Management Issues
Harsh but Expedient: Dominant Leaders Increase Group Cooperation via Threat of Punishment
Fan Xuan Chen et al.
Psychological Science, December 2021, Pages 2005-2022
Abstract:
Dominant leadership is, surprisingly, on the rise globally. Previous studies have found that intergroup conflict increases followers’ support for dominant leaders, but identifying the potential benefits that such leaders can supply is crucial to explaining their rise. We took a behavioral-economics approach in Study 1 (N = 288 adults), finding that cooperation among followers increases under leaders with a dominant reputation. This pattern held regardless of whether dominant leaders were assigned to groups, elected through a bidding process, or leading under intergroup competition. Moreover, Studies 2a to 2e (N = 1,022 adults) show that impressions of leader dominance evoked by personality profiles, authoritarian attitudes, or physical formidability similarly increase follower cooperation. We found a weaker but nonsignificant trend when dominance was cued by facial masculinity and no evidence when dominance was cued by aggressive disposition in a decision game. These findings highlight the unexpected benefits that dominant leaders can bestow on group cooperation through threat of punishment.
Cognitive Performance in Remote Work -- Evidence from Professional Chess
Steffen Künn, Christian Seel & Dainis Zegners
Economic Journal, forthcoming
Abstract:
During the COVID-19 pandemic, traditional (offline) chess tournaments were prohibited and instead held online. We exploit this unique setting to assess the impact of remote–work policies on the cognitive performance of individuals. Using the artificial intelligence embodied in a powerful chess engine to assess the quality of chess moves and associated errors, we find a statistically and economically significant decrease in performance when an individual competes remotely versus offline in a face-to-face setting. The effect size decreases over time, suggesting an adaptation to the new remote setting.
Sunk costs in the NBA: The salary cap and free agents
Quinn Keefer
Empirical Economics, December 2021, Pages 3445–3478
Abstract:
The previous research on the role sunk costs play in the National Basketball Association (NBA) has come to mixed conclusions. We use a direct measure of sunk costs, player compensation, and a quasi-experimental method that considers the endogenous relationship between compensation and productivity. Using the spike in salary cap for the 2016–2017 season, from new television broadcasting contracts, we find compensation has a significant effect on playing time. Specifically, we use players signing free agent contracts in 2015–2016 or 2016–2017. For both groups, we analyze the change in salary from the pre-contract season to the post-contract season. Using the difference-in-differences, we find the inflated salary cap, from the new television contracts, increased player compensation by 81.7%, on average. Instrumental variables estimations show the increase in compensation significantly affects playing time. The change in salary yields an additional 1.93 min played per game, which is approximately equal to the effect of a one-standard deviation increase in contemporaneous productivity. Furthermore, we find that our conclusions are robust to the use of various advanced analytical measures or traditional box-score statistics.
The Survival of Mediocre Superstars in the Labor Market
Thomas Peeters, Stefan Szymanski & Marko Terviö
Journal of Law, Economics, and Organization, forthcoming
Abstract:
We argue that liquidity constrained firms face strong incentives to hire experienced, but low ability workers instead of novice workers with higher upside potential. Using four decades of high-frequency information on worker performance in a “superstar” labor market allows us to estimate the revealed ability of experienced workers at the time they are hired by a new firm. More than one-fifth of these hires are “substandard” in that the revealed ability of the hired experienced worker lies below the mean ability of recent novices. Even more hires (around 40%) are “mediocre,” as their ability falls short of the hiring threshold that maximizes the long-run average ability of the active workforce. Replacing mediocre hires by novice workers would increase the average ability of the workforce by 0.1 standard deviations.
Algorithm-Augmented Work and Domain Experience: The Countervailing Forces of Ability and Aversion
Ryan Allen & Prithwiraj (Raj) Choudhury
Organization Science, forthcoming
Abstract:
Past research offers mixed perspectives on whether domain experience helps or hurts algorithm-augmented worker performance. Reconciling these perspectives, we theorize that intermediate levels of domain experience are optimal for algorithm-augmented performance, due to the interplay between two countervailing forces—ability and aversion. Although domain experience can increase performance via increased ability to complement algorithmic advice (e.g., identifying inaccurate predictions), it can also decrease performance via increased aversion to accurate algorithmic advice. Because ability developed through learning by doing increases at a decreasing rate, and algorithmic aversion is more prevalent among experts, we theorize that algorithm-augmented performance will first rise with increasing domain experience, then fall. We test this by exploiting a within-subjects experiment in which corporate information technology support workers were assigned to resolve problems both manually and using an algorithmic tool. We confirm that the difference between performance with the algorithmic tool versus without the tool was characterized by an inverted U-shape over the range of domain experience. Only workers with moderate domain experience did significantly better using the algorithm than resolving tickets manually. These findings highlight that, even if greater domain experience increases workers’ ability to complement algorithms, domain experience can also trigger other mechanisms that overcome the positive ability effect and inhibit performance. Additional analyses and participant interviews suggest that, even though the highest experience workers had the greatest ability to complement the algorithmic tool, they rejected its advice because they felt greater accountability for possible unintended consequences of accepting algorithmic advice.
Economic implications of access to daylight and views in office buildings from improved productivity
Piers MacNaughton et al.
Journal of Applied Social Psychology, December 2021, Pages 1176-1183
Abstract:
Previous research has found significant impacts of daylight and views on the cognitive function of office workers. In this study, we use scores on decision-making performance to estimate the annual economic potential of optimizing daylighting and views in U.S. offices. Cognitive scores were compared against over 100,000 previous test scores to obtain the distributional shift in cognitive performance when working in an office with optimized daylighting and views as opposed to an office with traditional blinds. These changes in performance were then compared to compensation data from the Bureau of Labor Statistics. Office workers shifted on average from the 52nd percentile to 65th percentile, equivalent to a $11,809 difference in salary per person per year. When conservatively accounting for the number of employees working within 15 ft of a window with blinds, optimizing daylight and views in U.S. offices has the potential to generate $352B ($240B–$464B), or 1.7% of the 2018 U.S. gross domestic product (GDP), in additional productivity. These findings suggest that building developers, architects and tenants should give additional attention to daylight design and façade technology as they consider new building construction, renovation and leasing options.
