Productive
Edgar Kausel et al.
Organizational Behavior and Human Decision Processes, November 2016, Pages 27-44
Abstract:
Overconfidence is an important bias related to the ability to recognize the limits of one's knowledge. The present study examines overconfidence in predictions of job performance for participants presented with information about candidates based solely on standardized tests versus those who also were presented with unstructured interview information. We conducted two studies with individuals responsible for hiring decisions. Results showed that individuals presented with interview information exhibited more overconfidence than individuals presented with test scores only. In a third study, consisting of a betting competition for undergraduate students, larger overconfidence was related to fewer payoffs. These combined results emphasize the importance of studying confidence and decision-related variables in selection decisions. Furthermore, while previous research has shown that the predictive validity of unstructured interviews is low, this study provides compelling evidence that they not only fail to help personnel selection decisions, but can actually hurt them.
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Do Bags Fly Free? An Empirical Analysis of the Operational Implications of Airline Baggage Fees
Mariana Nicolae et al.
Management Science, forthcoming
Abstract:
In 2008, the majority of U.S. airlines began charging for the second checked bag, and then for the first checked bag. One of the often cited reasons for this action by the airlines' executives was that this would influence customers to travel with less baggage and thus improve cost and operational performance. A popular customer belief, however, is that airline departure delays got worse due to an increase and size of customer carry-on baggage. A notable exception to the charging for checked bags trend was Southwest Airlines, which turned their resistance to this practice into a "Bags Fly Free" marketing campaign. Using a publicly available database of the airlines' departure performance, we investigate whether the implementation of checked bag fees was really associated with better operational performance metrics. At the aggregate level, using all publicly recorded U.S. flights from May 1, 2007, to May 1, 2009, we find that the airlines that began charging for checked bags saw a significant relative improvement in their on-time departure performance in the time periods after the baggage fees were implemented. Surprisingly, we also find that airlines that did not charge for checked bags also saw an improvement, although not as big, when competing airlines flying the same origin-destination city markets implemented the fees. The improvement in on-time departure performance was the largest for flights during peak evening departure time blocks.
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Can Social Information Affect What Job You Choose and Keep?
Lucas Coffman, Clayton Featherstone & Judd Kessler
American Economic Journal: Applied Economics, forthcoming
Abstract:
We show that the provision of social information influences a high-stakes decision and this influence persists over time. In a field experiment involving thousands of admits to Teach For America, those told about the previous year's matriculation rate are more likely to accept a teaching job, complete training, start, and return a second year. To show robustness, we develop a simple theory that identifies subgroups where we expect larger treatment effects and find our effect is larger in those subgroups. That social information can have a powerful, persistent effect on high-stakes behavior broadens its relevance for policy and theory.
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Performance and Management in the Public Sector: Testing a Model of Relative Risk Aversion
Sean Nicholson-Crotty, Jill Nicholson-Crotty & Sergio Fernandez
Public Administration Review, forthcoming
Abstract:
Research has demonstrated that management influences the performance of public organizations, but almost no research has explored how the success or failure of a public organization influences the decisions of those who manage it. Arguing that many decisions by public managers are analogous to risky choice, the authors use a well-validated model of relative risk aversion to understand how such choices are influenced by managers' perceptions of organizational performance. They theorize that managers will be less likely to encourage innovation or give discretion to employees when they are just reaching their goals relative to other performance conditions. Analyses of responses to the 2011 and 2013 Federal Employee Viewpoint Surveys provide considerable support for these assertions. The findings have significant implications for our understanding of the relationship between management and performance in public organizations.
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Dirk Black & Marshall Vance
University of Southern California Working Paper, July 2016
Abstract:
This paper examines supervisors' use of performance measures to update initial beliefs about employee ability over time. Using archival performance and job assignment data, we examine the weighting for promotion decisions of assessments made before employees begin working, and objective performance measures collected over time. We find that employers' initial assessments about employee ability predict workers' future career attainment. While economic theory predicts signals should be weighted according to informativeness, our results suggest the importance of initial assessments in subsequent promotion decisions is driven instead by confirmation bias. Controlling for performance, managers continue to rely on initial assessments for promotion decisions for at least six years after the initial assessment was made. However, after the first year on the job, initial assessments of ability have no predictive value for future performance. Moreover, the relative weight on the initial assessment vs. observed performance for promotion decisions is significantly greater than the corresponding relative weight for future performance up to eight years after the initial assessment was made. Thus, it appears that managers in our setting over-rely on initial assessments long after they are useful for sorting employees on ability. Prior research has documented career "fast tracks," whereby firms identify high-quality employees early and promote these workers quickly. Our findings suggest that workers may be placed on fast tracks even before they start working and are promoted more quickly, at least in part, due to biased performance evaluations and not on merit alone.
