The purpose of this paper is to examine the impact of business volatility on employee performance.
The authors use regression analysis to examine the authors’ research question.
The results suggest that business volatility has a significant and positive impact on employee performance. Furthermore, the authors find that the relationship between business volatility and employee performance is stronger for larger firms and firms with higher labor intensity.
The study links and contributes to two streams of literature: employee/labor cost management from the accounting literature and business volatility from the management literature. Whether business volatility affects employee performance remains an interesting question that has not been definitively answered empirically. To the best of the authors’ knowledge, this is the first empirical study that directly examines the relationship between business volatility and employee performance at the firm level.