What is the effect of aging
on performance, innovation,
and entrepreneurship?
Developing a research agenda
By Gert Schaafsma g.schaafsma.1@student.rug.nl gert_schaafsma@hotmail.com Student number: 1552619 University of Groningen Faculty of Economics and Business
Postbus 800, 9700 AV Groningen
Msc BA Master Thesis
Small Business & Entrepreneurship
26 August 2011
Abstract
The purpose of this study is to review the literature systematically on the effect of aging on performance, innovation, and entrepreneurship. First, conceptual models are developed from business and economic literature, which are tested by comparing the model with literature from other research areas, amongst others psychology, gerontology, and geriatrics. This comparison revealed a number of gaps in the business and economic literature, which were used to develop a research agenda of 22 hypotheses. Business and economic aging research should focus on individual and group level, the effect of leisure activities on retirement, the effect of prior experiences on innovation and entrepreneurship, HR practices for stimulating older workers’ performance and innovativeness, and cooperating of younger and older workers for improving performance and innovation.
Table of contents Abstract ... 2 Table of contents ... 3 Introduction ... 5 Methodology ... 9 Setting ... 9 Sample ... 12 Measurement instruments ... 13 Data collection ... 13 Data analysis ... 13 Literature review ... 15
First linkage: The influence of aging on performance ... 15
Aging and Performance ... 15
Moderator: Experience ... 16
Moderator: Retirement/ mentoring ... 18
Moderator: Workforce composition ... 20
Moderator: Motivation ... 21
Moderator: Stereotypes ... 22
Moderator: Measurement tool ... 23
Moderator: Age diversity ... 25
Moderator: Commitment ... 26
Second linkage: The influence of aging on innovation ... 29
Age and innovation ... 29
Moderator: Experience ... 29
Moderators: Job control, self efficacy, support for creativity ... 29
Moderator: Knowledge ... 30
Moderator: Retirement ... 31
Moderator: HR practices ... 31
Third linkage: The influence of aging on entrepreneurship ... 34
Age and entrepreneurship ... 34
Moderator: Risk tolerance ... 35
Moderator: Experience ... 36
Moderator: Experience ... 40
Moderator: Mentoring ... 44
Moderator: Retirement ... 45
Moderator: Workforce composition ... 48
Moderator: Motivation ... 49
Moderator: Stereotypes ... 51
Moderator: Age diversity ... 54
Moderator: Commitment ... 55
Second linkage: Age and innovation ... 58
Moderator: Experience ... 58
Moderator: Job control ... 59
Moderator: Self-efficacy ... 60
Moderator: Support for creativity ... 61
Moderator: Knowledge ... 62 Moderator: Retirement ... 63 Moderator: HR practices ... 64 Moderator: Entrepreneurship ... 64 Moderator: Leadership ... 65 Moderator: Training ... 65
Third linkage: Age and entrepreneurship ... 67
Moderator: Risk tolerance / aversion ... 67
Moderator: Experience ... 67
Limitations ... 69
Research agenda ... 70
Link age and performance ... 70
Link age and innovation ... 73
Link age and entrepreneurship ... 75
Conclusion ... 76
Introduction
Recently the interest in the aging workforce and the influences of aging on companies is growing. A reason for this growing interest is a decreasing number of young adults and an increasing number of people aged 55 and higher in European Union since 2005. The potential workforce is aging and is expected to shrink by ten percent in the period 2020 - 2050 (OECD, 2005). This problem is faced by western society whereas upcoming countries do not have this problem. For example, India has many high educated young workers, companies are working 24/7, and government is stimulating the economy and business climate ([Anon], 2011). The Aging monitor 2010 in the Netherlands showed an increased number of companies, which are facing the Aging problem. Over 60% of the companies expect problems from the Aging population in the next years. More than 25% of the companies are already experiencing problems of Aging. This is mainly due to 1) a skewed structure of the workforce, 2) the rigidity of the companies and 3) the lack of flow (Ruempol, Berg, & Montsanto, 2010). Therefore, companies will have to rely on older workers knowledge, skills, and experiences due to the shrinking workforce (Schalk et al., 2010). Furthermore, retiring employees will leave a knowledge gap, which cannot be filled completely by young employees because the new employees do not have the tacit business knowledge.
On the other hand, research shows that there are several reasons why perceptions of older workers might become more positive. First, new cohorts of older workers will be healthier and better educated, these factors enhance the chance that older workers productivity, and employability should improve (OECD, 2005). Second, rapid technological change and positive perceptions of the productivity of younger workers might increase and countervail the before mentioned trends (Van Dalen, Henkens, & Schippers, 2010). However, the pool of employees for employers is decreasing. The retiring employees are taking tacit knowledge away from the company, which cannot be replaced by a new and young employee.
consensus in literature about aging and entrepreneurship. Many studies showed that the extreme age at which someone starts their own company is about 40 years. With the aging society, this may lead to less new companies. This may create problems because studies show that new companies accounts for innovation and employment.
Performance. Performance is a widely discussed topic in literature. Performance can be negatively influenced by aging on company, group, or individual level (Klein & Kozlowski, 2000). On company level, aging is causing an outflow of knowledge experiences and skills (Schalk et al., 2010). Furthermore, the talent pool is smaller due to decreasing availability of young employees (OECD, 2005), resulting in viewer options to fill vacancies. On group level, differences in age may result in conflict of interest (Kanfer & Ackerman, 2004) and generational differences (Schalk et al., 2010). On individual level, employees may struggle with health (Proper, Deeg, & van der Beek, 2009), loss of physical and cognitive abilities (Avolio & Waldman, 1994). Furthermore, reorganizations and technological changes influence the performance of older workers negatively (Maurer, 2001; Niessen, Swarowsky, & Leiz, 2010).
Entrepreneurship. Performance and innovation are constructs, which occur in and around a company. Entrepreneurship, however, is another construct, which occurs around individuals or a group of persons. Nevertheless, entrepreneurship is influenced by aging due to a declining group of young, potential entrepreneurs. Research shows that the maximum age of going into self-employment lies around 40 years (Caliendo, Fossen, & Kritikos, 2010; Reynolds, 1997; van der Zwan, Thurik, & Grilo, 2010). Furthermore, age is a strong predictor of going into self-employment (Levesque & Minniti, 2006; Reynolds, 1997). Thus with the declining pool of young entrepreneurial talent (OECD, 2005), less entrepreneurial action may be expected. In addition, the group of older workers is less likely to go into self- employment, which leads to unused experiences. These experiences of older persons could be worth full for young entrepreneurs, unless the possible constraints of differences in generation and mentality.
