Panu Kalmi

Workplace Innovations and Employee Outcomes: Evidence from Finland

In the recent literature on workplace innovations, two competing views stand out. One strand of literature emphasizes positive outcomes for employees in the form of increased discretion, improved job security, and enhanced job satisfaction. In turn, critics argue that workplace innovations lead to increased job intensity and mental strain, and compromise job security. We address these issues by using a representative data set on individual employees from Finland. Our results indicate that workplace innovations are mainly associated with beneficial outcomes for employees. They are consistent with the view that institutional features of the Finnish labor market may mediate the outcomes.

How Does Employee Involvement Stack Up? The Effects of Human Resource Management Policies on Performance in a Retail Firm

The impact of innovative human resource management (HRM) practices on performance is investigated using panel data for all units of a retail firm. Our rich data include measures of the operating environment, important dimensions of core inputs, and information on HRM environments, and output is measured as value added. We estimate augmented production functions, including both establishment and manager fixed effects. When employees have opportunities to participate, and receive appropriate information and feedback from their supervisors, productivity is enhanced. Thus, even in settings where employees do simple tasks and are relatively low-skilled, participatory work environments can enhance business performance.

The Determinants of Stock Option Compensation: Evidence from Finland

A new, long, and rich panel data set consisting of all Finnish publicly traded firms is used to study how firm characteristics and stock market developments influence the adoption and targeting of stock option compensation. Stock option adoption is found to be a procyclical phenomenon. Findings from firm-level econometric analysis often corroborate those based on U.S. data, but important differences also emerge. Findings include: (i) firms with higher market value per employee are more likely to use stock option compensation; (ii) share returns from the past year affect the adoption of targeted stock options, but not broad-based plans; (iii) our results are consistent with the hypothesis that selective and broad-based plans arise as solutions to differing monitoring difficulties. Broad-based schemes are observed when production is human capital-intensive and employee performance is hard to monitor, while selective schemes are adopted when ownership is dispersed and therefore owners may have weak incentives to monitor management.

Trust, Inequality and the Size of the Co-Operative Sector: Cross-Country Evidence

We provide the first empirical evidence on the determinants of differences in the size of the cooperative sector around the world. Our key data have been recently released by the ICA and are integrated with other standard sources, such as data from the World Values surveys. In our empirical work we concentrate on the links between inequality and trust and cooperative incidence and undertake selectivity correction estimates as well as a series of robustness checks. Consistent with theory we find strong support for the proposition that trust plays a causal role in accounting for differences in co-operative incidence. Also consistent with theory, we find support (albeit much weaker) for the role of inequality. Further support for our findings flows from our estimates for conventional, listed firms, where we do not find that trust and inequality play similar roles in accounting for the variation in the incidence of large listed firms across countries. Copyright

The Relationship between Financial Participation and Other Forms of Employee Participation: New Survey Evidence from Europe

This article explores the relationships between financial participation and other forms of participation drawing on data collected from listed companies in Finland, Germany, the Netherlands and the UK. The authors provide evidence on two questions. First, does the presence of either direct or indirect participation predict the use of profit sharing and employee equity plans? Second, to what extent is employee participation in profit sharing and equity plans influenced by the presence of other forms of participation? Overall, the results provide little evidence of complementarity between financial participation and other forms of participation. There are also clear differences between types of financial participation. It is found that indirect participation has a weak relationship with use of profit sharing and participation in profit sharing plans. Direct participation is not associated with the use of equity plans or profit sharing but with participation in stock acquisition plans. Employee participation in plan design is strongly associated with participation in profit sharing and stock acquisition plans but not stock options.

Choice of Ownership Structure and Firm Performance: Evidence from Estonia

This article uses panel data for a representative sample of Estonian enterprises to analyse diverse issues related to the determinants of ownership structures and ownership changes after privatisation. A key focus is to determine whether ownership changes are related to economic efficiency. While employee-owned firms are found to be much more prone than other firms to switch ownership categories, often ‘employee-owned’ firms remain ‘insider-owned’ as ownership passes from current employees to managers and former employees. Logit analysis of the determinants of ownership structures and ownership changes provides mixed support for several hypotheses. As predicted: (i) wealth and resource constraints play a crucial role in the determination of ownership, with foreigners buying firms with the highest equity levels and insiders buying firms with the lowest equity valuations; (ii) risk aversion explains subsequent ownership changes, especially away from employee ownership; (iii) allocation of ownership depends on the pre-privatisation origin and location of the firm, and these factors also influence subsequent ownership changes. Our findings provide mixed support for the hypothesis that ownership changes are related to economic efficiency.

Social Capital and Access to Credit: Evidence from Uganda

Abstract We use a nationally representative survey in Uganda to study the links between social capital and financial access. Our results indicate a positive association between individual social capital and access to institutional credit, but no significant relationship between generalised trust and credit access. The effect of individual social capital is more pronounced for poorer people, in rural areas, and in areas where generalised trust is low. Individual social capital seems to promote access especially to semiformal and informal financial institutions.

Bargaining regimes, variable pay and financial participation: some survey evidence on pay determination

This exploratory paper provides preliminary evidence on the distribution of various forms of variable pay-by-pay determination structure. Data is drawn from the CRANET survey of company human resource practices, and is used for 13 countries. These countries are divided into two regimes, those where pay determination is predominantly centralized and those where it is generally decentralized. The use of variable pay is compared between the two. The results are consistent with both institutional and resource-based perspectives.

Organizational Structure and Performance in European Banks: A Reassessment

Abstract This paper studies the impact of ownership structure on performance in European banking both prior and during the recent crisis. We use a panel of European banks during the period 1996–2011 and utilize random effects estimations in order to identify differences in bank performance (profitability, loan quality, and cost efficiency) due to differences in ownership structure. Both stakeholder and shareholder banks have distinct advantages, shareholder banks showing better profitability before the crisis but stakeholder banks having higher loan quality before and during the crisis. Differences in profitability and loan quality between stakeholder and shareholder banks before the crisis are especially pronounced in countries that experienced a banking crisis after 2007. There is strong a heterogeneity in performance between different stakeholder ownership groups. With the exception of private savings banks, profitability and loan quality of stakeholder banks has improved relative to that of general shareholder banks during the crisis years. The paper contributes to the previous literature by comparing pre-crisis and crisis performance and includes more refined ownership classifications. The results indicate that the survival of the stakeholder model is due to its competitive advantages. Our findings provide support for those arguing that the diversity of organizational structures is worth preserving. Ownership pluralism should become a policy objective in the banking industry.

Firm and Employee Effects of an Enterprise Information System: Micro-Econometric Evidence

We investigate the impact of adopting an enterprise resource planning (ERP) system on performance changes and employee outcomes in a retail chain. We find that: (i) sales and inventory turnover initially drop by 7 % and recover in 6-12 months; (ii) inventory turnover recovers more quickly for establishments that adopt ERP later; (iii) employee outcomes, including increased workload, greater job difficulty and enhanced multitasking, vary significantly over time, though implications for employee welfare are ambiguous.