IDEAS home Printed from https://ideas.repec.org/p/shf/wpaper/2006005.html
   My bibliography  Save this paper

Firm Performance, Worker Commitment and Loyalty

Author

Listed:
  • Sarah Brown

    (Department of Economics, The University of Sheffield)

  • Robert McNabb
  • Karl Taylor

    (Department of Economics, The University of Sheffield)

Abstract

Using matched employer-employee level data drawn from the UK Workplace and Employee Relations Survey, we explore the influence of worker commitment and loyalty on firm level labour productivity and financial performance. Our empirical findings suggest that worker commitment and loyalty enhance both labour productivity and financial performance at the firm level thereby highlighting a hitherto neglected conduit for improved firm performance. Using employee level data, we also explore the determinants of worker commitment and loyalty in order to ascertain how such attachments to the firm may be engendered. In general, our employee level analysis suggests that it is firm level characteristics (such as appraisal schemes, supervision, suspensions and redundancies) that influence attachments to the firm. Such findings suggest that firms may be able to exert some influence over the loyalty and commitment of its workforce, which, in turn, may affect firm performance.

Suggested Citation

  • Sarah Brown & Robert McNabb & Karl Taylor, 2006. "Firm Performance, Worker Commitment and Loyalty," Working Papers 2006005, The University of Sheffield, Department of Economics, revised Apr 2006.
    • Handle: RePEc:shf:wpaper:2006005
    as

