Managing Intelligence
Human-Centered Artificial Intelligence: A Field Experiment
Sebastian Krakowski et al.
Management Science, forthcoming
Abstract:
Humans and artificial intelligence (AI) algorithms increasingly interact on unstructured managerial tasks. We propose that tailoring this human-AI interaction to align with individuals' cognitive preferences is essential for enhancing performance. This hypothesis is examined through a field experiment in a multinational pharmaceutical firm. In the experiment, we manipulated four contextual parameters of human-AI interaction -- work procedures, decision-making authority, training, and incentives -- to align with sales experts' cognitive styles, categorized as either adaptors or innovators. Our results show that tailored interaction significantly improves sales performance, whereas untailored interaction results in negative treatment effects compared with both the tailored and control conditions. Qualitative evidence suggests that this negative outcome arises from role conflicts and ambiguities in untailored interaction. Exploring the mechanisms underlying these outcomes further, a mediation analysis of AI login data reveals that human-AI interaction tailoring leads sales experts to adjust their AI utilization, which contributes to the observed performance outcomes. These findings support a human-centered approach to AI that prioritizes individuals' information-processing needs and tailors their interaction with AI accordingly.
Evidence of a social evaluation penalty for using AI
Jessica Reif, Richard Larrick & Jack Soll
Proceedings of the National Academy of Sciences, 13 May 2025
Abstract:
Despite the rapid proliferation of AI tools, we know little about how people who use them are perceived by others. Drawing on theories of attribution and impression management, we propose that people believe they will be evaluated negatively by others for using AI tools and that this belief is justified. We examine these predictions in four preregistered experiments (N = 4,439) and find that people who use AI at work anticipate and receive negative evaluations regarding their competence and motivation. Further, we find evidence that these social evaluations affect assessments of job candidates. Our findings reveal a dilemma for people considering adopting AI tools: Although AI can enhance productivity, its use carries social costs.
Making the Invisible Hand Visible: Managers and the Allocation of Workers to Jobs
Virginia Minni
University of Chicago Working Paper, November 2024
Abstract:
Why do managers matter for firm performance? This paper provides evidence of the critical role of managers in matching workers to jobs within the firm using the universe of personnel records from a large multinational firm. The data covers 200,000 white-collar workers and 30,000 managers over 10 years in 100 countries. I identify good managers as the top 30% by their speed of promotion and leverage exogenous variation induced by the rotation of managers across teams. I find that good managers cause workers to reallocate within the firm through lateral and vertical transfers. This leads to large and persistent gains in workers' career progression and productivity. Seven years after the manager transition, workers earn 30% more and perform better on objective performance measures. In terms of aggregate firm productivity, doubling the share of good managers would increase output per worker by 61% at the establishment level. My results imply that the visible hands of managers match workers' specific skills to specialized jobs, leading to an improvement in the productivity of existing workers that outlasts the managers' time at the firm.
Driving a Bargain: Negotiation Skill and Price Dispersion
Kristine Watson Hankins, Tong Liu & Denis Sosyura
MIT Working Paper, April 2025
Abstract:
We develop a measure of managers' negotiation skill based on their vehicle purchase price and connect it to observed negotiated prices in business-to-business contracting. Using proprietary data on insurance claims between hospitals and private insurers, we find that hospital managers with higher negotiation skill achieve better outcomes, both for the average price per service and for identical procedures at the same hospital. Evidence from both management turnovers for natural causes as well as shocks to insurer bargaining position supports a causal interpretation. Lastly, we structurally estimate a model to quantify the impact of managers' personal negotiation skill on hospital bargaining power. Counterfactual simulations imply that heterogeneity in managers' negotiation skills accounts for over 28% of the price dispersion explained by variation in hospitals' bargaining power.
