level choice and an effort-allocation choice. We focus on a setting where these choices are not independent and an active trade-off between effort level and effort allocation exists. Social incentives play a crucial role in this trade-off. While financial incentives increase the effort level, social incentives congruent with the principal’s interest mitigate the distortions in effort allocation associated with financial incentives, which improves the effectiveness of financial incentives. In a 2 2 experiment, we find that participants who receive distorting financial incentives provide significantly more total effort than participants who receive a fixed wage, but they allocate effort significantly less congruently. However, the effort-allocation distortion caused by distorting financial incentives is significantly reduced by congruent social incentives. We further find that the level of effort on the unmeasured task is not significantly different between fixed wages and financial incentives, which implies that distortions in effort allocation are driven by doing more of the measured task instead of doing less of the unmeasured task. Our findings have important implications for both theory building and organizational practices.
Voordeckers, W., Van Gils, A. & Van den Heuvel, J., 2007. Board composition in small and medium-sized family firms. Journal of Small Business Management, 45(1), pp. 137-156.
This study focuses on the determinants of board composition in Belgian small and medium-sized family firms. It extends the empirical literature on board composition in private small and medium-sized family enterprises by integrating several dimensions of the family component in the research model. Furthermore, using a multinomial logit model, we examine in which circumstances family firms opt for (1) a family board, (2) an inside board, or (3) an outside board. Results suggest that family-related contingency variables are far more important than CEO-related or control variables, giving support to the argument that board composition in family firms is a reflection of the family characteristics and objectives. Moreover, the results suggest that a resource dependence and added value perspective explain more of the variation in board composition than agency considerations.
Pfann, G., 2006.Downsizing and heterogeneous firing costs. The Review of Economics and Statistics, 88(1), pp. 158-170
A structural labor demand model is developed that allows for worker heterogeneity regarding firing costs and productivity. It is estimated for a firm in demise when 3,650 workers were made redundant in a restructuring following bankruptcy. This was the largest mass layoff in the history of the Netherlands. The model produces sharp predictions on how firing thresholds depend on individual worker characteristics. The signs of the estimated coefficients are consistent with these predictions. The model correctly predicts 68% of individual worker displacement. The results provide new in-depth knowledge on how firing costs influence personnel decisions.
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