    Download full text from publisher

    File URL: http://www.shef.ac.uk/content/1/c6/05/53/54/SERP2006005.pdf
    File Function: First version, 1996
    Download Restriction: no
    File URL: http://www.shef.ac.uk/content/1/c6/05/53/54/SERP2006005.pdf
    File Function: Revised version, 2006
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. George A. Akerlof & Janet L. Yellen, 1990. "The Fair Wage-Effort Hypothesis and Unemployment," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 105(2), pages 255-283.
    2. David E. Guest, 1990. "Have British Workers Been Working Harder in Thatcher's Britain? A Re-Consideration of the Concept of Effort," British Journal of Industrial Relations, London School of Economics, vol. 28(3), pages 293-312, November.
    3. George A. Akerlof, 1982. "Labor Contracts as Partial Gift Exchange," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 97(4), pages 543-569.
    4. Robert McNabb & Keith Whitfield, 1998. "The Impact of Financial Participation and Employee Involvement on Financial Performance," Scottish Journal of Political Economy, Scottish Economic Society, vol. 45(2), pages 171-187, May.
    5. Oulton, Nicholas, 1998. "Competition and the Dispersion of Labour Productivity amongst UK Companies," Oxford Economic Papers, Oxford University Press, vol. 50(1), pages 23-38, January.
    6. Rachel Griffith & Helen Simpson, 2004. "Characteristics of Foreign-Owned Firms in British Manufacturing," NBER Chapters, in: Seeking a Premier Economy: The Economic Effects of British Economic Reforms, 1980–2000, pages 147-180, National Bureau of Economic Research, Inc.
    7. Rebitzer, James B., 1995. "Is there a trade-off between supervision and wages? An empirical test of efficiency wage theory," Journal of Economic Behavior & Organization, Elsevier, vol. 28(1), pages 107-129, September.
    8. Machin, Stephen J & Stewart, Mark B, 1990. "Unions and the Financial Performance of British Private Sector Establishments," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 5(4), pages 327-350, Oct.-Dec..
    9. Max Munday & Michael J. Peel & Karl Taylor, 2003. "The Performance of the Foreign-Owned Sector of UK Manufacturing: Some Evidence and Implications for UK Inward Investment Policy," Fiscal Studies, Institute for Fiscal Studies, vol. 24(4), pages 501-521, December.
    10. Leigh, J. Paul, 1985. "The effects of unemployment and the business cycle on absenteeism," Journal of Economics and Business, Elsevier, vol. 37(2), pages 159-170, May.
    11. McNabb, Robert & Whitfield, Keith, 1998. "The Impact of Financial Participation and Employee Involvement on Financial Performance," Scottish Journal of Political Economy, Scottish Economic Society, vol. 45(2), pages 171-187, May.
    12. Magnus Allgulin & Tore Ellingsen, 2002. "Monitoring and Pay," Journal of Labor Economics, University of Chicago Press, vol. 20(2), pages 201-216, Part.
    13. Mohammed Chaudhury & Ignace Ng, 1992. "Absenteeism Predictors: Least Squares, Rank Regression, and Model Selection Results," Canadian Journal of Economics, Canadian Economics Association, vol. 25(3), pages 615-635, August.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Melanie K. Jones & Paul L. Latreille & Peter J. Sloane, 2016. "Job Anxiety, Work-Related Psychological Illness and Workplace Performance," British Journal of Industrial Relations, London School of Economics, vol. 54(4), pages 742-767, December.
    2. Andrew E. Clark, 2011. "The Organisational Commitment of Workers in OECD Countries," management revue. Socio-economic Studies, Rainer Hampp Verlag, vol. 22(1), pages 8-27.
    3. OMISORE, Segun & Ho, Manh-Toan, 2019. "Corporate Entrepreneurship, Strategy Formulation, and the Performance of the Nigerian Manufacturing Sector," Thesis Commons u39nc, Center for Open Science.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Brown, Sarah & Gray, Daniel & McHardy, Jolian & Taylor, Karl, 2015. "Employee trust and workplace performance," Journal of Economic Behavior & Organization, Elsevier, vol. 116(C), pages 361-378.
    2. Sessions, John G., 2008. "Wages, supervision and sharing," The Quarterly Review of Economics and Finance, Elsevier, vol. 48(4), pages 653-672, November.
    3. Sarah Brown & Jolian McHardy & Robert McNabb & Karl Taylor, 2011. "Workplace Performance, Worker Commitment, and Loyalty," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 20(3), pages 925-955, September.
    4. Tetteh, Rebecca & Mohammed, Safura & Ahmed Azumah, Ayisha, 2017. "What is the effect of wages and supervision on productivity? The perspective of Sunyani Technical University staff," MPRA Paper 81473, University Library of Munich, Germany.
    5. John G. Sessions & Nikolaos Theodoropoulos, 2014. "Tenure, Wage Profiles and Monitoring," Research in Labor Economics, in: New Analyses of Worker Well-Being, volume 38, pages 105-162, Emerald Group Publishing Limited.
    6. Ourania Karakosta & Nikos Tsakiris, 2009. "Indirect Tax Reforms and Public Goods under Imperfect Competition," University of Cyprus Working Papers in Economics 5-2009, University of Cyprus Department of Economics.
    7. Dennis Dittrich & Martin Kocher, 2006. "Monitoring and Pay: An Experiment on Employee Performance under Endogenous Supervision," Papers on Strategic Interaction 2006-23, Max Planck Institute of Economics, Strategic Interaction Group.
    8. Christian Pfeifer, 2010. "Impact of wages and job levels on worker absenteeism," International Journal of Manpower, Emerald Group Publishing Limited, vol. 31(1), pages 59-72, March.
    9. Vesna Stavrevska, 2011. "The efficiency wages perspective to wage rigidity in the open economy: a survey," International Journal of Manpower, Emerald Group Publishing Limited, vol. 32(3), pages 273-299, June.
    10. Rebitzer, James B. & Taylor, Lowell J., 2011. "Extrinsic Rewards and Intrinsic Motives: Standard and Behavioral Approaches to Agency and Labor Markets," Handbook of Labor Economics, in: O. Ashenfelter & D. Card (ed.), Handbook of Labor Economics, edition 1, volume 4, chapter 8, pages 701-772, Elsevier.
    11. Kocher, Martin & Dittrich, Dennis, 2006. "Monitoring and Pay: An Experiment on Employee under Endogenous Supervision," CEPR Discussion Papers 5962, C.E.P.R. Discussion Papers.
    12. Vera Popva, 2010. "What renders financial advisors less treacherous? - On commissions and reciprocity -," Jena Economics Research Papers 2010-036, Friedrich-Schiller-University Jena.
    13. Veronique Genre & Karsten Kohn & Daphne Momferatou, 2011. "Understanding inter-industry wage structures in the euro area," Applied Economics, Taylor & Francis Journals, vol. 43(11), pages 1299-1313.
    14. Gary Charness & Ramón Cobo-Reyes & Juan A. Lacomba & Francisco Lagos & Jose Maria Perez, 2016. "Social comparisons in wage delegation: experimental evidence," Experimental Economics, Springer;Economic Science Association, vol. 19(2), pages 433-459, June.
    15. Omar Al-Ubaydli & John List, 2016. "Field Experiments in Markets," Artefactual Field Experiments j0002, The Field Experiments Website.
    16. Bai, Peiwen & Cheng, Wenli, 2020. "Relative earnings and firm performance: Evidence from publicly-listed firms in China, 2005–2012," International Review of Economics & Finance, Elsevier, vol. 66(C), pages 279-290.
    17. Simon G�chter & Ernst Fehr, "undated". "Fairness in the Labour Market � A Survey of Experimental Results," IEW - Working Papers 114, Institute for Empirical Research in Economics - University of Zurich.
    18. Julio J. Rotemberg, 2007. "Minimally altruistic wages and unemployment in a matching model," Working Papers 07-5, Federal Reserve Bank of Boston.
    19. Grossmann, Volker, 2002. "Is it rational to internalize the personal norm that one should reciprocate?," Journal of Economic Psychology, Elsevier, vol. 23(1), pages 27-48, February.
    20. Andrén, Daniela, 2001. "Short-Term Absenteeism Due To Sickness: The Swedish Experience, 1986 - 1991," Working Papers in Economics 46, University of Gothenburg, Department of Economics.

    More about this item

    Keywords

    Commitment; Financial Performance; Labour Productivity; Loyalty.;
    All these keywords.

    JEL classification:

    • J20 - Labor and Demographic Economics - - Demand and Supply of Labor - - - General
    • J50 - Labor and Demographic Economics - - Labor-Management Relations, Trade Unions, and Collective Bargaining - - - General

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:shf:wpaper:2006005. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Mike Crabtree (email available below). General contact details of provider: https://edirc.repec.org/data/desheuk.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.