This study examines the impact of business volatility on employee performance. We posit that employees work harder in a more volatile business environment as prior research links business volatility to increased use of performance-based compensation systems, which may result in better employee performance. Our results suggest that business volatility has a significant and positive impact on employee performance. Furthermore, we find that the relationship between business volatility and employee performance is stronger for larger firms and firms with higher labor intensity.
Published in the American Journal of Business in August 2018, Vol. 33 (no. 3), pages 96-119.
The American Journal of Business