As noticed, performance, innovation, and entrepreneurship are being negatively influenced by the aging population, on both sides of the coin, the entry, and exit of employees. The challenge in these three areas lays in the fact that business and economic literature is not leading on the aging topic anymore. Literature from areas like psychology, geriatrics, and gerontology are much further developed due to detailed, age related databases. However, these research areas are more focussing on diseases, physical disabilities and functioning of older persons and not on the performing of older persons in companies.
literature review and conceptual model. In the results and discussion section, literature from the other fields of science is researched by the systematic literature research. It is expected that there will be gaps occurring from these literature reviews. Consequently, a research agenda for business and economic research can be formulated.
The main research question is “What is the effect of aging on performance, innovation, and entrepreneurship? What are the differences in literature from business and economic, and from other perspectives? Which steps should be taken in future research?
The significance of this study is that the best of business and economic literature is combined and compared with other literature from leading areas. Business and economic literature needs to introduce specific constructs like physical and mental ability, job knowledge, and motivation in order to get a better overview of companies (Sturman, 2003). In addition, the expected gaps result in future research directions for business and economic literature.
The main definitions in this thesis are aging, innovation, creativity, and entrepreneurship. The terms age, aging, and ageing are defined as chronological age (Kooij, de lange, Jansen, & Dikkers, 2008; Schalk et al., 2010). Age and aging will be used to avoid confusion of terms. Innovation is defined as the way companies try to improve products and services and adjust to the changing environment. The influence of aging on performance and innovation will be discussed on company, group, and individual level. In the literature concerning innovation, there is an incentive to research creativity instead of innovation (Binnewies et al., 2008; Shalley, Zhou, & Oldham, 2004). Therefore, creativity is defined as the process in a persons’ mind or the process in groups to come up with an idea for new products or product innovation. Entrepreneurship is defined as going into self-employment, of perusing a career as employee. Furthermore, with entrepreneurship, entrepreneurial behaviour of persons is taken into account.
Methodology
The western aging workforce is increasingly affecting companies due to an outflow of employees and a decrease of available young employees. The outflow of employees leads to a loss of knowledge skills and abilities. Older working employees may have problems with performing due to physical, mental, and motivational disabilities. Furthermore, older workers might have motivational problems, which lead to less innovation. Moreover, the aging workforce may be a problem for entrepreneurship because older persons are less likely to go into self-employment. Therefore, the research questions of this thesis were “What is the Effect of Aging on Performance, Innovation, and Entrepreneurship? What are the differences in literature from business and economic, and from other perspectives? Which steps should be taking in future research?
This qualitative research described the effect of aging on performance, innovation, and entrepreneurship. In addition, gaps in literature were found and a research agenda was developed. An extensive systematic literature research as prescribed by Brereton et al., (2007) in the field of economics and business was conducted to 1) create and overview of the linkages between age and performance, and moderators on these linkages, 2) research those moderators to finish the literature review. To test the findings from the literature review, a systematic review in the other fields of literature researched the linkages and moderators from the literature review and new linkages as a basis for the results. In the results section, the differences and similarities for all linkages were discussed and provided as a base for the research agenda.
Setting
this literature search, the following restrictions were used: exclusion of business and economic literature, publication year 2000-now and only articles were given in the results. Table 2 presents an overview of the used terms for the results section. These two literature researches were executed to discover similarities and differences between both fields of literature to find interesting point for improvement for the business and economic aging studies. These outcomes were discussed and resulted in a research agenda.
Table 1
Research topics for literature review (business and economic articles)
Search topic Results Document types Publication years Language
Ageing workforce 33 Articles and reviews 2000-2011 English and Dutch Ageing, firm performance 18 Articles and reviews 2000-2011 English and Dutch Ageing, innovation 318 Articles and reviews 2000-2011 English and Dutch Ageing, entrepreneurship 19 Articles and reviews 2000-2011 English and Dutch Ageing, performance 327 Articles and reviews 2000-2011 English and Dutch Aging, performance 27 Articles and reviews 2000-2011 English and Dutch Aging, innovation 44 Articles and reviews 2000-2011 English and Dutch
Aging, entrepreneurship 12 Articles 2008-2011 English and Dutch
Age, experience, performance 124 Articles All English and Dutch
Age, retirement, performance 56 Articles All English and Dutch
Age, mentoring, performance 7 Articles All English and Dutch
Age, workforce composition 4 Articles All English and Dutch
Age, motivation, performance 82 Articles All English and Dutch
Age, stereotypes, performance 29 Articles All English and Dutch
Age, measurement tool, performance 23 Articles All English and Dutch
Age, diversity, performance 79 Articles All English and Dutch
Age, commitment, performance 91 Articles All English and Dutch
Age, experience, innovation 80 Articles All English and Dutch
Age, experience, creativity 14 Articles All English and Dutch
Age, knowledge, innovation 35 Articles 2009-2011 English and Dutch
Age, knowledge, creativity 13 Articles All English and Dutch
Age, retirement, innovation 22 Articles All English and Dutch
Age, retirement, creativity 0 Articles All English and Dutch
Age, HR practices, innovation 5 Articles All English and Dutch
Age, HR practices, creativity 2 Articles All English and Dutch
Age, job control, innovation 6 Articles All English and Dutch
Age, job control, creativity 3 Articles All English and Dutch
Age, self efficacy, innovation 4 Articles All English and Dutch
Age, self efficacy, creativity 2 Articles All English and Dutch
Age, support for creativity, innovation
5 Articles All English and Dutch
Age, support, creativity 13 Articles All English and Dutch
Age, entrepreneurship, innovation 56 Articles All English and Dutch
Age, entrepreneurship, creativity 3 Articles All English and Dutch
Age, experience, entrepreneurship 49 Articles All English and Dutch
Sample
The sample of articles in this study is almost unlimited. One limitation was that some articles could not be downloaded from the ISI Web of Knowledge because the university had no access to it. For those articles, Scholar Google (www.scholargoogle.com) and the EBSCOhost Table 2