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Challenges for Global Supply Chain Sustainability: Evidence from Conflict Minerals Reports
Yong Kim & Gerald Davis
Academy of Management Journal, forthcoming
Abstract:
The vertically-integrated corporation of the 20th century has been replaced by disaggregated global supply chains across many industries. Dis-integration can reduce costs but also limits the ability to monitor and control critical processes, including labor practices and the sourcing of supplies. This article asks: What organizational factors distinguish corporations that are able to vouch for their supply chains from those that are not? The Section 1502 of the Dodd-Frank Act of 2010 gave companies over three years to determine and report on whether their products contained "conflict minerals" from the Democratic Republic of Congo (DRC) area. Our analysis of every conflict minerals report submitted to the SEC by over 1,300 corporations found that 80% admitted they were unable to determine the country of origin of such materials, and only 1% could certify themselves conflict-free with certainty beyond reasonable doubt. Internationally diversified firms and those with large and more dispersed supply chains were less likely to declare their products conflict-free: complexity reduces the visibility of a firm's supply chain. Our results suggest that widespread outsourcing may have reduced the corporate sector's capacity to account for the practices that yield its products.
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Managing perceptions of distress at work: Reframing emotion as passion
Elizabeth Baily Wolf et al.
Organizational Behavior and Human Decision Processes, November 2016, Pages 1-12
Abstract:
Expressing distress at work can have negative consequences for employees: observers perceive employees who express distress as less competent than employees who do not. Across five experiments, we explore how reframing a socially inappropriate emotional expression (distress) by publicly attributing it to an appropriate source (passion) can shape perceptions of, and decisions about, the person who expressed emotion. In Studies 1a-c, participants viewed individuals who reframed distress as passion as more competent than those who attributed distress to emotionality or made no attribution. In Studies 2a-b, reframing emotion as passion shifted interpersonal decision-making: participants were more likely to hire job candidates and choose collaborators who reframed their distress as passion compared to those who did not. Expresser gender did not moderate these effects. Results suggest that in cases when distress expressions cannot or should not be suppressed, reframing distress as passion can improve observers' impressions of the expresser.
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Seth Carnahan, David Kryscynski & Daniel Olson
Academy of Management Journal, forthcoming
Abstract:
This study places important boundary conditions on the generally accepted notion that CSR will reduce turnover. Our primary argument is that CSR will be most effective at reducing turnover that is motivated by a preference for more meaningfulness at work. We find empirical support for this idea using microdata on attorneys employed by large law firms. We find that firms with higher levels of CSR have moderately lower rates of turnover to startup law firms and through occupation changes, moves which are more likely to be motivated by a preference for meaningfulness than moves to non-startup law firms. Strikingly, the retention benefits of CSR are much stronger after attorneys experience mortality-related shocks that cause them to re-evaluate their jobs (i.e., for New York City-born attorneys following the 9/11 attacks). To our surprise, we also find that firms with higher levels of CSR experience higher turnover rates to non-startup law firms. In addition to our arguments about the importance of meaningfulness, the study provides two important extensions to work examining CSR and turnover: (1) it may be useful to view the CSR-turnover relationship through a risk-management lens, and (2) investments in CSR may increase employee departures from organizations under certain conditions.
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Are employee-friendly workplaces conducive to innovation?
