The Productivity Effect of High Involvement Management: Causal Evidence From Germany

ABSTRACT This study empirically examines the effects of High Involvement Management ( HIM ) on establishment productivity. To achieve this it draws on a large‐scale panel data set representative of the German economy. The identification strategy exploits the bracketing property of fixed effects and lagged dependent variable models and supplements this with a selection‐on‐observables approach to estimate causal effects. Descriptive evidence indicates that decision makers value the joint implementation of the pillars of HIM ( Knowledge , Power , Information , and Rewards ), as they tend to cluster and factor analysis confirms that the included management practices reflect a single underlying management orientation. The causal analysis reveals significant productivity gains from HIM and each of its four pillars. These effects materialize for HIM adoption, HIM intensification and the presence of a HIM philosophy. While the results are in line with a monotonically increasing effect as additional pillars are adopted, no synergies between the pillars or underlying practices emerge. Finally, the findings reveal no meaningful differences in the effectiveness of HIM across establishment size, sector, knowledge intensity, or innovation strategy, suggesting that its impact is broadly consistent across organizational contexts.