Research topics for results and discussion (business and economic articles are excluded)
Search topic Results Document types Publication years Language
Age, experience, performance 102 Articles 2008-2011 English and Dutch
Age, retirement, performance 124 Articles All English and Dutch
Age, mentoring, performance 71 Articles All English and Dutch
Age, workforce composition 6 Articles All English and Dutch
Age, motivation, performance 67 Articles 2009-2011 English and Dutch
Age, stereotypes, performance 68 Articles All English and Dutch
Age, measurement tool, performance 106 Articles 2010-2011 English and Dutch
Age, diversity, performance 121 Articles All English and Dutch
Age, commitment, performance 38 Articles All English and Dutch
Age, experience, innovation 74 Articles 2007-2011 English and Dutch
Age, experience, creativity 68 Articles All English and Dutch
Age, knowledge, innovation 70 Articles 2010-2011 English and Dutch
Age, knowledge, creativity 71 Articles All English and Dutch
Age, retirement, innovation 28 Articles All English and Dutch
Age, retirement, creativity 10 Articles All English and Dutch
Age, HR practices, innovation 0 Articles All English and Dutch
Age, HR practices, creativity 0 Articles All English and Dutch
Age, job control, innovation 41 Articles All English and Dutch
Age, job control, creativity 6 Articles All English and Dutch
Age, self efficacy, innovation 55 Articles All English and Dutch
Age, self efficacy, creativity 12 Articles All English and Dutch
Age, support for creativity, innovation
6 Articles All English and Dutch
Age, support, creativity 45 Articles 2008-2011 English and Dutch
Age, entrepreneurship, innovation 9 Articles All English and Dutch
Age, entrepreneurship, creativity 3 Articles All English and Dutch
Age, leadership, innovation 50 Articles 2008-2011 English and Dutch
Age, leadership, creativity 21 Articles All English and Dutch
Age, training, innovation 77 Articles 2009-2011 English and Dutch
Age, training, creativity 64 Articles All English and Dutch
Age, experience, entrepreneurship 13 Articles All English and Dutch
website (www.ebscohost.com) were used to find and download the missing articles. Moreover, in some cases, an article could be found in the universities’ library. An article was excluded from the thesis when it could not be downloaded or when there was no hardcopy available in the library.
Measurement instruments
Brereton’s systematic literature review process was used to measure the effects of aging on performance, innovation, and entrepreneurship. This process is a basic tool to assess and aggregate research outcomes in order to provide a balanced and objective summary of research evidence for a particular topic (Brereton et al., 2007). In the systematic literature review process, three phases needs to be conducted, 1) plan review, 2) conduct review, and 3) document review. In the first phase, research questions needs to be specified, and a review protocol needs to be developed and validated. In the second phase, relevant research is identified, primary studies are selected, study quality is assessed, required data is extracted, and data is synthesised. In the third phase, the report need to be written and validated (Brereton et al., 2007).
Data collection
The data was collected from the ISI Web of Knowledge website between November 2010 and august 2011.
Data analysis
Table 3
Conceptualizations
Concepts Definitions
Age / Aging Age of a person in years
Performance The performance of individuals, groups, and or firms Innovation New or adapted products, procedures
Entrepreneurship A mix of market demand and supply, opportunities, resources, abilities, traits, preferences, risk-reward profile.
Creativity The process in a persons’ mind or the process in groups to come up with an idea for new products or product innovation Experience Knowledge of work, working measured in years
Retirement Stopping working by reaching an age Work position Function in a company
Motivation Intrinsic or extrinsic
Stereotypes Pre-determined set of facts which are not always right
Role ambiguity A lack of clarity about expected behaviour from a job of position
Team age diversity Range of age in teams in companies
Quality of team processes Performance of a team and the influence on output
Commitment Willingness of an employee to work hard and try to achieve the best result possible
Job control The way an employee is controlled in the work Self efficacy One’s self believe in a tasks
Support for creativity Formal or informal support from managers to search for new or adoptions of products or procedures
Literature review
Western society is aging rapidly, the influence of aging on companies becomes more and more clear (OECD, 2005). First, the number of available employees for companies is decreasing. Second, the entry of young employees is declining and the outflow of older workers is increasing in the current years in western society. Therefore, companies may struggle to find the right employees, lose knowledge and experiences, which results in loss of performance, innovation, and entrepreneurship. The literature review will address these three areas, on company, group, and individual level. In the first section, research studies on the influence of aging on performance will be addressed. The linkages, both direct and, indirect linkages, can be discussed on company, group, and individual level. In the second part, the influence of aging of innovation will be discussed. Finally, the last section will focus on the relation between aging and entrepreneurship of entrepreneurial behaviour.
First linkage: The influence of aging on performance
In this section, the direct and indirect influences of aging on performance will be discussed from an economic and business point of view based on scientific literature. The occurrence of aging and the influence on performance is widely discussed in literature. Many moderators on the linkage age and performance have been found. Therefore, each influence will be discussed in a separated paragraph. First, the direct link between age and performance is discussed, second, the moderators of the relationship will be discussed, and last the conceptual model is displayed (figure 1).
Aging and Performance
To the researchers’ knowledge, there has been one study which showed a positive relation between age and performance (Selmer, Lauring, & Feng, 2009), other literature showed only a negative or no relation. Therefore, the conclusion can be made that the evidence for a strong relation between age and performance is lacking. This can be explained by the broad and difficultness of the age performance relation itself and the many ways of measuring this relation. In addition, the articles, which did not find a direct link between age and performance, might have had an objective that was not directed to find a relationship between age and performance. Furthermore, measuring the direct effect of age on performance might be hard due to moderators and the general fact that individuals are different, and behave and act not in the same way. For example, the performance of an individual might be influenced by family issues, illness, a lack of interests, and/or economic recession.
The next session describes the moderators on the relation of age and performance. All articles, which explain parts of the age performance relation, are important. Therefore, the moderators will now be discussed to get a better view of the relation of age and performance.
