Department of Strategic Management and Globalization

The Impact of Education and Innovation on Firms' Productivity

During the past decade, the contribution of non-technological growth drivers on firms' productivity has emerged in business and economic literature. In this project we study the casual relation of the educational mix of employees on firms innovation activities and their impact on productivity. We consider a unique dataset  based on a representative sample of Danish firm and distinguish between four types of innovation (product, process, organization, and marketing) and three types of education (technical science, social science and humanities). We exploit econometric techniques for testing the importance of educational composition and the  different level of complementarities among types of innovation. In particular, we concentrate our attention on the contribution of product and marketing innovation on productivity performance.

Participants: Martin Junge, Danish Business Research Academy, Battista Severgnini, Anders Sørensen, Copenhagen Business School

Time Frame: 2014-2015.

 

Human Capital Heterogeneity and the Locus and Control of Intrapreneurship

A dominant view on entrepreneurship in established firms is that bottom-up processes in the context of a high degree of delegation of decision rights and high demographical diversity result in high levels of opportunity creation. However, this view potentially neglects that bottom-up processes and high diversity create coordination and cooperation problems, calling for decision-management in the entrepreneurial process. We specifically predict that while employee heterogeneity in fact drives the creation of entrepreneurial opportunities, this positive main effect is reinforced by centralizing decision control relating to entrepreneurship. We also predict that if the sole locus of opportunity creation is the top-management level, this is associated with a low level of opportunity creation. On the other hand, if opportunity creation is more distributed across the hierarchy, this is associated with a high level of opportunity creation. To test these predictions, we match a paired large-scale double-respondent survey addressed to CEOs and HR managers with unique, population-wide, employer-employee data.  

Participants: Jay B Barney, University of Utah, Nicolai Foss, Jacob Lyngsie, Copenhagen Business School

Time Frame: 2014-2015. 

 

Does offshoring jeopardize domestic human capital?

We investigate the effect of offshoring on domestic human capital. Offshoring describes the process where firms relocate disaggregated organizational activities to foreign locations. While much research has investigated firm level consequences of accessing foreign factor market endowments (e.g., implications for financial performance, innovation, etc.), we know less about the implications for the domestic organization. Hence, to explore this topic, we synthesize two competing hypotheses: one that predicts a positive firm effect of offshoring on the domestic human capital and one that predicts a negative effect. While the former view emphasizes how processes of offshoring may ‘hollow-out’ domestic firm competencies, the latter suggests that offshoring can serve as a gateway to the creation of competences that reside in the relationship between the domestic firm and the foreign subsidiary/supplier. Empirically, we combine unique survey data on the offshoring experience of Danish firms with register data on employee turnover and retention in the domestic organizations. 

Participants: Eliane Choquette, Aarhus University, Marcus M Larsen, Copenhagen Business School, Torben Pedersen, Bocconi University

Time Frame: 2014-2015

 

The Effect of Management Practices in Danish Manufacturing Firms: A Field Experiment

The Business Danish Authority has developed a public program to improve management practices of Danish small and medium size enterprises so as to increase productivity and competitiveness. The program is financed by the European Regional Development Fund and various public and private Danish funds. The program will be a nationwide randomized control trial (field experiment) to identify effective growth policies that will involve up to 1000 firms and with a total budget of approximately 70 million DKK and a project horizon of 3 years. The program will be run by an external “operator” in cooperation with HOPE members. The program involves a control group and two treatment groups with two distinct policy interventions: i) a Growth Check that involves a 2-day on site visit by leading consultants that will result in a tailored-made action plan to achieve additional business growth; ii) a Growth Check intervention plus a Voucher to co-finance 50% of additional consultancy services to execute the plan.

For various outcome measures, we examine what firms characteristics enhance the effect of the interventions . We also plan to use firm and individual Danish registry data to validate WMS results and examine the effect of top management characteristics observable on the effectiveness of the program.

