Management Purpose
Corporate Purpose in Public and Private Firms
Claudine Gartenberg & George Serafeim
Management Science, forthcoming
Abstract:
Analyzing data from approximately 1.5 million employees across 1,108 established public and private U.S. companies, we find that the strength of employee beliefs related to purpose is weaker in public companies. Among public companies, those beliefs are stronger for firms with more committed owners. These patterns are most pronounced within the salaried middle and hourly ranks rather than senior executives. Differences across firms can be attributed, in part, to differences in leadership and incentive characteristics. Our findings are consistent with higher owner commitment and the corresponding policies that arise alongside this higher commitment, enabling a stronger sense of purpose inside organizations.
Why Providing Humans with Interpretable Algorithms May, Counterintuitively, Lead to Lower Decision-making Performance
Timothy DeStefano et al.
MIT Working Paper, December 2022
Abstract:
How is algorithmic model interpretability related to human acceptance of algorithmic recommendations and performance on decision-making tasks? We explored these questions in a multi-method field study of a large multinational fashion organization. We first conducted a quantitative field experiment to compare the use of two models -- an interpretable versus an uninterpretable algorithmic model -- designed to assist employees with decision making around how many products to send to each of its stores. Contrary to what the literature on interpretable algorithms would lead us to expect, under conditions of high perceived uncertainty, decision makers' use of an uninterpretable algorithmic model was associated with higher acceptance of algorithmic recommendations and higher task performance than was their use of an interpretable algorithmic model with a similar level of performance. We next investigated this puzzling result using 31 interviews with 14 employees -- 2 algorithm developers, 2 managers, and 10 decision makers. We advance two concepts that suggest a refinement of theory on interpretable algorithms. First, overconfident troubleshooting -- a decision maker rejecting a recommendation coming from an interpretable algorithm, because of their belief that they understand the inner workings of complex processes better than they actually do. Second, social proofing the algorithm -- including respected peers in the algorithm development and testing process -- may make it more likely that decision makers accept recommendations coming from an uninterpretable algorithm in situations characterized by high perceived uncertainty, because the decision makers may seek to reduce their uncertainty by incorporating the opinions of people with their own knowledge base and experience.
Work Un(Interrupted): How Non-territorial Space Shapes Worker Control over Social Interaction
Leroy Gonsalves
Organization Science, forthcoming
Abstract:
Organizational research has long emphasized the importance of physical space in structuring opportunities for social interaction among workers. Using 14 months of field research during an office redesign at a large team-based sales company, I find that the adoption of non-territorial space -- a change from assigned cubicles to an unassigned mix of spaces -- substantially increased worker control over social interaction. Whereas the old territorial space rendered workers constantly accessible to others, the new non-territorial space altered information about workers' location and availability preferences, enabling new strategies for hiding in the space and signaling availability to others through workspace selection. This led to greater reliance on virtual or asynchronous communication technologies, and less unwanted interruption in the new non-territorial space. The findings identify how the non-territorial dimension of office space affects worker control over social interaction. They also reveal the social practices through which individuals actively use material and symbolic resources in the physical environment to avoid cognitive and temporal costs of unwanted interruption. The study complements dominant structural accounts with a richer theorization of individual agency -- while physical spaces certainly structure opportunities for social interaction, they also structure the strategies that individuals can use to actively manage social interaction.
Incentives to Persevere
Elif Incekara-Hafalir et al.
Management Science, forthcoming
Abstract:
Achieving success often requires persistent effort. We study the effectiveness of two reward mechanisms, all-or-nothing and piece-rate, to incentivize full completion of repeated tasks over time. Our theoretical analysis shows that exogenously imposing the all-or-nothing mechanism can be ineffective due to the potential discouragement effect. In contrast, empowering individuals to choose between the two reward mechanisms can significantly improve the full completion rate. Data from a series of field experiments and follow-up replications provide robust evidence that the all-or-nothing mechanism is effective only when it is presented as an option. Our results highlight the importance of choice in incentivizing persistent effort.