Moderator: Experience
et al., (2010) shows that the chairpersons’ title ownership and age exert a significant influence on various performance level measures, but not on performance growth. The explanation can be found in the use of not specific measurement instruments. Hard statement cannot be made without specific measurement instruments. In addition, recent work of Cheng and colleges (Chan, Cheng, & Leung, 2011) show that a title and age are related to performance. The article of Cheng et al., (2010) sheds a light on the board age structure in China over the years 1999-2005. One of the strengths of this article is the large sample and the variety of variables. Although this study reveals new facts, this article could be more worth full if some cases were used to find explanations for unexplained outcomes. For example, how many firms are there with the owner as chairpersons, could that be an explanation for older chairpersons? Therefore, are the older chairpersons chosen, or are they in this position due to the obtained fact of entrepreneurship, ownership.
The relationship between age and performance on group and individual level is positively related by experience (Ali & Davies, 2003; Avolio et al., 1990; Liden, Stilwell, & Gerald, 1996). In addition, age is positively related to the number of previous years of work experience and previous jobs (Saks & Waldman, 1998). Older workers are assumed to perform equal or better than their younger colleagues did (Avolio & Waldman, 1990; Liden et al., 1996). In addition, if older employees recognized that their knowledge, skills, and abilities did not fit the requirements of the new tasks their performance will be lower (Niessen et al., 2010) and this results in a lower performance. Job experience made it for both younger and older worker more difficult to work after reorganization. Age and job experience were positively related. Unfortunately, the relation between job experience and performance was not investigated in the study (Niessen et al., 2010). In this study, there was a sample of 117 respondents. The average age of the young employees was 29 years and older workers had an average age of 48 years. The age of the older group is not even close towards retirement age, which can be explained by the type of researched firms, two high tech corporations, a multinational chemical company, and a biochemical company, which, often have a younger workforce. Two measuring points are used in this study: one before the change and the other three months after the change. Once could argue that the three months after change implementation is too short. However, by assessing two measurement points, changes in the performance can be recognized (Niessen et al., 2010).
for job performance in high complexity jobs. The nonexistence of an inverted U-shaped relation implicates a compensation of older workers via job experiences. Furthermore, job experience in a low complexity job will not result in all situations in a high performance. In addition, much job experience in a high complexity job with objective measures will lead to a high performance. Based on this meta analysis, the following conclusion can be drawn: older workers are performing on a lower level compared with younger workers, but the experience of older workers helps them to increase their performance to a normal level. It is reasonable to state this conclusion since the article of Sturman (2003) is an extensive meta analysis, which researched all articles from seven journals in the period 1980-2001 (Academy of Management Journal, Administrative Science Quarterly, Industrial and Labour Relations Review, Journal of Management, Journal of Applied Psychology, Organizational Behaviour and Human Decision Processes, and Personnel Psychology). Furthermore, Sturman’s limitation about the generalizability is legitimate, further research is indeed necessary on the individual level of age influencing performance. The study shows that research in the field of age and performance should include specific constructs of interest like physical and mental ability, job knowledge, and motivation.
As age increases, the negative relationship between role ambiguity and general performance decreases. Coping mechanisms associated with age and tenure may help individuals to develop better tools to cope with an ambiguous work environment. The experience in life and work play here an important role. Older persons are better in coping with ambiguous situations, which reduces the undesirable effect on performance resulting in equal performance of aged and younger workers (Shirom, Fried, & Cooper, 2008). The meta analysis of Shirom et al., (2008) an extensive, three way study on the relation of age, gender, and tenure upon stressors–performance relations, resulted from 30 independent studies (N = 7700), gathered from 14 high quality journals from 1975 to 2002.
Moderator: Retirement/ mentoring
(Ramaswami & Dreher, 2010). A worker might experience a loss of social connections during or after retirement. Mentoring might be a solution for the retiree to stay connected and younger workers profit from the experience and knowledge input of the retiree.
On company level, retired Chief Executive Officers (CEOs) may remain connected to a company on the background (Evans, Nagarajan, & Schloetzer, 2010). There were three options, 1) an executive retires completely, 2) an executive holds some decision rights, and 3) an executive retained on the board for a certain time. CEOs who reach the retirement age are less likely to exit the firm completely, are less likely to retain full decision rights, and are positively related to financial performance (option 2). The decision rights of a former CEO are mostly concerned towards important, strategic board decisions. The firm, which is giving some decision right to the retiree, is more likely to hire a younger CEO, without prior CEO experience. The retiree functions as a mentor for the inexperienced young CEO and tries to prevent the younger CEO for common mistakes. This leads to an increased influence of the retiree over the young CEO with corresponding positive or negative implications for the firm’s post turnover financial performance. In addition, retention of a non-founder as a board chair had a negative influence with future financial performance. There are two explanations for this finding, 1) older CEOs are short term focused, and do not invest in long-term research and development, which is a predictor for long-term financial performance (Barker III & Mueller, 2002), 2) CEO age is positively related to the status quo (believe in correctness of current strategy of the firm). Companies with CEOs who are committed to the status quo showed lower performances (McClelland, Liang, & Barker, 2010). Nevertheless, the retention of a non-founder in the function of a board member can have a positive influence on future stock returns (Evans et al., 2010). There is no significant relation between the retention of a founder and future firm performance. The negative relations of founder and non-founder can be interpreted by assuming that non-founders do not have the financial and non-financial attachment to the firm. These articles show that there are various options and various outcomes in relation to retirement and firm performance. The options show mixed results for a firms’ performance and the performance of the board. However, compared with other articles, the work of Evans et al., (2010) is worth full because it is going into depth on the issue of retiring CEO’s and their influence after retiring.
work was the most important reason for not having an early retirement. In addition, financial advantages and social contact were important reasons older employees to stay employed. Moreover, a healthy workplace and appreciation for colleagues and supervisors were indicators for having not an early retirement. Besides these factors, the development of skills and competencies is also an important factor. Further, any person in the company can and should work on creating and sustaining a healthy and motivated Aging workforce (Proper et al., 2009). Companies can influence the decision of older workers to stay and work until retirement age is achieved (Shacklock, Brunetto, & Nelson, 2009) by means of the following factors: level of autonomy in decision-making, work environment, importance of work, flexibility, and interests outside work (Buyens, Van Dijk, Dewilde, & De Vos, 2009; Iverson, 1999). In addition, employees are positive regarding to continue working until the age of 65, continuing working after the age of 65 was perceived as very negative (Buyens et al., 2009). Another finding on the topic of retirement is that companies are not retrieving retired or early-retired employees when having problems (Henkens et al., 2008). In addition, six dominant themes about older workers re-entry practices and reasons to keep on working were discovered (Shacklock, Fulop, & Hort, 2007). On company level, introducing flexible working schedules gives older workers more scope to their own timetable, which may result in continuing to work. However, other research shows that younger workers are more inclined by flexible schemes compared with older workers, due to the extensive shift of the company toward functional flexibility (Hsu, Wu, & Yeh, 2011). On group level, mixed working teams and social contacts are factors that were described as reasons not to retire. On individual level, the participants’ age was a common reason to retire. Age was also found to be a barrier to re-entry to the workforce. Special qualified employees wanted to continue working, and if older workers perceive self-worth and job satisfaction then they are also intend to remain working (Shacklock et al., 2007).