Participants: Nicolai Foss, Jimmy Martínez-Correa, Cedric Schneider, Anders Sørensen, Copenhagen Business School

Time Frame: 2015-2018.

 

The impact of technological change on worker health and safety

Workplace injuries are an unfortunate and unintended consequence of production.  In this project, we examine how adoption of automated production technology affects worker health and safety in the Danish manufacturing sector. To perform this analysis we assemble a unique data set that combines an original survey of automation technology with employer-employee matched administrative register data. This application has several desirable features: first, the form and use of automated production technology (beyond just the incidence) is identifiable in a nationally representative sample of nearly 600 manufacturing firms between 2005 and 2010, a period of substantial adoption. Second, the health and safety impact can be measured in terms of workplace injury claims and hospitalization records of individual workers.

Participants: Morten Saaby Pedersen, Lene Kromann, Anders Sørensen

Time Frame: 2015-16

 

Market competition and workplace injury

In this project, we investigate the relationship between workplace injury and industry structure. We hypothesize that an increase in the number of competitors increases incentives to adopt cost-reducing means to reduce profit losses, including as labor injury costs. The empirical analysis is made feasible by access to employer-employee matched administrative register data on the entire population of manufacturing firms in Denmark with detailed sales information, which allows us to identify number of competitors and market shares. We link these data to workplace injury claims and hospitalization records of individual workers.

Participants: Morten Saaby Pedersen

Time Frame: 2015-16

 

Performance pay and health

While a substantial literature focuses on the productivity effects of performance pay schemes, comparatively little is known about the impact on workers’ health when employers adopt output-based incentives. Performance may schemes may impact workers’ health through several pathways. The increased work effort caused by performance pay schemes may give incentives to take greater risks on the job and increase work-related stress. Performance pay schemes may also impact the health production function by increasing the returns from healthy days. To investigate these issues, we use administrative register data on all private employees in Denmark with detailed information on earnings and health care utilization. We consider effects across many different occupations and industries.

Participants: Morten Saaby Pedersen, Anders Sørensen

Time Frame: 2015-16

 

Value Creation and Appropriation in the Context of Human Capital

Scholars have debated the extent to which human capital—embodied in firms’ employees— generate value for firms, and the extent to which this is ultimately appropriated by the firm’s shareholders or the employees themselves. Yet, we still know very little about the contingencies underlying the appropriation of value, in part due to the difficulty of accurately measuring the quality of human capital and the returns to this capital. This paper goes beyond the firm-specific vs. generic human capital dichotomy in order to set up a formal model of human capital value creation and appropriation, and operationalizes this model for testing on a large data set of Danish firms. The contingencies for value appropriation could include industry-specific characteristics like labor and product market frictions, which could be assessed either with public data sources (e.g. industry concentration) or with questions in the survey. These contingencies will also include firm-specific characteristics like organizational structure.

Participants: Russell Coff, Jacob Lyngsie, Christian Asmussen

Time Frame: 2014-2016.

 

Performance Measurement in Danish Companies

In recent years firms have started becoming increasingly interested in measuring the performance of their employees. This increases the demand for not only systematic registrations of performance but also better registration of qualitative aspects of personnel. This new trend has probably been supported by software systems like SAP and SAS. However, little is known on how many firms make registration of what. In order to get a first assessment we conduct a survey of Danish firms on which types of registrations they make and what kind of performance measurement they apply.

Participants: Anne Raaby Brønden, Nykredit and Niels Westergård-Nielsen

Time Frame: 2015-16

 

Incentive Pay and CEO Salaries

It is well known that many CEOs have a performance related wage. However, there is little empirical evidence regarding the level and how it is related to the key performance indicators of the firm. This project examines to what extent Danish CEOs are intensivized in their jobs and what are the determinants behind the composition of salary between a fixed salary and a performance based salary. Key performance indicators of the firm is used to reveal the link to performance.

This paper uses a survey of Danish firms along with register data.

Participants: Ida Linde Hansen and Niels Westergaard-Nielsen.

Time Frame: 2015