Reality at Work
A Potential Pitfall of Passion: Passion Is Associated With Performance Overconfidence
Erica Bailey et al.
Social Psychological and Personality Science, forthcoming
Abstract:
Having passion is almost universally lauded. People strive to follow their passion at work, and organizations increasingly seek out passionate employees. Supporting the benefits of passion, prior research finds a robust relationship between passion and higher levels of job performance. At the same time, this research also reveals significant variability in the size of the effect. To explain this heterogeneity, we propose that passion is associated with performance overconfidence -- inflated views about how well the self is performing -- and that this association provides a helpful lens in understanding when passion will be more or less beneficial for performance. A daily diary field study with 829 employees (33,160 observations) and an experiment with 396 participants provide evidence that passion is associated with performance overconfidence. These findings provide a lens through which to discuss when, why, and for whom passion may be more helpful for performance or a potential pitfall.
Job security, socio-economic background, and worker performance: Evidence from Major League Baseball
Richard Paulsen
Managerial and Decision Economics, forthcoming
Abstract:
Using a panel dataset of contract-year observations for Major League Baseball (MLB) players, this study looks to understand how job security affects incentives for worker performance. Prior works have found evidence of diminished performance when job security is high in the early years of guaranteed contracts (shirking) and heightened performance when job security is low at the end of contracts when players are hoping to secure new contracts (opportunistic behavior). The focus of this study is on how socio-economic background interacts with job security to influence performance. Theory and empirical evidence suggest that workers from disadvantaged socio-economic backgrounds may care more about job security, which could subsequently lead the performance of such workers to be more affected by changes to job security. This hypothesis is tested empirically. In testing this indirectly, evidence of stronger impacts of job security on performance of MLB players from lower income countries relative to those from higher income countries is found. To directly test this hypothesis, data on player socio-economic backgrounds is hand-collected. The performance of players from less-advantaged socio-economic backgrounds is found to be more affected by job security. Given that job security is common in many work settings, these findings have implications for workers and employers both inside and outside of sports.
Third Places and Neighborhood Entrepreneurship: Evidence from Starbucks Cafés
Jinkyong Choi, Jorge Guzman & Mario Small
NBER Working Paper, June 2024
Abstract:
Sociologists have shown that “third places” such as neighborhood cafés help people maintain and use their network ties. Do they help local entrepreneurs, for whom networks are important? We examine whether the introduction of Starbucks cafés into U.S. neighborhoods with no coffee shops increased entrepreneurship. We find that, when compared to census tracts that were scheduled to receive a Starbucks but did not do so, tracts that received a Starbucks saw an increase in the number of startups of 5.0% to 11.8% (or 1.1 to 3.5 firms) per year, over the subsequent 7 years. There was no effect on neighborhoods with prior cafés. A partnership between Starbucks and Magic Johnson focused on underprivileged neighborhoods produced larger effects. Starbucks locations with more square footage and those with a higher number of visits also produced larger effects.
Performance pay and work hours: US survey evidence
Benjamin Artz & John Heywood
Oxford Economic Papers, July 2024, Pages 609–627
Abstract:
Using US survey data, we show that those on performance pay work substantially longer hours. This remains in worker fixed-effect estimates and in worker with employer fixed-effect estimates. The magnitudes confirm increased hours as a dimension of the anticipated effort response and long hours as a potential intermediary between performance pay and reduced worker health. Despite managers being the most likely to both receive performance pay and work long hours, this association largely reflects sorting and not the behavioral response evident for other workers.
Timing Is Everything: An Imprinting Framework for the Implications of Leader Emotional Expressions for Team Member Social Worth and Performance
Jacob Levitt & Constantinos Coutifaris
Organization Science, forthcoming
Abstract:
Leader emotional expressions have profound implications for team members. Research has established that how frequently leaders express positive and negative emotional expressions shapes team member performance through conveying critical social-functional information about team member social worth. Yet, this social-functional approach to emotions has not fully considered how the timing of leader emotional expressions during a team’s lifecycle can also shape the information conveyed to individual team members about their social worth. In this paper, we integrate the social-functional approach to emotions with imprinting theory to propose that the temporal context of leader emotional expressions has performance implications for individual team members through two distinct facets of social worth: respect and status. Specifically, our imprinting framework explains how positive leader emotional expressions during the early team phase have the most beneficial performance implications through imprinting respect in individual team members. We then propose that these positive implications are amplified by more frequent than average negative leader emotional expressions during the midpoint phase. When filtered through earlier positive expressions, negative emotional expressions during the midpoint phase may signal opportunities for respect and status gains rather than respect and status losses. We find general support for our model in a pre-registered four-wave longitudinal archival study of consulting teams at a leading professional services company and a four-wave longitudinal field study at a NCAA Division 1 sports program. Our work highlights that the temporal context of leader emotional expressions is an important performance predictor through social worth.
