John F. Tomer

Understanding high-performance work systems: the joint contribution of economics and human resource management

High-performance work systems (HPWS) are organizations that utilize a fundamentally different approach to managing than the traditional hierarchical approach associated with mass production/scientific management. At the heart of this emerging approach is a radically different employer-employee relationship. Leading organizational behavior specialists believe that HPWS has the greatest potential to provide sustained competitive advantage to companies adopting it. Thus, human resource managers and scholars as well as economists ought to be very interested in it. While much has been written about HPWS in the human resource management (HRM) literature, economists’ attention to it has been practically nil despite the fact that organizational economics is a significant area within economics. The primary purpose of this paper is to improve our understanding of the superior economic performance of HPWS. The secondary purpose is to compare the respective contributions of the HRM and economics disciplines to this understanding. The HRM/ organizational behavior literature contains important explanations regarding the economic performance of HPWS. In contrast, there is hardly any economic literature explicitly focused on HPWS. However, as indicated below, economic theory, particularly x-efficiency theory, can be adapted to this purpose. The explanations that make the most sense of the economic performance of HPWS are interdisciplinary ones that integrate economics with organizational behavior.

What is Behavioral Economics

This paper is concerned with defining the characteristics of behavioral economics (BE), identifying the different strands of BE, and carefully comparing BE to mainstream or orthodox economics. An important question here is: Is BE an economic school of thought? It is noteworthy that BE is not strongly associated with a political economic ideology or particular substantive propositions as is the case with some other economic schools of thought. What distinguishes BE is its scientific practices and its guiding notions of what good scientific practice ought to be. In other words, BEs practice and espouse scientific methods that are different, at least, from those typical of mainstream economics (ME). This paper develops an approach to comparing BE to other types of economics. The job of comparison is first to identify the key dimensions (related to its approach to science) along which BE, and its different strands, differs from ME, and second to use these dimensions to illustrate the differences. The desired dimensions of comparison are ones for which there are critical and important differences between BE and ME. Further, these dimensional differences are related to BEs critique of ME and how behavioral economists describe their attempts to distinguish themselves from ME. The dimensions selected for this use are: 1) narrowness, 2) rigidity, 3) intolerance, 4) mechanicalness, 5) separateness, and 6) individualism. Comparing economic disciplines using the comparison dimensions is like locating places on a map, except that the map of the economic disciplines is a six dimensional one, not a two dimensional one. To locate a discipline on the map, it is necessary to have judgments of the disciplines location on each of the six dimensions. In a sense, we are discovering what BE is partly by finding out its characteristics, but partly by finding out its differences from certain other well known entities (disciplines). After using these dimensions to characterize ME, they are used to characterize BEs strands starting with the two earliest strands of BE, those emanating from the work of Herbert Simon and George Katona. The other strands of BE considered here are psychological economics, Harvey Leibensteins x-efficiency theory, George Akerlof and behavioral macroeconomics, behavioral finance, Vernon Smith and experimental economics, and the evolutionary theory of Richard Nelson and Sidney Winter. Other elements of BE that can not be classified in these strands are also considered.

Personal Capital and Emotional Intelligence: An Increasingly Important Intangible Source of Economic Growth

This paper focuses on a new source of economic growth, personal capital formation, and provides an explanation for a part of economic growth that has heretofore been unexplained. Personal capital is the human capacity reflecting the quality of an individuals psychological, physical, and spiritual functioning; it is a capacity fundamentally different from cognitive ability. Spending effort to improve emotional intelligence, often in order to improve job performance, is the essence of what successful investment in personal capital involves. Given the increasing investment in it and the evidence of its importance, economists can no longer afford to neglect the contribution of personal capital to economic growth.

Economic man vs. heterodox men: the concepts of human nature in schools of economic thought☆

Economic man, the man who acts on pure economic motives alone, is the concept of man at the heart of mainstream economics. Heterodox economists, while acknowledging that economic man has served usefully for some purposes, know in different ways that economic man is, because it leaves out too much of human nature, a deficient concept of man. They are uncomfortable at best with the idea of characterizing humans in such a reductionist way. This paper proposes to use the comprehensive view of human nature developed by Ken Wilber to point to the specific deficiencies of economic man. With Wilbers model of human development as the backdrop, it is possible to map the different schools of thought with respect to each other, showing how each of their overlapping conceptions of man include some important elements missing in economic man but fail to include other elements.

