Complementarities of Human-Resource Management Practices: A Case for a Behavioral-Economics Perspective

We stress the relevance of complementarities of human-resource management (HRM) practices for explaining persistent productivity differences across organizations. We give an overview of economics as well as strategic HRM literature, document gaps, and show how insights from behavioral economics can inform the analysis. To this end, we develop a simple agency model illustrating how social preferences influence the design and consequences of incentive schemes, investigate how auxiliary HRM practices can strengthen this interaction, and discuss other behavioral subfields that are also suited to inform research on complementarities. Finally, we give an outlook on further research in this field.