Moderator: Workforce composition
Workforce composition is the design of the workforce and the attitude of employees to their workforce. The relation between age and performance might be moderated by workforce composition by the means of desired and undesired job attitudes and the physical abilities of employees (Feldman & Ng, 2010).
middle-aged workforce with higher educational background, contributes significantly to firms’ productivity (Liu, Tsou, & Wang, 2010). In addition, Landau et al., (2008) investigated the influence of aging on performance in the car industry. The main results of this study were that older workers had a more favourable work position in the factory. Older and smaller workers and workers with overweight were doing the very favourable jobs. The deficit of older workers’ performance was more or less compensated by the allocation of older workers, the health worker effect. Older workers were not pushed into their physical limits by job rotation and (early) retirement, which resulted in higher performance. This study shows that recognition of the influences of aging in manufacturing industries can result in steady performances of the employees. The case study of 1700 workers in German car manufacturers measured the variables age, gender, height, and weight. Furthermore, questionnaires were conducted and workers received a diagram of the human body were they could mark the regions which suffered from the work. In addition, of the 1200 assembly line workers, 256 were interviewed. In the case study, multiple measurement instruments were used, the study had a large sample, different groups, different variables, which increases the strength of the research. The study can be generalized towards other European car manufacturers. Furthermore, being aware of in the influence of workforce composition on employees can result in happier and better performing employees (Landau et al., 2008).
On group/individual level, meta analyses on job attitudes showed that older workers have more favourable job attitudes and/or less unfavourable job attitudes than younger workers. Managers should be aware of the fact that the positive job attitudes of older workers may affect the job performance indirectly. Furthermore, training may be useful in improving the individual performance of older workers, but giving older workers a positive job attitude, can increase more than individual performance (Feldman & Ng, 2010; Harrison, Newman, & Roth, 2006).
Moderator: Motivation
shows that older workers’ motivation develops in a multiple directions, as employees are aging. Motivation is declining, stable, or rising depending on the level of analysis and type of job or task and changing resources (Stamov-Rossnagel & Hertel, 2010). In addition, older workers are motivated by autonomy and achieving goals (Bipp, 2010; Rabl, 2010).
Moderator: Stereotypes
In business and economic literature, much is written about the worth of older workers for a company. Mixed result are shown, but when it comes to changes of functions in companies and performance objectives, older workers are rewarded less than their younger colleagues (van der Heijden, 2001).There seems to be a moderating role of stereotyping on the relation of age and performance. A study of Schwerha, Wiker, and Jaraiede (2007) found that older workers had the same learning and performance capabilities as younger workers in situation without distractions. This result weakens the negative stereotype of older workers and poor performance (Campion & Posthuma, 2007). In the presence of auditory and visual distracters, older worker performed twice as bad as their younger counterparts (Schwerha et al., 2007). The study used experimental testing in a fixed setting and a fixed procedure to come to a comparative analysis. By experimental testing, other influences could be reduced and the focus could be added on the learning and performance of older workers, this strengthens the outcomes of the study. Stereotypes are influencing the motivation of workers (Campion & Posthuma, 2007), which can result in a decrease of the self-efficacy (self-efficacy is the development or belief that one is able to improve skills) of employees. A decrease of self-efficacy results in a decrease of individual performance. Firms can influence the self-self-efficacy by understanding the companies’ culture and employees’ attitudes (Maurer, Barbeite, Weiss, & Lippstreu, 2008). However, self-efficacy was not related to age (Niessen et al., 2010). In addition, perceptions on performance of older workers are often negative and strengthen the stereotypes. Older workers are seen as having a lower mental and/or physical ability, are less able to cope with stress, and are less competent. Therefore, their performance must be lower than the performance of their younger colleagues (Scherwa et al., 2007, p. 166). However, research shows that older workers have a higher-level of intrinsic work motivation and job involvement and lower levels of job depersonalization compared with younger workers. In addition, older workers are more satisfied, loyal, and committed. Nevertheless, a relation with performance was not researched in this study (Feldman & Ng, 2010).
workers are perceived as warmer compared with younger workers. However, older workers are discriminated when a job required the warmth related qualities, younger worker were chosen more often. In addition, competent older workers were seen as less warm, the opposite of the stereotype. Incompetent older workers were seen as warm, as the stereotype prescribes. Moreover, older workers were at least performing equal compared with their younger colleagues. This is the opposite of the statement occurring from the stereotype (Krings et al., 2011). In addition, respondents own age is a predictor of positive attitude towards older workers (Chiu, Chan, Snape, & Redman, 2001). Becoming older and reaching the age of older workers leads to a more positive and considerate way of providing support for older workers. Moreover, the frequency of contact with older workers resulted in a decrease of discriminatory attitudes among younger workers. The author even opts for hiring larger number of older workers to give a statement and may counter discriminatory attitudes among the workforce (Chiu et al., 2001). A higher level of job involvement is related to preferences for career preservation or career expansion, while lower levels of job involvement were related to career-diminishment preferences. Furthermore, the results provide indirect support for the idea that stereotype-threat mechanisms do play a role in the performance of older workers (Chiu et al., 2001). The idea that stereotypes are influencing older workers performance might be true. Older workers become more and more insecure about their own capabilities. This is caused by the diverse perception of older workers on their own performance (Buyens et al., 2009).
