Firm Size Differences in Financial Returns From Flexible Work Arrangements (FWAs)

Abstract

Firms of differing sizes make FWAs available to employees, with varying performance outcomes. Research on the financial outcomes of FWAs is sparse and tends to focus on large firms. This study investigates the associations between FWAs and return on labour (ROL) as well as the relevance of these associations to small, medium and large firms, using a sample of 3244 employees working in 602 businesses. The findings show negative associations between flexible leave as FWA and ROL for all firms. Job-sharing has financial value for firms with 100 or more workers, with the majority being females but it is not feasible in small firms due to limited employee numbers. Flexible work hours pay off for firms with up to 99 employees but the financial outcomes become negative thereafter, requiring closer monitoring in larger firms. The findings indicate that firm size is relevant to FWA regulations and negotiations with implications for employers, employees and policymakers.

Keywords: FWAs; Return on labour; Small and medium firms; Large firms; Work-life balance; Linear mixed effect; Dominance analysis

JEL Classification: J24, J81, L25, M12, M54, O15, L26