How to Compete: The Impact of Workplace Practices and Information Technology on Productivity

Using data from a unique nationally representative sample of businesses, we examine the impact of workplace practices, information technology, and human capital investments on productivity. We estimate an augmented Cobb-Douglas production function with both cross section and panel data covering the...

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Bibliographic Details
Published in:	The review of economics and statistics 2001-08, Vol.83 (3), p.434-445
Main Authors:	Black, Sandra E., Lynch, Lisa M.
Format:	Article
Language:	eng
Subjects:	Capital stocks Coefficients Economic models Employees Estimators Human capital Human resources Information technology Labor Labor productivity Production functions Productivity Profit sharing plans Statistical analysis Studies Workplaces
Online Access:	Get full text
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Summary:	Using data from a unique nationally representative sample of businesses, we examine the impact of workplace practices, information technology, and human capital investments on productivity. We estimate an augmented Cobb-Douglas production function with both cross section and panel data covering the period of 1987-1993, using both within and GMM estimators. We find that it is not whether an employer adopts a particular work practice but rather how that work practice is actually implemented within the establishment that is associated with higher productivity. Unionized establishments that have adopted human resource practices that promote joint decision making coupled with incentive-based compensation have higher productivity than other similar nonunion plants, whereas unionized businesses that maintain more traditional labor management relations have lower productivity. Finally, plant productivity is higher in businesses with more-educated workers or greater computer usage by nonmanagerial employees.
ISSN:	0034-6535 1530-9142