Moderator: Measurement tool
supervisors need to give more feedback to employees, and they get more feedback from employees. This can be a start for 1) improving the work of employees, 2) improving the supervisors’ competences, 3) improving individual performance by training and development programs (van der Heijden, 2001). On team level, the relationship between supervisor and subordinates is very important in relation to performance (James, McKechnie, & Swanberg, 2011; McEvoy & Cascio, 1989; Schalk et al., 2010; Waldman & Avolio, 1986). In addition, employees with older, more experienced supervisors achieved better scores on the objective performance measures than employees working for comparatively younger less experienced supervisors. Interestingly, on subjective performance ratings, older supervisors did not rated their employees more positively than the younger supervisors did (Liden et al., 1996). Furthermore, the teams’ age diversity was seen as a factor for better performance (Schalk et al., 2010).
If companies fail to maintain objective performance criteria, consideration should be given to performance related pay instead of age related pay (Strack, Baier, & Fahlander, 2008). This means that measurement tools needs to be defined again. The introduction of performance related pay will result in less paid older workers. However, performance related pay can increase the use of experiences and superior knowledge by older workers, which in turn leads to higher payment then in the current system. In addition, selecting older employees on their knowledge and link those to younger motivated employees can result in an increase of performance on company level. This leads to knowledge transfer and a reduction of capacity shortfalls (Strack et al., 2008).
The integration of self-development in the performance management system and the rewarding of participating employees, leads to increased knowledge sharing and continuously learning (Maurer, 2001). Companies profit from this because increased sharing of knowledge can result in a better performance of both older and younger workers. For example, older workers are less familiar with technologic innovations. By stimulating older and younger workers to cooperate, work can be finished quicker and accurate. The older workers’ input is the experience, the younger workers’ input is the knowledge of the use of technological innovations (Maurer, 2001; Morris & Venkatesh, 2000) and this result in learning from the older workers experiences (Maurer, 2001).
Moderator: Age diversity
Age diversity is the range of age in companies or workgroups. Age diversity can influence the relationship of age and performance on company, group, and individual level (Armstrong-Stassen & Lee, 2009; Kunze, Boehm, & Bruch, 2011). However, recent meta analysis of 92 resources found no support for the relation between age diversity and team performance. A possible explanation might be that generational differences may have implications for team performance instead of age diversity (Bell, Villado, Lukasik, Belau, & Briggs, 2011).
On company level, age diversity appeared to be related to the emergence of an age discrimination climate, which negatively affects firm performance (Kunze et al., 2011). An indirect effect was found between age diversity and performance by the means of collective affective commitment. The mean age of employees does not affect the relation of age diversity and performance (Kunze et al., 2011). In addition, the age performance relation was moderated by age diversity, but the moderating effect is not equally distributed. Moreover, western companies were found to be more aware of age diversity influence than eastern societies (Li, Chu, Lam, & Liao, 2011). Furthermore, age diversity is negatively related with innovation, which harms the performance in companies (Ostergaard, Timmermans, & Kristinsson, 2011)
On group level, the age diversity of top management teams is curvilinear related to sales growth. In addition, low to moderate age diversity levels of top management team of firms that are operating in a complex environment is positively related toward sales growth. However, firms with a high level of age diversity of top management teams and with large differences in age, sales growth was declining. (Richard & Shelor, 2002). In sports, age diversity is negatively related to team performance (Timmerman, 2000). The generalizability of this study is low because the research area of sports is small and different compared with business and economic literature.
Moderator: Commitment
Commitment is the willingness of an employee to work hard and try to achieve the best result possible for the company. As employees age their commitment might be influenced by personal or organizational issues, which may harm the performance of employees and organizations. There is a positive relation between age and organizational commitment (Qiao, Khilji, & Wang, 2009). Organizational commitment is often divided in affective, normative and continuance commitment. The individual commitment of employees is often researched by assessing their job satisfaction (Gunlu, Aksarayli, & Percin, 2010; Kooij, Jansen, Dikkers, & de lange, 2010). It is important to assess the personal job satisfaction since organizational commitment is positively affected by job satisfaction (Chang & Chang, 2007).
On company level, it was found that with increasing age of workers, employees are more satisfied with an increase in income. Intrinsic, extrinsic, and general job satisfaction with increased age was positively related to normative and affective organizational commitment (Allen & Meyer, 1993; Gunlu et al., 2010). In addition, the latter two measurements of job satisfaction had the strongest linkages with organizational commitment (Gunlu et al., 2010). This implies that rewarding employees in a correct way in terms of money and complements, employees are more committed to the company and performing better. Manager rated continuance organizational commitment is strongly related with age (Shore, Barksdale, & Shore, 1995).
A study to the effect of human resource (HR) practices on affective, normative, and continuance organizational commitment showed that between organizations, the same HR practices might have different outcomes. Therefore, research should be done in organizations before implementing HR practices, a one size fit all approved is undesired (Smeenk, Eisinga, Teelken, & Doorewaard, 2006).
turnover. First, there were no differences in the three age groups, the age group of 30 years and younger is quite small compared to the other groups. Second, difference between groups was that satisfaction with job security was more strongly related to the commitment of senior workers (age range: 31–45 and age range: 45>) and to their desire to remain with their companies (Finegold et al., 2002).
+ + - + + +/ No relation or negative - + + + - + - + - +/- + - +
Figure 1. Conceptual model of the relationship between age and performance
Second linkage: The influence of aging on innovation
What is the influence of age on innovation? Are older people less innovative due to their age, or are they equal or even better in innovation than younger employees due to their experiences and knowledge? In the next part, the linkages between age and innovation will be discovered. The section ends with presenting the conceptual model (figure 2).
Age and innovation
During the search for literature, it became apparent that numerous authors prefer to investigate the link between age and creativity (Binnewies et al., 2008; Shalley et al., 2004). Here, both linkages will be taken into account. Amabile, Barsade, Mueller, and Staw (2005), and Barker III and Mueller, (2002) found that there is no or a negative linkage between age and creativity. Meta-analytic research on the relationship between age and creativity showed that there is not a direct relation and moderators may play an important role (Binnewies et al., 2008; Eder & Sawyer, 2007).
