Working Paper: CEPR ID: DP9789
Authors: Hein Bogaard; Jan Svejnar
Abstract: We exploit organizational reforms in a foreign-owned bank in Central-East Europe to study the implementation of modern HRM policies in an emerging market context. We have branch-level data and use our knowledge of the process that led to the adoption of the reforms to implement two estimators that address endogeneity bias in a complementary fashion: an IV approach and Generalized Propensity Score estimation. Our results show that some of the reforms had a positive impact on productivity, but they also underscore the risks of quantity-based incentives where quality is important.
Keywords: banking; central and eastern europe; endogeneity of hrm policies; foreign ownership; incentives; insider econometrics
JEL Codes: F23; G21; M52
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| HRM reforms (E69) | branch performance (L25) |
| high-powered individual incentives for sales staff (M52) | average sales productivity of branch employees (L25) |
| ratio of sales staff to other support staff (M51) | average sales productivity of branch employees (L25) |
| HRM policies (M51) | productivity (O49) |
| HRM policies (M51) | profitability (L21) |
| HRM policies (M51) | product mix (M31) |
| HRM policies (M51) | loan quality (G51) |