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Wednesday, July 20, 2016

Hands-on management

 

Productivity Spillovers in Team Production: Evidence from Professional Basketball

Peter Arcidiacono, Joshua Kinsler & Joseph Price

Journal of Labor Economics, forthcoming

Abstract:
We estimate a model where workers are heterogeneous both in their own productivity and in their ability to facilitate the productivity of others. We use data from professional basketball to measure the importance of peers in productivity because we have clear measures of output, and members of a worker’s group change on a regular basis. Our empirical results highlight that productivity spillovers play an important role in team production. Despite this, we find that worker compensation is largely determined by own productivity with little weight given to productivity spillovers.

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The Effects of Mentor Quality, Exposure, and Type on Junior Officer Retention in the United States Army

Susan Payne Carter et al.

NBER Working Paper, July 2016

Abstract:
Despite the prevalence of mentor relationships in the workplace, little is known about their impact on labor market outcomes, including job retention. Using plausibly exogenous assignment of protégés to mentors in the U.S. Army, we find positive retention effects for protégés assigned to high-performing immediate and senior supervisors. These positive effects are strongest for those with high SAT scores. We find virtually no evidence of type-matched mentoring effects on retention, except when mentors are also high-performing. For protégés serving under high-performing mentors, matching on high SAT score and home division positively impacts protégé retention.

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Economic downturns undermine workplace helping by promoting a zero-sum construal of success

Nina Sirola & Marko Pitesa

Academy of Management Journal, forthcoming

Abstract:
Workplace helping is essential to the success of organizations and economies. Given the economic benefits of helping, it seems important that during difficult economic periods the amount of helping does not decline. In this research, we propose and show that it does. We argue that cues that signal the economy is performing poorly prompt a construal that the success of one person implies less success for others. This zero-sum construal of success in turn makes employees less inclined to help. Four studies found evidence consistent with our theory. Study 1 found that worse economic periods are associated with a more zero-sum construal of success using data from 59,694 respondents surveyed across 51 countries and 17 years and objective indicators of their macroeconomic environments. Studies 2 and 3 were experiments among employees of U.S. organizations that found an induced perception that the U.S. economy was performing poorly led to a more zero-sum construal of success and made employees less inclined to help. Study 4 was an unobtrusive experiment among freelance professionals from 47 countries that found that participants' perception that the economy in their country was in a downturn was associated with a more zero-sum construal of success and less helping behavior. This research demonstrates the importance of bridging the macro-micro divide in organizational sciences and considering the impact of macroeconomic changes on individual employee psychology and behavior.

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New Blood as an Elixir of Youth: Effects of Human Capital Tenure on the Explorative Capability of Aging Firms

Ted Tschang & Gokhan Ertug

Organization Science, forthcoming

Abstract:
The relationship between firm age and innovation has been an enduring topic of interest. We contribute to this research by studying how the effect of firm age on the quality of explorative and exploitative innovations is affected by the firm-specific and industry tenure of the talent resources (employees) that the firm utilizes. We start with the baseline predictions that firm age is related to the development of better exploitative innovations and worse explorative innovations. However, the tenure of employees intervenes in these relationships, by way of bringing in new knowledge, mental models, and beliefs. We predict that longer firm-specific and industry tenure of employees enhances the positive effect of firm age on the quality of exploitative innovations, while amplifying the negative effect of firm age on the quality of explorative innovations. In addition, for both the baseline and the moderating effect, we also formulate a prediction comparing the quality of explorative innovations with those of exploitative innovations. We find support for the moderating effects of human capital tenure for the quality of explorative innovations, but not for the quality of exploitative innovations. We reason that the latter may be due to the need for some level of exploration even in exploitative innovations, at least in the setting we study — the video game industry. Our results suggest that the negative effects of firm age on the quality of explorative innovations can be mitigated by talent resources (employees) the firm uses who have lower firm-specific and industrywide tenure.