Moderator: Experience
The linkage age and innovation/creativity can be a strong one due to more working experience, task specific knowledge, skills, and routines of older employees. Experiences and knowledge are prerequisites for innovation. Older employees are able to free mental resources due to their routines, which can lead to better and more efficient problem solving (Ford & Gioia, 2000; Gilson & Shalley, 2004). In addition, older workers can develop creative ideas by their experience and self-confidence (Binnewies et al., 2008). On the other hand, working experiences and routines can be a constraint for innovation/creativity because these characteristics are common with normal behaviour and solving problems in a standard way. Research on the creativity in the advertisement market showed that age and advertising experience are unrelated to creativity (Reid, King, & DeLorme, 1998). In addition, a lack of creativity might result in unsatisfied managers (Zuperkiene & Zilinskas, 2008).
Moderators: Job control, self efficacy, support for creativity
study included 172 workers from 50 companies. Unfortunately, the relation of age on the innovation capability was not investigated in this study.
Knowledge sharing is positively related to top management support (Anderson, 2011; Lin, 2007). Furthermore, the work of Binnewies et al., (2008) shows that the link between age and creativity is positively moderated by high job control, and negatively by low job control and low support for creativity. This means that creativity of older workers is not really affected by job control. However, older employees could develop creative ideas owing to their experience and self-confidence regardless of the level of job. Furthermore, the negative relation of low support for creativity with creativity can be damaging for the creativity of older workers and they might be discouraged to develop creative ideas. The age-creativity link, which is moderated by the support of supervisors or co-workers, can cause discourage of the older employees to develop creative ideas. As a result, older employees may hold on to routines and produce less creative ideas. In addition, if a company has a range of job resources, creativity of both older and younger employees will benefit (Binnewies et al., 2008). The research included questionnaires, expert rating, and interviews among a sample of 274 nurses. The response rate was 42% (N = 117), which can be regarded as normal. The generalizability of this study is limited because creativity in the study was not part of their formal job role.
Moderator: Knowledge
The average age of knowledge and the age diversity of searched knowledge affect innovativeness. The innovation ability of a company suffers from the search for competitor knowledge. In the search for old and external knowledge, the product innovation is stimulated. Older competitor knowledge harmed the current product innovations of the company. However, older external knowledge increased current product innovation (Katila, 2002).
The success of a company depends mainly on the intellectual and system capabilities and to a lesser extent to the physical assets. Intellectual capabilities enhance cognitive knowledge, advanced skills, system understandings, and self-motivated creativity (Quinn, Anderson, & Finkelstein, 1996).
Knowledge sharing and the willingness of employees to donate and collect knowledge are positively related to the innovation capability of the company (Lin, 2007). In addition, knowledge is an important input for the innovation strategies of companies (Chiu-Chi Wei, Su-Hui Chen, & Yu-Chen Lee, 2009; Harison & Koski, 2010)
There exists a positive relation between external knowledge and product innovation for companies with a high research and development (R&D) expenditure (Tsai, Hsieh, & Hultink, 2011). Unfortunately, this study was conducted at company level with no examination of the influence of persons’ age.
Moderator: Retirement
Retirement of older employees leads to a shortage of specialists and even a reduction in the rate of technological innovations (Clark & Thurston, 2000). This is supported by Heeley and Jacobson (2008) who argue that prior knowledge is an important input for the development of new inventions. Companies using recent technology input to develop new products, have a lower stock return than companies that are using inputs slightly behind the technology frontier. Therefore, older employees can have valuable tacit knowledge from earlier innovations, which can be used to develop a new product.
Moderator: HR practices
Age is moderating the relationship between HR practices and knowledge sharing or innovative behaviour. The older the employees are, the more they show innovative behaviour when they are offered training, self-development, career opportunities, and participation in intergenerational teams (Slagter, 2009). Furthermore, innovative HR practices leads to better HR outcomes and company performance. Unfortunately, the influence of age was not researched in this study (Zheng, O'Neill, & Morrison, 2009). One question is of importance: are older employees willing to go into training or do they have the incentive for a further career? Age is negatively related to the willingness to be flexible. In other words, older employees do not want to change, or want to do extra work (van den Berg & van der Velde, 2005). Therefore, HR practices should be developed to increase the motivation of older workers to be flexible.
Moderator: Entrepreneurship
- + - - - or no linkage + + + + +/- + - - + + - + + -
Figure 2. Conceptual model of the relationship between age and innovation.
Age Creativity Innovation
Self-efficacy High job control
Low support for creativity
Experience and
self-confidence
Experience and routines Knowledge and retirement External knowledge
Competitor knowledge HR Practices
Third linkage: The influence of aging on entrepreneurship
Age and entrepreneurship
In the previous section, literature concerning the influence of aging on performance and innovation was reviewed. In the following part, the relation of aging with entrepreneurship will be discussed and the conceptual model is presented (figure 3). Entrepreneurship is widely discussed in the literature. Important contributions to the theories about the need for entrepreneurship and the purpose of entrepreneurship were developed by Schumpeter, Kirzner, and Lachman. Other researcher focussed on the age of persons when going into self-employment. The maximum age of a person to start a business is around 40-45 years and there exists consensus about this maximum age. This raises the question whether the current aging society in Europe (OECD, 2005) and the Netherlands (Audretsch, 2003) is harming the entrepreneurship, especially if small companies are the motor of the labour force, like in the Netherlands (Audretsch, 2003). What does this imply for the aging workforce in the western society and the relation of aging society towards entrepreneurship? Is entrepreneurship influenced by an Aging society, or does an Aging workforce has no influence on the rate of start-ups, or the willingness to start up a company?
(Malchow-Moller et al., 2010). Workers with a university degree remained longer in self-employment (Caliendo et al., 2010).
