Research Wire

COMPUTERS PAY OFF FOR WORKERS WHO USE THEM

Computers and other technology have been blamed for the decline in human jobs and earnings, but a Wharton study has found that computers have a positive effect on salaries.

The study — by Peter Cappelli, professor of management and co-director of the Center for Human Resources, and Kermit Daniel, assistant professor of public policy and management — found that the more computer technology in an organization, the higher the human earnings. Further, even the use of computers by non-managers raises the earnings of supervisors, managers and technicians in the organization. Only part of these effects can be attributed to the higher skill levels needed to operate the equipment.

“Our results suggest that computer technology is not ‘deskilling’ production jobs, but rather ‘upskilling’ them,” the authors write.

Peter Cappelli and Kermit Daniel: “Technology, Work Organization and the Structure of Wages”

QUALITY-ORIENTED COMPETITIVE STRATEGY

U.S. firms have long been criticized for relying exclusively on financial control systems that place too much emphasis on budgets and short-term profits. In contrast, others often argue that Japanese control systems are more closely aligned with long-term goals and strategies, thereby contributing to Japan’s competitive success.

Using data from the automobile and computer industries in Canada, Germany, Japan and the U.S., Accounting Professors Christopher Ittner and David Larcker examined organizations that follow a quality-oriented competitive strategy to see whether quality action plans were being implemented as intended and whether long-term strategic quality goals were being achieved. Their study found that American and German organizations emphasizing quality in their strategic plans do tend to implement quality-oriented strategic control systems. However, Japanese manufacturers make greater use of these strategic control practices regardless of their strategic emphasis.

The authors also found that some practices, such as greater management involvement in selecting specific strategic action plans, are associated with higher performance in both industries. Other practices, such as providing overly detailed long-term action plans in computer firms, can actually hinder performance.

Christopher D. Ittner and David F. Larcker: “Quality Strategy, Strategic Control Systems and Organizational Performance”

LABOR LESSONS AND THE AUTO INDUSTRY

Management comes up with another great scheme to reorganize factory work, but how does it look to the rank-and-file?

Wharton researchers polled Chrysler workers at six plants that had moved to a Modern Operating Agreement (MOA) — a union-management system based on fewer job classifications, shop floor work teams, pay-for-skills compensation and extensive training. The survey of nearly 800 workers, carried out within three to five years of implementation, found that initial resistance and skepticism among workers had changed into a clear preference for certain aspects of the new work system. Work teams were supported more strongly by workers than the new pay plan or reduced job classifications. Younger, better-educated male workers were most likely to be positive about the new system.

The researchers also found that workers were more positive the more they had experienced the system’s impact on their daily work activities.

John Paul MacDuffie, Larry Hunter and Lorna Doucet: “What Does Transformation Mean to Workers? The Effects of the ‘New Industrial Relations’ on Union Employees’ Attitudes”

PENSION SYSTEMS FOR DEVELOPING COUNTRIES

Worldwide population aging, combined with serious financial instability in national social security systems, make pension reform and redesign an urgent necessity, say researchers from Wharton’s Pension Research Council.

In a recent paper, the researchers outlined the fundamental role that a well-designed pension system can play for developing countries. Such a system would be mandatory, maintain a tight link between benefits and contributions both at the individual and generational levels, invest contributions in a “sensibly internationally-diversified” portfolio, be fully funded, pay benefits only to the old, and pay out pensions as annuities rather than as lump sums.

The researchers suggest alternative forms that benefits should take, depending on a country’s income, its tax and benefit system and its political/economic stability.

Olivia S. Mitchell and Gary S. Fields: “Designing Pension Systems for Developing Countries”

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