Human Resource Management Systems and the Performance of U.S. Manufacturing Businesses

Casey Ichniowski

NBER Working Paper No. 3449
Issued in September 1990
NBER Program(s):   LS

This paper estimates the effects of systems of human resource management policies on the performance of U.S. manufacturing businesses. OLS results for labor productivity and Tobin's q models both reveal that nonunion businesses that employ a human resource management system with flexible job design, formal training, and workplace communication mechanisms have the highest levels of economic performance. Nonunion businesses with ''Union-style" human resource management systems involving grievance procedures, seniority-based promotions, and no flexible job design exhibit significantly lower levels of performance statistical models are unable to determine whether the more "progressive" human resource management system stimulates economic performance or whether this system is the appropriate choice for better performing businesses. Still, the positive :relationship between performance and this human resource management system suggests that this system will be more common in the future. In contrast, the "union-style" system appears to be a thing of the past. It is confined to unionized businesses in declining industries and very old nonunion businesses with low levels of economic performance.

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Document Object Identifier (DOI): 10.3386/w3449

Published: With Kathryn Shaw and Giovanna Prennushi, published as "The Effects of Human Resource Management Practices on Productivity: A Study of Steel Finishing Lines", AER (1997).

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