Moderator: Risk tolerance
The decision of going into self-employment for wageworkers is highly influenced by high-risk attitudes. However, when the person has not been a wageworker before, high-risk attitudes were not an influence of going into self-employment (Caliendo, Fossen, & Kritikos, 2009). Moreover, older workers might be taking the same risks as their younger counterparts in companies, they might be more cooperative and competitive (Charness & Villeval, 2009)
Moderator: Experience
Prior start up experience and R&D experience was found as characteristic of the entrepreneurial team (Song, Podoynitsyna, van der Bij, & Halman, 2008). Wageworkers with more than 22 years of work experiences will not go into self-employment (Malchow-Moller et al., 2010). In addition, thinking of an own business until the age of 36 year can result in actually going into self-employment. After this age the likelihood to start an own business is significantly decreased (van der Zwan et al., 2010). Age appears to be the dominant factor in the decision to start a new company (Reynolds, 1997). About 95% of all start-ups are realised by persons aged in the range of 18 to 44 years. In the start up phase, age and experience combined will lead to an increase in the company size until the limits of age and experiences are reached, which leads to a decrease in company size growth (Lévesque & Minniti, 2006). The usage of a strategic plan and a decision making plan by an entrepreneur will lead to a faster growth of the company in comparison with entrepreneurs who do not use these plans (Moreno, Castillo, & Masere, 2010). However, a person who is gaining experience as a wageworker has the advantage of a stable income, which may be a reason to stay employed and do not become an entrepreneur (Levesque & Minniti, 2006). Moreover, lifetime working experience had a positive effect of remaining self-employed (Caliendo et al., 2010) Work experience encouraged the business creation and that younger unemployed persons were more willing to set up their own business (Startiene & Remeikiene, 2009).
(Stam, Audretsch, & Meijaard, 2008). Young entrepreneurs without business experience were more likely to go into entrepreneurship (Kuckertz & Wagner, 2010). Entrepreneurship is not always an individual start-up, teams might play an important role. Teams, which begin with broadly experienced members, are more likely to find experienced executives. This can prevent entrepreneurs from mistakes (Beckman & Burton, 2008). In addition, having prior business experience is also positively related to entrepreneurial learning, i.e. getting assistance in finance, or hiring persons for important tasks, which the entrepreneur cannot fulfil (Sardana & Scott-Kemmis, 2010).
- - - + + but limited - - - + + - - +
Figure 3. Conceptual model of the relationship between age and entrepreneurship
Results and Discussion
The aging population is causing an increase in the size of the group of employees in the ages of 40-70. These workers are confronted with motivational, mental, and physical disabilities. Furthermore, the size of the group of young employees is decreasing. Therefore, companies may face problems with the outflow of employees and the lack of qualified young employees to fill the vacant positions. In addition, the outflow of employees results in an outflow of companies’ knowledge, experiences, and individual abilities. This results in a loss of performance, innovation, and entrepreneurship. Therefore, the research questions were “What is the effect of aging on performance, innovation, and entrepreneurship? What are the differences in literature from business and economic, and from other perspectives? Which steps should be taken in future business and economic research?” The literature review of business and economic literature revealed direct linkages and a number of moderators on the relation of age and performance, innovation, and entrepreneurship. The result section showed the outcomes from the other fields of literature and discussed the similarities and differences between the literature fields. These findings served as an input for the research agenda.
For the results section, the following format will be used. First, the results of the relation between age and performance are discussed. This is followed by a discussion of the results from other literature field on the age innovation relation. Subsequently, the results of the age entrepreneurship relation are discussed. Finally, the research agenda is provided.
First linkage: Age and performance
complexity, stereotypes, and commitment) will be discussed to get a better understanding of this linkage.
Moderator: Experience
Evidence was found for the positive relation between age and experience although there were differences chronological age of workers, and the work experience of workers. There are too many individual differences between persons, which determine the experiences of a person (Ng & Feldman, 2009). Unfortunately, performance was not a construct in the research of Ng and Feldman (2009), so the relation of age, experience, and performance was not investigated. A research on the effect of short shift work on the long-term performance of older workers showed that the relation of age and experience is positive to a certain extent, but there needs to be an opportunity in the work situation to stimulate the brains and gain new experiences. Otherwise, a person will perform lower despite the existing experiences. Furthermore, workers who stopped working in short shifts for at least four years ago were performing better than during their work in short shifts (Rouch, Wild, Ansiau, & Marquie, 2005).
In a musical experiment, it is found that young and middle aged musicians performed better in recognizing music than older musicians. The relation between age and experience was negligible, the relation between experience and performance was a strong one (Dowling, Bartlett, Halpern, & Andrews, 2008). In the setting of the experiment, groups were age based (18–30 years, 31–59 years, and 60 years and older), musical experience was measured by the amount years of formal training (0-2 years, 2-10 years, 10 years and more), and inexperienced and experienced musicians were tested. Results showed that when persons’ specific experience is tested, the experience of the person is related to performance and not the persons’ age performance. Translating these findings to economic and/or business literature shows that research should not only focus on the general experience of workers measured in years, but also on task or industry specific experiences. For example, an older worker with many years of work experience, measured in years, changed work and ended up in another industry. The aged person is highly experienced but lacking necessary experience to perform in the new situation.
their experience than their younger counterparts. Despite the changing work due to information communication technology changes (ICT) and processing a huge load of information, older workers were able to cope with the situation. Furthermore, inexperienced older persons who were also tested outperformed their younger counterparts. This means that older persons in general have some mechanisms to cope with difficult situations. Unlike the suggestion of some stereotypes, older persons can handle stressful situation even if it is in a new situation and can perform better compared with younger persons. Therefore, this finding may be important for unemployed aged workers, in an aging society; this study showed that general experience helps older workers to perform on other tasks, even in the complex air traffic controlling industry (Nunes & Kramer, 2009). In addition, research showed that older workers performed better due to their prior experience and specialized expertise compared with their younger counterparts (Taylor, Kennedy, Noda, & Yesavage, 2007). In addition, memory training of older workers (Mage = 61.3 year) leads to improved source memory performance and better performance in the short term (Engvig et al., 2010). The improvements may indicate short-term structural changes, which leads to options for older workers who get new tasks for example due to a reorganization or older workers who are unemployed. This article shows that older worker can change.
that older age is often accompanied by increases in “crystallized” intelligence, which is a synonym for experiential knowledge.
Not only experience, but also openness to experience was found to be very important to cognitive performance of older people (Sharp, Reynolds, Pedersen, & Gatz, 2010). Openness to experience is the way persons are “having curiosity, an intrinsic wish for knowledge, and the ability to assimilate novel ideas (Sharp et al., 2010, p. 60)”. Openness to experience leads to a better individual performance in the older ages, whereas persons without openness performed worse. This longitudinal study followed 857 participants in the range of 50-95 year since 1984. Therefore, the effect of this study is applicable for persons in and after their retirement. Interesting is the question if and how this effect is applicable for persons aged in the range of 35-65 years.
