The Productivity Effects of Worker Replacement in Young Firms

39 Pages Posted: 22 Feb 2017

See all articles by Martin Murmann

Martin Murmann

Centre for European Economic Research (ZEW)

Date Written: February 8, 2017

Abstract

Existing management research has so far dealt with the consequences of labor turnover for established firms, but has not addressed its effect on young entrepreneurial businesses. In this paper I assess, both theoretically and empirically, the productivity effects of worker replacement in young firms. Worker replacement isolates labor turnover due to employee replacement as a separate category of turnover and has been shown to positively affect the productivity of established firms in previous research. Using a large and representative sample of German start-ups, I show that worker replacement has negative effects on young firms' productivity that remain even when controlling for moderating factors. These effects are even more negative when the founder does not have prior managerial experience.

Keywords: Firm productivity, Labour turnover, Churning, Entrepreneurship

JEL Classification: L26, M13, J24, J63, D22

Suggested Citation

Murmann, Martin, The Productivity Effects of Worker Replacement in Young Firms (February 8, 2017). ZEW - Centre for European Economic Research Discussion Paper No. 17-010, Available at SSRN: https://ssrn.com/abstract=2921842 or http://dx.doi.org/10.2139/ssrn.2921842

Martin Murmann (Contact Author)

Centre for European Economic Research (ZEW) ( email )

P.O. Box 10 34 43
L 7,1
D-68034 Mannheim, 68034
Germany

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