Multiskilling and Firm Performance

Abstract

In this study, we examined uncertainty factors and human resource management practices that foster multiskilling of the workforce and the effect of multiskilling on labor productivity growth of the firm. An empirical analysis of 206 Korean manufacturing firms in 22 three-digit KSIC's showed the following results. First two uncertainty factors, the product demand variability in the industry and the occurrence of abnormal situations at the workplace, were positively associated with multiskill formation in the sample firms. Second, Human resource management practices such as mutual learning among coworkers, delegation of authority, and interworkshop mobility were positively associated with multiskill formation. Third, the degree of multiskill formation was positively associated with the firm's labor productivity growth from 1988 to 1993. Fourth, uncertainty had an indirect impact on labor productivity growth only through multiskill formation. When both uncertainty and multiskilling were included in the regression models, uncertainty had no impact on labor productivity growth. Fifth, we found growth effect of multiskilling but no level effect after controlling other factors.