Productivity Effects of Organizational Change: Microeconometric Evidence

36 Pages Posted: 19 Nov 2002

See all articles by Irene Bertschek

Irene Bertschek

ZEW – Leibniz Centre for European Economic Research

Ulrich Kaiser

University of Southern Denmark - Faculty of Social Sciences; Center for Economic and Business Research (CEBR); Centre for European Economic Research

Date Written: September 15, 2001

Abstract

This paper analyzes the relationship between investment in information and communication technologies (ICT), non-ICT-investment, labor productivity and workplace reorganization. Firms are assumed to reorganize workplaces if the productivity gains arising from workplace reorganization exceed the associated reorganization costs. Two different types of organizational change are considered: enhancement of group-work and the flattening of hierarchies. Empirical evidence is provided for a sample of 411 firms from the German business-related services sector.

A simultaneous econometric model for labor productivity and firms' decision to reorganize workplaces shows that changes in human resources practises do not significantly affect firms' output elasticities with respect to information and communication technologies, non-ICT-capital and labor. We also do not find significant differences in firms' returns to scale. The point estimates of the individual output elasticities and of the control variables for observable firm heterogeneity are, however, generally larger if workplace reorganization is realized. We therefore apply Kernel density estimation technique to demonstrate that the entire labor productivity distribution shifts out to the right if workplace reorganization takes place, indicating that workplace reorganization induces a significant increase in labor productivity. Significant differences in the productivity of ICT-capital and non-ICT-capital cannot be found.

Keywords: workplace reorganization, ICT-investment, labor productivity, endogenous switching regression model, Kernel density estimation

JEL Classification: C25, D24

Suggested Citation

Bertschek, Irene and Kaiser, Ulrich, Productivity Effects of Organizational Change: Microeconometric Evidence (September 15, 2001). ZEW Discussion Paper No. 01-32. Available at SSRN: https://ssrn.com/abstract=329122 or http://dx.doi.org/10.2139/ssrn.329122

Irene Bertschek (Contact Author)

ZEW – Leibniz Centre for European Economic Research ( email )

P.O. Box 10 34 43
L 7,1 D-68161 Mannheim
Germany

Ulrich Kaiser

University of Southern Denmark - Faculty of Social Sciences ( email )

Campusvej 55
DK-5230 Odense M
Denmark

HOME PAGE: http://www.sam.sdu.dk/staff/uka

Center for Economic and Business Research (CEBR) ( email )

Porcelaenshaven, Bldg 65
DK-2000 Frederiksberg
Denmark

HOME PAGE: http://www.cebr.dk/uk

Centre for European Economic Research ( email )

P.O. Box 10 34 43
L 7,1 D-68161 Mannheim
Germany

HOME PAGE: http://www.zew.de/de/mitarbeiter/mitarbeiter.php3?action=mita&kurz=uka

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