Disclosing Labor Demand
Gurpal Sran
University of Chicago Working Paper, November 2021
Abstract:
I study disclosure choices in job postings and the trade-off between two channels: detailed postings inform and attract optimal job applicants (i.e., a labor market channel) but could also inform competitors in labor and product markets (i.e., a proprietary costs channel). First, I provide evidence consistent with a proprietary costs channel: private firms and redacting firms are less specific in their postings, and postings are more often anonymous in industries with high levels of trade secrecy. Then, I exploit the introduction of federal trade secrecy protections (i.e., the Defend Trade Secrets Act, or DTSA) to assess the trade-off between the two channels. After the implementation of the DTSA, firms demand higher levels of skill in postings for innovative jobs, consistent with trade secrecy protections spurring innovative activities. However, job posting specificity decreases, in line with the proprietary costs channel, as trade secrecy protections are maximized when firms remain opaque regarding innovation. This decrease is attenuated for postings in tight labor markets, which is not only indicative of the importance of specificity in job postings, but also consistent with the proposed trade-off.
You don’t need to answer right away! Receivers overestimate how quickly senders expect responses to non-urgent work emails
Laura Giurge & Vanessa Bohns
Organizational Behavior and Human Decision Processes, November 2021, Pages 114-128
Abstract:
Workplaces increasingly use response speed as a proxy for hard work, signaling to employees that the only way to succeed is to be “always on.” Drawing on boundary theory and egocentrism, we examine a problematic bias around expectations of response speed for work emails, namely that receivers overestimate senders’ response speed expectations to non-urgent emails sent outside normative work hours (e.g., on the weekend). We label this phenomenon the email urgency bias and document it across eight pre-registered experimental studies (N = 4,004). This bias led to discrepancies in perceived stress of receiving emails, and was associated with lower subjective well-being via greater experienced stress. A small adjustment on the sender’s side alleviated the email urgency bias (a brief note senders can add in their emails to clarify their response expectations). This paper demonstrates the importance of perspective differences in email exchanges and the need to explicitly communicate non-urgent expectations.
The myth of the flat start-up: Reconsidering the organizational structure of start-ups
Saerom (Ronnie) Lee
Strategic Management Journal, January 2022, Pages 58-92
Abstract:
There has been an ongoing debate over whether start-ups should be “flat” with minimal hierarchical layers. To reconcile this debate, this article distinguishes between creative and commercial success (i.e., novelty vs. profitability), and examines how these outcomes are variously influenced by a start-up's hierarchy. This study suggests that while a flatter hierarchy can improve ideation and creative success, it can result in haphazard execution and commercial failure by overwhelming managers with the burden of direction and causing subordinates to drift into power struggles and aimless idea explorations. I find empirical support for this trade-off using a large sample of game development start-ups. These findings offer one resolution to the debate by sorting out the conditions under which hierarchy can be conducive or detrimental to start-ups.
Organizing Entrepreneurial Teams: A Field Experiment on Autonomy over Choosing Teams and Ideas
Viktoria Boss et al.
Organization Science, forthcoming
Abstract:
Scholars have suggested that autonomy can lead to better entrepreneurial team performance. Yet, there are different types of autonomy, and they come at a cost. We shed light on whether two fundamental organizational design choices — granting teams autonomy to (1) choose project ideas to work on and (2) choose team members to work with — affect performance. We run a field experiment involving 939 students in a lean startup entrepreneurship course over 11 weeks. The aim is to disentangle the separate and joint effects of granting autonomy over choosing teams and choosing ideas compared with a baseline treatment with preassigned ideas and team members. We find that teams with autonomy over choosing either ideas or team members outperform teams in the baseline treatment as measured by pitch deck performance. The effect of choosing ideas is significantly stronger than the effect of choosing teams. However, the performance gains vanish for teams that are granted full autonomy over choosing both ideas and teams. This suggests the two forms of autonomy are substitutes. Causal mediation analysis reveals that the main effects of choosing ideas or teams can be partly explained by a better match of ideas with team members’ interests and prior network contacts among team members, respectively. Although homophily and lack of team diversity cannot explain the performance drop among teams with full autonomy, our results suggest that self-selected teams fall prey to overconfidence and complacency too early to fully exploit the potential of their chosen idea. We discuss the implications of these findings for research on organizational design, autonomy, and innovation.
My Manager Moved! Manager Mobility and Subordinates’ Career Outcomes
Minseo Baek, Matthew Bidwell & JR Keller
Organization Science, forthcoming
Abstract:
How do managers’ moves across jobs affect the subordinates they leave behind? Manager mobility disrupts established manager-subordinate relationships, as subordinates must now learn to work with a replacement. We explore how this relational disruption affects subordinates’ objective career success—specifically, their financial rewards and subsequent promotion chances. We argue that manager mobility may have both positive and negative implications for subordinate outcomes. The loss of an established relationship may reduce subordinates’ performance and managers’ propensity to reward them; on the other hand, relational disruption may make subordinates more willing and able to seek out valuable opportunities elsewhere in the organization. We also argue that these effects are likely to be greatest for those subordinates who had worked with the previous manager for longer. Using eight years of personnel data from the U.S. offices of a Fortune 500 healthcare company, we show how managers’ mobility is associated with a decrease in subordinates’ financial rewards but an increase in their promotion prospects.