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Do We Really Need to Change the Decision Maker? Counterintuitive Escalation of Commitment Results in Real Options Contexts

William Boulding, Abhijit Guha & Richard Staelin

Management Science, forthcoming

Abstract:
A robust finding in the escalation literature, termed as the preference effect, is that involvement in the period 1 initial project assessment decision increases the tendency for decision makers to stick with a losing course of action during the period 2 project reassessment decision. The proposed solution is to bring in a new decision maker in period 2. Across multiple studies, we show that providing period 1 information in real options format increases the tendency for decision makers to view period 2 focal event information as both more negative and more important. Consequently, such decision makers exhibit less escalation in period 2, i.e., exhibit behavior opposite to the preference effect. This suggests that, in real option contexts, not only do we not need to bring in a new decision maker, but also (counterintuitively) it is beneficial to retain the same decision maker in situations where escalation is likely to occur.

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A New Approach to an Age-Old Problem: Solving Externalities by Incenting Workers Directly

Greer Gosnell, John List & Robert Metcalfe

NBER Working Paper, June 2016

Abstract:
Understanding motivations in the workplace remains of utmost import as economies around the world rely on increases in labor productivity to foster sustainable economic growth. This study makes use of a unique opportunity to “look under the hood” of an organization that critically relies on worker effort and performance. By partnering with Virgin Atlantic Airways on a field experiment that includes over 40,000 unique flights covering an eight-month period, we explore how information and incentives affect captains’ performance. Making use of more than 110,000 captain-level observations, we find that our set of treatments — which include performance information, personal targets, and prosocial incentives — induces captains to improve efficiency in all three key flight areas: pre-flight, in-flight, and post-flight. We estimate that our treatments saved between 266,000-704,000 kg of fuel for the airline over the eight-month experimental period. These savings led to between 838,000-2.22 million kg of CO2 abated at a marginal abatement cost of negative $250 per ton of CO2 (i.e. a $250 savings per ton abated) over the eight-month experimental period. Methodologically, our approach highlights the potential usefulness of moving beyond an experimental design that focuses on short-run substitution effects, and it also suggests a new way to combat firm-level externalities: target workers rather than the firm as a whole.

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Be nice to your innovators: Employee treatment and corporate innovation performance

Chen Chen et al.

Journal of Corporate Finance, August 2016, Pages 78–98

Abstract:
This paper investigates the effect that employee treatment schemes have on corporate innovation performance. We find that firms with better employee treatment schemes produce more and better patents through improving employee satisfaction and teamwork. Additional tests suggest that our main findings cannot be attributed to job security, unionization, reverse causality, and omitted variables. We also find that firms with better employee treatment schemes produce patents that enhance market valuation and facilitate better future operating performance. Collectively, our findings show that treating employees well benefits firms and shareholders, for well treated employees are encouraged to create intellectual property.

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The Causes of Peer Effects in Production: Evidence from a Series of Field Experiments

John Horton & Richard Zeckhauser

NBER Working Paper, July 2016

Abstract:
Workers respond to the output choices of their peers. What explains this well documented phenomenon of peer effects? Do workers value equity, fear punishment from equity-minded peers, or does output from peers teach them about employers’ expectations? We test these alternative explanations in a series of field experiments. We find clear evidence of peer effects, as have others. Workers raise their own output when exposed to high-output peers. They also punish low-output peers, even when that low output has no effect on them. They may be embracing and enforcing the employer’s expectations. (Exposure to employer-provided work samples influences output much the same as exposure to peer-provided work.) However, even when employer expectations are clearly stated, workers increase output beyond those expectations when exposed to workers producing above expectations. Overall, the evidence is strongly consistent with the notion that peer effects are mediated by workers’ sense of fairness related to relative effort.

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Call Center Productivity Over 6 Months Following a Standing Desk Intervention

Gregory Garrett et al.

IIE Transactions on Occupational Ergonomics and Human Factors, forthcoming

Methods: This study compared objective measures of productivity over time between a group of stand-capable desk users and a seated control group in a call center. Comparison analysis was completed for continuous six-month secondary data for 167 employees, across two job categories.

Results: Users of stand-capable desks were ∼45% more productive on a daily basis compared to their seated counterparts. Further, productivity of the stand-capable desk users significantly increased over time, from ∼23% in the first month to ∼53% over the next six months. Finally, this productivity increase was similar for employees across both job categories.

