Making Stuff Happen

Kevin Lewis

January 23, 2024

Creating the "American Way" of Business: Evidence from WWII in the U.S.
Michela Giorcelli
NBER Working Paper, December 2023

The Second World War II (WWII) was arguably one of the largest shocks to the U.S. economic and production system in history. Historians, business historians, and economists have largely discussed the stimulus that WWII had on U.S. technological advancements. However, its effect on U.S. ''managerial technology'' innovations has been largely ignored, except for very few qualitative works. In this paper, I argue that ''managerial technology'' played a key role in shaping U.S. WWII production and its capacity to defeat some of the most advanced economies in the world. The large-scale diffusion of innovative management practices to US firms involved in war production acted as a technology that put them on a higher growth path for decades. Moreover, it made U.S. managerial practices internationally distinctive and helped create the so-called "American Way" of business, which was exported to war-torn European and Japanese economies in the war aftermath.

Artificial intelligence, firm growth, and product innovation
Tania Babina et al.
Journal of Financial Economics, January 2024

We study the use and economic impact of AI technologies. We propose a new measure of firm-level AI investments using employee resumes. Our measure reveals a stark increase in AI investments across sectors. AI-investing firms experience higher growth in sales, employment, and market valuations. This growth comes primarily through increased product innovation. Our results are robust to instrumenting AI investments using firms' exposure to universities' supply of AI graduates. AI-powered growth concentrates among larger firms and is associated with higher industry concentration. Our results highlight that new technologies like AI can contribute to growth and superstar firms through product innovation.

Cloud Computing and Firm Growth
Timothy DeStefano, Richard Kneller & Jonathan Timmis
Review of Economics and Statistics, forthcoming

Cloud computing has shifted how firms access IT away from investment in fixed capital to pay-on-demand services that facilitate remote and simultaneous use. Using firm-level data we examine the impact of cloud adoption on firm performance and organizational geography with an IV approach that exploits cross-section and time-series variation in fiber broadband speeds as instruments. Cloud leads younger firms to increase revenue, employment, and productivity, whereas incumbent firms experience no scale effects and weaker productivity gains. Incumbents however undergo restructuring through establishment deaths and fewer births, while both types of firms experience geographic reorganization shifting farther from the headquarters.

Algorithmic management diminishes status: An unintended consequence of using machines to perform social roles
Arthur Jago et al.
Journal of Experimental Social Psychology, January 2024

As artificial intelligence (AI) proliferates throughout society, it brings the potential to reshape how people perceive social roles and relationships. Across five preregistered studies, we investigated how AI-based algorithmic management influences perceptions and forecasts of social status. We found that people believe algorithmic management, compared to prototypical human management, leads to lower status in the eyes of others (Study 1). Moreover, forecasts of lower status mediated people's anticipated negative emotions when assessing remote jobs that were framed as primarily algorithmically managed (Study 2). Further, we found that people infer lower status given algorithmic management because they believe it signals that job tasks lack complexity, both when evaluating themselves or others (Studies 3 and 4). Finally, using OpenAI's natural language processing algorithm (GPT-3), we created an actual managerial algorithm and found that the lowered status inferences persist when people are managed by an algorithm that provides instructions, feedback, and monetary incentives (Study 5). We discuss theoretical implications for research on status, hierarchy, and the psychology of technology.

Predicting Ranger Attrition
Aaron Coombs & Neil Hauenstein
Military Psychology, forthcoming

Elite military programs such as the 75th Ranger Regiment's Ranger Assessment and Selection Program (RASP) see rates of attrition often in excess of 50%, and amplify the need to identify and screen candidates based on their probability of successful matriculation. Models were developed (and cross-validated) to predict attrition from RASP using the physical abilities, cognitive abilities, and personality scores collected during candidate admissions screening. We report both regression weights and standardized odds ratios for optimum models of candidate success over three program timeframes to enable an understanding of the relative importance of each predictor. In spite of physical abilities scores being used to select RASP candidates, they were the strongest predictors of RASP attrition. Personality scores accounted for more variance in predicting candidate success than cognitive ability scores. Personality predictors, especially dimensions related to Openness, were better at predicting week one attrition than attrition in later weeks. The use of a single, aggregated candidate probability score for making admissions decisions is discussed, along with additional practical and scientific implications.

The Effect of Incentives in Non-Routine Analytical Team Tasks
Florian Englmaier et al.
Journal of Political Economy, forthcoming

Despite the prevalence of non-routine analytical team tasks in modern economies, little is understood regarding how incentives influence performance in these tasks. In a series of field experiments involving more than 5,000 participants, we investigate how incentives alter behavior in teams working on such a task. We document a positive effect of bonus incentives on performance, even among teams with strong intrinsic motivation. Bonuses also transform team organization by enhancing the demand for leadership. Exogenously increasing teams' demand for leadership results in performance improvements comparable to those seen with bonus incentives, rendering it as a likely mediator of incentive effects.

The position that awaits: Implications of expected future status for performance, helping, motivation, and well-being at work
Edward Lemay et al.
Journal of Experimental Social Psychology, March 2024

Social status shapes many important aspects of people's experiences at work. Guided by research and theory on prospection, the authors tested the predictions that a) expectations of future status predict important outcomes at work independently of current status; and b) expectations of future status are based on current status and partially explain effects of current status. Eight studies using a combination of survey, experimental, and intensive longitudinal methods supported these predictions. Across these studies, expectations of future status had unique effects relative to current status and partially explained the effects of current status on behavioral outcomes (i.e., task performance, organizational citizenship behavior), motivational and affective outcomes (i.e., work engagement, turnover intentions, and learning, performance, and helping motivation), and psychological well-being. Furthermore, several of these responses predicted changes in status over time, and they elicited status conferral by others, suggesting that expectations of future status may elicit responses that confirm those expectations. Status may be consequential for people's work lives, in part, because it shapes how people construe the future. Implications are discussed.

Deadlines Versus Continuous Incentives: Evidence from the Patent Office
Michael Frakes & Melissa Wasserman
NBER Working Paper, January 2024

A quota system with an associated deadline may retain the possibility of worker procrastination and related deadline behaviors. A performance appraisal system based on continuous temporal incentives, on the other hand, has the potential to alleviate deadline effects but may lose some of the quality-related benefits associated with the flexibility of a quota/deadline system. We explore these tradeoffs by observing patent examiner behavior and examination quality outcomes surrounding a 2011 reform at the U.S. Patent and Trademark Office that built on its bi-weekly quota system by adding a set of bonuses tied to daily examination-pendency measures. We find a substantial reduction in deadline effects and near complete temporal smoothing in examiner behavior in connection with the reform, leading to large reductions in average examination pendency while resulting in no corresponding reductions in the accuracy of examinations.


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