How Remote Work Alters the Tasks of Office Work
Peter Cappelli & Jasmine Wu
University of Pennsylvania Working Paper, March 2025
Abstract:
We examine how the execution of office work has changed with the move to remote work through group interviews with roughly 760 employees of a multinational company across three countries and several offices. Perhaps the most important finding is the shift in focus of individual employees toward tasks associated with individual performance and away from help-giving and collaborative tasks. The social ties that made seeking help and giving a simple, informal process in the office context weakened and continue to erode with employee turnover. The norms that developed during the pandemic emphasizing self-care paradoxically contribute to longer, dysfunctional meetings: shrinking of office space, the move to hoteling, and giving local managers control over attendance in office makes rebuilding those relationships extremely difficult.
The Impact of Return-to-Office Mandates on Equity Analysts
Baolian Wang, Peixin Li & Jiawei Yu
University of Florida Working Paper, April 2025
Abstract:
Employing a difference-in-differences design, we investigate how brokerage firms' return-to-office (RTO) mandates affect analysts' forecast quality. We find that RTO mandates significantly enhance forecast accuracy, with stronger effects among younger, less experienced, and female analysts and those in Democratic-leaning states or under time pressure. The improvement is more pronounced for stocks less central to analysts' career priorities, indicating strategic effort allocation. Additionally, RTO mandates improve forecast timeliness. These results corroborate the hypothesis that in-office work boosts labor productivity. However, RTO mandates are associated with increased analyst turnover, though this effect fades by 2022-2023 as RTO policies become widespread.
Meaning At Work
Nava Ashraf et al.
NBER Working Paper, May 2025
Abstract:
We evaluate a firm's unusual, worker-centered, solution to the agency problem: enabling employees to reduce the cost of effort rather than pushing them with performance rewards. We randomize the roll-out of the firm's "Discover Your Purpose" intervention among 2,976 white-collar employees and evaluate their outcomes over two years. We find that performance increases because the low performers either leave the firm or improve in their current jobs. The trade-off between meaning and pay flattens as those with low meaning and high pay leave the firm. Treatment also reshapes stated priorities and reduces gender gaps in preferences and behaviors, including uptake of parental leave. A cost-benefit analysis reveals high returns that are shared between the firm and the employees through higher bonuses. Finally, we show that observational data obscure these gains, causing firms to underestimate the intervention's true value.
Purpose (doesn't) Pay Paychecks: Sustainability Signaling in the Market for Entrepreneurial Labor
Paul Momtaz & Cristiano Bellavitis
Syracuse University Working Paper, May 2025
Abstract:
We explore the role of sustainability signaling in the market for entrepreneurial labor. Using email communication data from AngelList, we quantify the strength of environmental, social, and governance (ESG) signals from the labor demand (entrepreneurial firms) and supply (entrepreneurial talent) sides. We conceptualize the entrepreneurial labor market as two phases; search (the initiation of communication) and bargaining (negotiating employment terms). ESG signals from both supply and demand help overcome search frictions. ESG signaling increases the probability of candidates responding to companies' first email contact, even in cases where it is ex-ante clear that the company will not meet the candidates' desired wage levels. However, ESG commitment can become detrimental during bargaining, unless entrepreneurial firms and talent signal ESG orientations jointly. Importantly, companies' ESG commitments do not compensate for lower-than-desired wage levels during bargaining, suggesting that purpose does not pay paychecks.
The effect of employee mobility on firm innovation
Stephen Ciccone, Huimin Li & Yixin Liu
Financial Review, May 2025, Pages 417-452
Abstract:
We study the effect of employee mobility on firm innovation. Using an occupation-based measure of employee mobility, we find that firms with more mobile workforces are associated with greater patent quantity and quality and higher innovation efficiency. This effect is more pronounced for firms with higher labor intensity, greater business diversification, and lower unionization rates. Both the private market value of innovation and the effectiveness of innovation to generate revenues increase with higher employee mobility. Consistent results are found using a quasi-experimental shock, which helps address endogeneity concerns. Our findings suggest that employee mobility has a profound impact on innovation.