University / Organisation : Max Planck Institute for Research on Collective Goods

Paper or project ? paper

Title : Abstenteeism and Firm Performance: Evidence from Retail

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Abstract : This study examines the relationship between absenteeism and firm performance using data on 1,387 stores of a retail chain, combined with public health data, covering a 36-month period. Contrary to widespread belief, the relationship between absenteeism and sales is not monotonic. Instead, it exhibits an inverted U-shape. This indicates that reducing absenteeism does not necessarily improve firm performance. In fact, moderate absenteeism is associated with higher sales than perfect attendance. Furthermore, if actual absenteeism is lower than predicted based on the regional acute spread of respiratory disease, sales are lower than if the two align. A similar relationship is also observed with respect to measures of service quality. Endogeneity concerns are addressed using fixed effects regression and instrumental variable estimation. In conclusion, the results demonstrate that absenteeism is not generally detrimental to firm performance.