High Performance Work Practices, Decentralization, and Profitability : Evidence from Panel Data

The aim of this article is to test the effects on firm profitability of the adoption of both high performance work practices (HPWPs) and changes in organizational design relating to the depth of the corporate hierarchy and the allocation of decision authority. For this purpose, we resort to panel estimates based on a longitudinal data set that includes information relating to 109 Italian manufacturing single-plant firms observed in the 1990s during 7 years. The econometric results show that the adoption of HPWPs leads to better performances, especially when it is associated with the delegation of decision authority downward the corporate hierarchy