When Time-Off Sparks Time-At-Work: Time-Off as a Source of Competitive Advantage for Innovation

Jiayi Bao, University of North Carolina at Chapel Hill

Abstract: This paper studies how the adoption of paid vacation as a human resource practice impacts organizations in the context of new ventures. We find that the provision of paid vacation to employees positively affects both short-term venture revenue and long-term survival. We then investigate why. We do not find empirical support that paid vacation helps ventures to attract better talent. Our results are most consistent with an incentive story that paid vacation brings about organizational gains by incentivizing workers to take actual time off which ultimately improves their productivity at work.

Read the full working paper here (PDF).