High-involvement management practices and the productivity of firms: Detecting industry heterogeneity

Abstract

The aim of this article is to clarify the links between high-involvement management (HIM) practices, productivity and branches of industry. The data combine a representative survey (N = 787) of private-sector firms in Finland and register-based firm-level data on sales per employee in the year following the survey. The authors analysed the data using mixture regression and identified two clusters in the association between HIM and productivity. In one cluster, high-involvement management and productivity were positively associated, while in the other cluster, the association was negative. The association between the intensity of HIM utilisation and productivity is not always additive; the benefits of HIM were most prominent in industries where HIM was most seldom utilised. This paradox was most notable in the service sector.