Jie Chen, Woon Sau Leung & Kevin Evans
Journal of Corporate Finance, October 2016, Pages 61-79
Abstract:
We find strong evidence that firms with employee-friendly workplaces achieve greater innovative success, particularly in industries where innovation is more difficult to achieve. Furthermore, employee-friendly firms were also more inclined to sustain R&D investment during the recent crisis. These findings are consistent with the view that an employee-friendly workplace helps to develop tolerance for failure, which encourages engagement in innovation. We find no support for alternative explanations, such as employee-friendly workplaces helping to attract and retain talented employees and reducing career concerns of executives, which could nurture innovation.
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A Field Experiment in Motivating Employee Ideas
Michael Gibbs, Susanne Neckermann & Christoph Siemroth
Review of Economics and Statistics, forthcoming
Abstract:
We study a field experiment at a large technology company. Employees were encouraged to submit ideas on process and product improvements. The company randomly assigned 19 teams into treatment and control groups. Treatment team employees received rewards if their ideas were approved. Nothing changed for control team employees. Our main finding is that rewards substantially increased the quality of ideas. Rewards increased participation in the suggestion system but decreased ideas per participating employee, with zero net effect on the quantity of ideas. Broader participation persisted after the reward was discontinued, suggesting habituation. We find no evidence for motivational crowding out.
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When "Embedded" Means "Stuck": Moderating Effects of Job Embeddedness in Adverse Work Environments
David Allen, Vesa Peltokorpi & Alex Rubenstein
Journal of Applied Psychology, forthcoming
Abstract:
Job embeddedness is predominately assumed to benefit employees, work groups, and organizations (e.g., higher performance, social cohesion, and lower voluntary turnover). Challenging this assumption, we examined the potentially negative outcomes that may occur if employees are embedded in an adverse work environment - feeling "stuck," yet unable to exit a negative situation. More specifically, we considered two factors representing adverse work conditions: abusive supervision and job insecurity. Drawing from conservation of resources theory, we hypothesized that job embeddedness would moderate the relationship between these conditions and outcomes of voluntary turnover, physical health, emotional exhaustion, and sleep quality/quantity, such that employees embedded in more adverse environments would be less likely to quit, but would experience more negative personal outcomes. Results from two independent samples, one in Japan (N = 597) and one in the United States (N = 283), provide support for the hypothesized pattern of interaction effects, thereby highlighting a largely neglected "dark side" of job embeddedness.
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Outside employment opportunities, employee productivity, and debt discipline
Jayant Kale, Harley Ryan & Lingling Wang
Journal of Corporate Finance, forthcoming
Abstract:
Using a sample of over 99,000 firm year observations encompassing > 13,800 firms from 1978 to 2007, we analyze how changes in labor market conditions influence the disciplining effect of debt on employee productivity. We document that better (worse) outside employment opportunities weaken (strengthen) the disciplinary effect of debt on employee output. The influence of outside employment options on leverage-output relation is robust to various controls for endogeneity, including using instrumental variables, a quasi-natural experiment, both firm and industry-level analysis, alternative model specifications, and controls for employees' work conditions and changes in work efficiencies. Altogether, our findings highlight the importance of labor market conditions on the efficacy of corporate financial policies and our understanding of how these policies influence economic outcomes.
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The Strength of Weak Ties in MBA Job Search: A Within-Person Test
Jason Greenberg & Roberto Fernandez
Sociological Science, May 2016
Abstract:
Whether and how social ties create value has inspired substantial research in organizational theory, sociology, and economics. Scholars generally believe that social ties impact labor market outcomes. Two explanatory mechanisms have been identified, emphasizing access to better job offers in pecuniary terms and the efficacy of non-redundant information. The evidence informing each theory, however, has been inconsistent and circumstantial. We test predictions from both models using a rich set of job search data collected from an MBA student population, including detailed information about search channels and characteristics of job offers. Importantly, we can compare offers made to the same student derived via different search channels while accounting for industry, function, and non-pecuniary characteristics. We find that contrary to conventional wisdom, search through social networks typically results in job offers with lower total compensation (-17 percent for referrals through strong ties and -16 percent for referrals via weak ties vs. formal search). However, our models also show that students are considerably more likely to accept offers derived via weak ties. They do so because they are perceived to have greater growth potential and other non-pecuniary value. On balance, our tests are consistent with Granovetter's argument that networks provide value by facilitating access to information that is otherwise difficult to obtain, rather than providing greater pecuniary compensation.