How to compete: The impact of workplace practices and information technology on productivity

Using data from a unique nationally representative, sample of businesses, w e examine the impact of workplace practices, information technology, and hu man capital investments on productivity. We estimate an augmented Cobb-Doug las production function with both cross section and panel data covering the period of 1987-1993, using both within and GMM estimators. We find that it is not whether an employer adopts a particular work practice but rather ho w that work practice is actually implemented within the establishment that is associated with higher productivity. Unionized establishments that have adopted human resource practices that promote joint decision making coupled with incentive-based compensation have higher productivity than other simi lar nonunion plants, whereas unionized businesses that maintain more tradit ional labor management relations have lower productivity. Finally, plant pr oductivity is higher in businesses with more-educated workers or greater co mputer usage by nonmanagerial employees.