Digital technologies and performance incentives: evidence from businesses in the Swiss economy
Abstract Using novel survey data from Swiss firms, this paper empirically examines the relationship between the use of digital technologies and the prevalence of performance incentives. We argue that digital technologies tend to reduce the cost of organizational monitoring through improved measureme...
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| Format: | Article |
| Language: | English |
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SpringerOpen
2025-01-01
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| Series: | Swiss Journal of Economics and Statistics |
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| Online Access: | https://doi.org/10.1186/s41937-024-00132-3 |
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| author | Johannes Lehmann Michael Beckmann |
| author_facet | Johannes Lehmann Michael Beckmann |
| author_sort | Johannes Lehmann |
| collection | DOAJ |
| description | Abstract Using novel survey data from Swiss firms, this paper empirically examines the relationship between the use of digital technologies and the prevalence of performance incentives. We argue that digital technologies tend to reduce the cost of organizational monitoring through improved measurement of employee behavior and performance, as well as through employee substitution in conjunction with a reduced agency problem. While we expect the former mechanism to increase the prevalence of performance incentives, the latter is likely to decrease it. Our doubly robust ATE estimates show that companies using business software and certain key technologies of Industry 4.0 increasingly resort to performance incentives, suggesting that the improved measurement effect dominates the employee substitution effect. In addition, we find that companies emerging as technology-friendly use performance incentives more frequently than their technology-averse counterparts. Both findings hold for managerial and non-managerial employees. Our estimation results are robust to a variety of sensitivity checks and suggest that Swiss businesses leverage digital technologies to enhance control over production or service processes, allowing them to intensify their management of employees through performance incentives. |
| format | Article |
| id | doaj-art-e2512bce678c4f87aaab0ec9de4567be |
| institution | Kabale University |
| issn | 2235-6282 |
| language | English |
| publishDate | 2025-01-01 |
| publisher | SpringerOpen |
| record_format | Article |
| series | Swiss Journal of Economics and Statistics |
| spelling | doaj-art-e2512bce678c4f87aaab0ec9de4567be2025-02-02T12:44:56ZengSpringerOpenSwiss Journal of Economics and Statistics2235-62822025-01-01161111910.1186/s41937-024-00132-3Digital technologies and performance incentives: evidence from businesses in the Swiss economyJohannes Lehmann0Michael Beckmann1University of Basel, Faculty of Business and EconomicsUniversity of Basel, Faculty of Business and EconomicsAbstract Using novel survey data from Swiss firms, this paper empirically examines the relationship between the use of digital technologies and the prevalence of performance incentives. We argue that digital technologies tend to reduce the cost of organizational monitoring through improved measurement of employee behavior and performance, as well as through employee substitution in conjunction with a reduced agency problem. While we expect the former mechanism to increase the prevalence of performance incentives, the latter is likely to decrease it. Our doubly robust ATE estimates show that companies using business software and certain key technologies of Industry 4.0 increasingly resort to performance incentives, suggesting that the improved measurement effect dominates the employee substitution effect. In addition, we find that companies emerging as technology-friendly use performance incentives more frequently than their technology-averse counterparts. Both findings hold for managerial and non-managerial employees. Our estimation results are robust to a variety of sensitivity checks and suggest that Swiss businesses leverage digital technologies to enhance control over production or service processes, allowing them to intensify their management of employees through performance incentives.https://doi.org/10.1186/s41937-024-00132-3Digital technologiesComputer technologiesBusiness softwareKey technologies of Industry 4.0Performance incentivesDoubly robust ATE estimation |
| spellingShingle | Johannes Lehmann Michael Beckmann Digital technologies and performance incentives: evidence from businesses in the Swiss economy Swiss Journal of Economics and Statistics Digital technologies Computer technologies Business software Key technologies of Industry 4.0 Performance incentives Doubly robust ATE estimation |
| title | Digital technologies and performance incentives: evidence from businesses in the Swiss economy |
| title_full | Digital technologies and performance incentives: evidence from businesses in the Swiss economy |
| title_fullStr | Digital technologies and performance incentives: evidence from businesses in the Swiss economy |
| title_full_unstemmed | Digital technologies and performance incentives: evidence from businesses in the Swiss economy |
| title_short | Digital technologies and performance incentives: evidence from businesses in the Swiss economy |
| title_sort | digital technologies and performance incentives evidence from businesses in the swiss economy |
| topic | Digital technologies Computer technologies Business software Key technologies of Industry 4.0 Performance incentives Doubly robust ATE estimation |
| url | https://doi.org/10.1186/s41937-024-00132-3 |
| work_keys_str_mv | AT johanneslehmann digitaltechnologiesandperformanceincentivesevidencefrombusinessesintheswisseconomy AT michaelbeckmann digitaltechnologiesandperformanceincentivesevidencefrombusinessesintheswisseconomy |