ICT, hierarchy, and job design
IZA Discussion Paper No. 15491 08/2022 joint work with Michael Beckmann and Matthias Kräkel (submitted 08/2022)
In recent decades, information and communication technology (ICT) has changed the design of jobs on a large scale. However, it remains unclear, whether these changes will lead to more centralization or more decentralization within firms. The previous literature on this debate has focused on a strict dichotomy between both possible directions. On the contrary, the theoretical and empirical analyses in this study show that equipping employees with ICT yields both more centralized and more decentralized job-design policies. This finding is particularly pronounced for executive employees, who are granted more work autonomy but also face more control via stronger monitoring. While the theoretical framework is based on a modified principal-agent model, the empirical approach relies on parametric and semiparametric estimation models, thereby exploiting the geographical variation of instrumental variables.
Technology and performance pay in organizations
Working paper available, joint work with Matthias Kräkel and Philipp Grunau
In this study, we draw on established theories in labor and organizational economics to emphasize theoretically that ICT increases task complexity and worker interdependencies. This shift towards non-routine team tasks - we call it ‘Team-Biased Technological Change’ (TBTC) - boosts the need to adapt incentive schemes towards collective performance pay. To date, there has been little literature addressing changes in the compensation system that stem from the proliferation of modern technologies in the workplace. This study aims to close this research gap. Using unique German panel data on management practices from the years 2014 to 2018, we apply the bracketing-property approach to show that the deployment of ICT at the worker-level leads to adaptations in the compensation system, especially in lower layers in an organizational hierarchy.
Technology, sustainability, and management
Working paper available, joint work with Tobias Kretschmer
This study discusses three pressing challenges that affect firm productivity and profitability, namely artificial intelligence (AI), climate change, and the changing nature of management practices. I argue that it is crucial for firms that use AI technologies and comply with environmental standards to actively adopt management practices that promote employee empowerment, employee inclusion and equality (SDG 8, United Nations 2023). I emphasize the complementary role between AI technologies, environmental compliance, and SDG-oriented management practices, and test for three-way complementarities by applying the cube-view of complementarities on German firm-level data. I find disproportionate productivity and profitability effects in German firms implementing the whole three-way system of complements rather than implementing these practices in isolation or as incomplete two-way combinations. The estimation results are robust to the construction of a homogeneous firm population, and to subgroup analyses considering firm size and industry.