Conclusions: These findings suggest important benefits of employing stand-capable desks in the work force to increase productivity. Prospective studies that include employee health status, perceptions of (dis)comfort and preference over time, along with productivity metrics, are needed to test the effectiveness of stand-capable desks on employee health and performance.

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The Impact of Idea Generation and Potential Appropriation on Entrepreneurship: An Experimental Study

Soheil Hooshangi & George Loewenstein

Management Science, forthcoming

Abstract:
Using a novel experimental paradigm, we explore how the experience of generating an idea, and the possibility that another investor might adopt a rejected investment opportunity, bias the investment decisions of innovator and imitator entrepreneurs. We find that individuals who generate a business idea form biased evaluations of economic potential of ideas, be it their own idea or somebody else’s idea. On the one hand they are overconfident about the value of, and overly likely to invest in, their own idea. On the other hand, when investing in another person’s idea, even if it is not competing with their own idea, they are underconfident about the value of, and insufficiently likely to invest in the idea. Surprisingly, we find that entrepreneurial experience exacerbates this pattern of over- and underconfidence. In addition, we find that the threat that another investor can appropriate a declined investment opportunity increases willingness to invest. We propose a theoretical account to explain the observed pattern of over- and underconfidence in imitative and innovative entrepreneurship. Our findings challenge the traditional account that lowering the cost of imitation has a disincentive effect on the investment decisions of pioneer entrepreneurs, and provide evidence that a more lenient appropriability regime may, unexpectedly, have positive effects on entrepreneurship. Our findings also identify new psychological mechanisms that can play a role in important phenomena such as the emergence of spinoffs and rush to market entry.

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The Effects of Wage Contracts on Workplace Misbehaviors: Evidence from a Call Center Natural Field Experiment

Jeffrey Flory, Andreas Leibbrandt & John List

NBER Working Paper, June 2016

Abstract:
Workplace misbehaviors are often governed by explicit monitoring and strict punishment. Such enforcement activities can serve to lessen worker productivity and harm worker morale. We take a different approach to curbing worker misbehavior — bonuses. Examining more than 6500 donor phone calls across more than 80 workers, we use a natural field experiment to investigate how different wage contracts influence workers’ propensity to cheat and sabotage one another. Our findings show that even though standard relative performance pay contracts, relative to a fixed wage scheme, increase productivity, they have a dark side: they cause considerable cheating and sabotage of co-workers. Yet, even in such environments, by including an unexpected bonus, the employer can substantially curb worker misbehavior. In this manner, our findings reveal how employers can effectively leverage bonuses to eliminate undesired behaviors induced by performance pay contracts.

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Revisiting the Small-Firm Effect on Entrepreneurship: Evidence from Firm Dissolutions

Aleksandra Kacperczyk & Matt Marx

Organization Science, forthcoming

Abstract:
Afrequent claim in the entrepreneurship literature is that employees learn to become entrepreneurs during paid employment. We revisit this mechanism in the context of the well-established finding that smaller firms generate higher rates of entrepreneurship. We propose a novel mechanism responsible for higher rates of entrepreneurship emanating from smaller firms: large firms might have a advantage over small firms in providing internal opportunities to retain entrepreneurial talent. We test this claim in a setting where firm dissolution extinguishes internal opportunities, using a new hand-collected data set of career histories in the automatic speech recognition (ASR) industry. For nondefunct firms, we replicate the “small-firm effect.” However, the small-firm effect no longer holds within the subsample of defunct firms: entrepreneurship rates among individuals present at firm dissolution are in fact higher for larger firms. Additional analyses indicate that this effect is unlikely to be driven by the early departure of higher-skilled workers who anticipate the firm’s demise. Finally, we find preliminary evidence consistent with the notion that large organizations may not only retain but also “mold” workers into entrepreneurs. More broadly, the study emphasizes the need to consider a novel mechanism responsible for transition into entrepreneurship — the role of opportunities available to employees in incumbent firms.

By KEVIN LEWIS | 09:00:00 AM