Beyond transaction markets, toward relationship marketing in the human firm: A socio-economic model

Abstract Relationship marketing involving a long-term, symbiotic, learning partnership between buyer and seller is an important new development that is dramatically different from transaction oriented marketing in which the aim of the seller is simply to close a specific sale. The socio-economic model developed in this paper explains the firms choice of marketing orientation, i.e., where the firm will locate on the spectrum from transaction orientation to relationship marketing orientation. This choice is determined by 1) the economic incentives from markets it participates in, 2) the customers orientation, 3) the internal organizational capabilities of the seller, 4) the “macro” societal influence, 5) the “micro” social influences of extra firm institutions and infrastructures, 6) special product related factors, and 7) the technological opportunities available to the seller. There is good reason to believe that businesses fail to invest sufficiently in their buyer-seller relationships. Therefore, society would gain if governments were to foster the development of relationship marketing.

Good habits and bad habits: A new age socio-economic model of preference formation

Abstract In contrast to neoclassical economics which generally takes consumer preferences as given, the model developed here explains how a persons preferences for consumer goods change over time and may change for the better or worse. This is a four self model. The four selves correspond to four types of preferences: actual preferences, metapreferences, true preferences, and unrestrained preferences. An individuals initial actual preferences reflecting ones investment in consumption capital are likely to change to the extent that they differ either from ones metapreferences or ones unrestrained preferences. Temptations from the latter could lead to a deterioration of actual preferences. Or the intrapsychic stress that occurs when metapreferences are significantly out of synch with actual preferences could lead to improved actual preferences. A persons actual preferences improve when they change toward true preferences, the unique set of preferences that represent what is really and truly the best for that person.

Addictions are not rational: a socio-economic model of addictive behavior

Drawing on important insights from psychological and other noneconomic literature and combining these with economic insights, a careful explanation of why addictive behavior is not rational is provided and a socio-economic model is developed to explain addictive behavior. The model incorporates a much broader conception of human behavior than does mainstream economics, and a broader recognition of the variety of factors that influence human behavior. The model is consistent with intuitive wisdom and the wisdom of religious and spiritual traditions. There is much scope for further research.

The human firm in the natural environment: a socio-economic analysis of its behavior

Abstract New realities are leading an increasing number of businesses to discard their old managerial perspectives and practices with regard to the natural environment. As desirable as the new approaches are, the environmental behavior (pollution, pollution prevention, etc.) of these firms cannot be explained by the neoclassical model. Thus, this paper develops a socio-economic model of the firms environmental behavior that incorporates managerial, social, environmental, and ethical realities not found in the neoclassical model. In contrast to short-term oriented, opportunistic approaches, managements are increasingly setting high environmental goals, integrating environmental management with other aspects of management, developing environmentally oriented strategies that harmonize economic and environmental interests, and utilizing system-wide approaches along with socially responsible decision making. This cannot be explained by the neoclassical model in which the firms environmental behavior is an outcome of economic incentives from (1) product and resource markets, and (2) regulators. The socio-economic model adds four important new elements: (1) the firms internal organizational capability; (2) environmental opportunities; (3) societys environmental concerns, awareness, and demands; and (4) influences from extra-firm institutions. Therefore, the firms environmental behavior is an outcome not only of economic incentives but of (1) the firms capacity to take advantage of opportunities, and (2) the external social influences on it.

Beyond the machine model of the firm, toward a holistic human model

Abstract According to mainstream economic theory, businesses are essentially machines, vehicles for transforming inputs into outputs. Although useful for some purposes, this theory unfortunately fails to account for some very important differences between companies. What is missing from the machine model of the firm are the soft ingredients such as leadership, vision, passion, ethical principle, character, empowerment, self-realization, commitment, community, and inspiration. The reason they are missing is that these “soft” factors are considered to be incompatible with the “hard” nature of economic theory. Contrary to the conventional economic wisdom, the present paper develops a holistic model of the firm that incorporates both hard and soft ingredients.

What Causes Obesity? And Why Has It Grown So Much?

Obesity in the United States is widely acknowledged to be a severe and growing problem, especially among the young. Can economists contribute to understanding the causes of obesity? This economist proposes a model that includes nonrational decisionmaking. It is a useful start to understanding a complex process.