Does Organizational Reform improve Firm Productivity?

This paper investigates whether differences exist in productivity growth between firms which reform their organizations and firms which do not. We adopt propensity score matching to compare the two groups to reduce the bias due to confounding variables. In general, firms which reform their organizations improve productivity three years afterward. Non-deteriorating firms which reform their organizations improve productivity between 2-4 years afterward. Reforms with empowerment or with proposals from the employees improve productivity more than those in general. These results suggest that productivity growth is not observed right after the reform due to adjustments necessary for organizational reform, and that involvement of employees is important for organizational reforms to improve firm productivity.