Employee approval of CEOs and firm value: Evidence from Employees' choice awards
Spencer Barnes & Yingmei Cheng
Journal of Corporate Finance, forthcoming
Abstract:
Using Glassdoor's list of "Top CEOs by Employees' Choice," we adopt a regression discontinuity (RD) specification to establish a causal link between the employee approval of CEOs and firm value. Having a CEO included in the top list results in an increase in firm performance in both stock returns and return on assets. Having a top CEO significantly increases a firm's employee efficiency, attraction to future employees, hiring of high-quality laborers such as inventors, and attraction to the customers. Our findings establish that the CEO-employee relationship is an important, though intangible, component of a corporation, and we emphasize the critical role of perceived corporate culture in the spirit of Guiso et al. (2015).
How objectifiers are granted power in the workplace
Bibi Zhang, Barbara Wisse & Robert Lord
European Journal of Social Psychology, forthcoming
Abstract:
Objectification often has profound negative consequences for its victims, yet we argue that objectification may have positive ancillary implications for the perpetrators. Drawing from system justification theory, we posit that, especially in organizations characterized by higher power distance, objectifying supervisors would be afforded more power by their subordinates because they would deem such behaviour as more typical (i.e., descriptive justification) and more desirable (i.e., prescriptive justification). The results of two experiments (N = 443 and N = 211) showed that high (vs. low) power distance subordinates afforded less power to a non-objectifying supervisor (but not more power to an objectifying supervisor), and that prescriptive justification (but not descriptive justification) mediated the interaction effect of objectification and power distance on power affordance. In a field survey with dyads of supervisors and subordinates (N = 122), we found that subordinates with relatively high power distance orientations afforded power to their objectifying supervisors through prescriptive justification. Our research contributes to objectification literature by demonstrating when and how supervisor objectification can be rationalized and perpetuated through granting objectifiers power.
Nothing Propinks Like Propinquity: Using Machine Learning to Estimate the Effects of Spatial Proximity in the Major League Baseball Draft
Majid Ahmadi et al.
NBER Working Paper, December 2022
Abstract:
Recent models and empirical work on network formation emphasize the importance of propinquity in producing strong interpersonal connections. Yet, one might wonder how deep such insights run, as thus far empirical results rely on survey and lab-based evidence. In this study, we examine propinquity in a high-stakes setting of talent allocation: the Major League Baseball (MLB) Draft from 2000-2019 (30,000 players were drafted from a player pool of more than a million potential draftees). Our findings can be summarized in four parts. First, propinquity is alive and well in our setting, and spans even the latter years of our sample, when higher-level statistical exercises have become the norm rather than the exception. Second, the measured effect size is consequential, as MLB clubs pay a significant opportunity cost in terms of inferior talent acquired due to propinquity bias: for example, their draft picks are 38% less likely to ever play a MLB game relative to players drafted without propinquity bias. Third, those players who benefit from propinquity bias fare better both in terms of the timing of their draft picks and their initial financial contract, conditional on draft order. Finally, the effect is found to be the most pronounced in later rounds of the draft, where the Scouting Director has the greatest latitude.
The persistent effects of early career contracts: Evidence from NBA drafts
Qiyao Zhou, Debao Hu & Keren Shi
Applied Economics, forthcoming
Abstract:
This article examines the persistent effects of early career contracts using the National Basketball Association (NBA)'s draft data over the period 1995-2019. We use regression discontinuity design (RDD) to compare the differences in career outcomes between the first-round picked rookies and the second-round picked ones. The empirical results suggest that draft rounds per se significantly influence a player's career outcome in almost all indicators (i.e. career earnings, total points scored, and total years played). Explorations of the mechanisms suggest that differences in rookie contract length and sunk costs influence teams' human capital investment in rookies.