No Experience Necessary: The Peer Effects of Intended Entrepreneurs
Isaac Hacamo & Kristoph Kleiner
Review of Finance, forthcoming
Abstract:
Under a randomized setting, this paper finds workers with entrepreneurial ambitions -- intended entrepreneurs -- are (i) far more common than workers with past entrepreneurial experience and (ii) increase the rate of entrepreneurship among their peers. Peer effects are persistent, stronger for tighter networks, and extend to the decision to join a startup. As intended peers explain half of the variation in entrepreneurship rates in our sample, our results demonstrate that intended entrepreneurs, even those that never personally start a firm, represent a vital component of the entrepreneurial ecosystem.
Enacting Decentralized Authority: The Practices and Limits of Moving Beyond Hierarchy
Michael Lee
Administrative Science Quarterly, forthcoming
Abstract:
Decentralization as an organizing principle has drawn growing interest from scholars and practitioners because of its perceived suitability for contemporary market conditions and alignment with employees’ evolving work expectations. However, efforts to decentralize authority face significant obstacles and often end in failure. I propose that existing research on decentralization has struggled to generate insight into how such barriers can be overcome because it has treated decentralization as a static outcome imposed by organizational designers. In contrast, this article treats decentralization as a dynamic and situated achievement that must be continually enacted, and it leverages ethnographic data from a decentralization effort in order to build theory on the organizational practices that support enactments of decentralized authority. I find that successful enactments of decentralized authority were supported by practices that established clear boundaries of authority and focused collective attention on these boundaries, as well as by practices that depersonalized collective attributions of the source of authority. At the same time, the practices were difficult to sustain because they were cognitively, emotionally, and temporally demanding. Through this study, I show that decentralization is not merely a one-time structural change but an ongoing collective process that requires navigating and neutralizing the structural and psychological forces pulling organizations back toward hierarchy.
Stable Matching on the Job? Theory and Evidence on Internal Talent Markets
Bo Cowgill et al.
Management Science, forthcoming
Abstract:
A principal often needs to match agents to perform coordinated tasks, but agents can quit or slack off if they dislike their match. We study two prevalent approaches for matching within organizations: centralized assignment by firm leaders and self-organization through market-like mechanisms. We provide a formal model of the strengths and weaknesses of both methods under different settings, incentives, and production technologies. The model highlights trade-offs between match-specific productivity and job satisfaction. We then measure these trade-offs with data from a large organization’s internal talent market. Firm-dictated matches are 33% more valuable than randomly assigned matches within job categories (using the firm’s preferred metric of quality). By contrast, preference-based matches (using deferred acceptance) are only 5% better than random but are ranked (on average) about 38 percentiles higher by the workforce. The self-organized match is positively assortative and helps workers grow new skills; the firm’s preferred match is negatively assortative and harvests existing expertise.
On the impact of institutional change: Rights reassignment and career length
Martin Schmidt
Economic Inquiry, forthcoming
Abstract:
Rottenberg argued that the reassignment of negotiating rights from owners to players, that would accompany free agency in professional sports, would have little impact on locational or market outcomes. Empirical investigations into such reassignment have produced mixed results. The present paper examines the impact such reassignment had on professional sports athletes' career length. By examining the univariate time series and panel data behavior of Major League Baseball players' average tenure and retention rates, we find that the increased negotiating power associated with the advent of free agency had the impact of shortening average player career length.
Innovation Strategy After IPO: How AI Analytics Spurs Innovation After IPO
Lynn Wu, Bowen Lou & Lorin Hitt
Management Science, forthcoming
Abstract:
We examine the role of AI analytics in facilitating innovation in firms that have gone through IPO. Using patent data on over 1,000 publicly traded firms, we find that firms acquiring AI analytics capability post-IPO experience less of a decline in innovation quality compared with similar firms that have not acquired that capability. This effect is greater when only machine learning capabilities are considered. Moreover, we find this sustained rate of innovation is driven principally by the continued development of innovations that combine existing technologies into new ones -- a form of innovation that is especially well supported by analytics. By examining three main mechanisms that hampered post-IPO innovation, we find that AI analytics can ameliorate the pressure to meet short-term financial goals and disclosure requirements. However, it has limited effect in addressing managerial incentives. For firms with long product cycles, the disclosure effect is reduced to a greater extent than it is for those with short cycles. Overall, our results show the importance of examining technology as a critical input factor in innovation. We show that the increased deployment of AI analytics may reduce some of the innovative penalties suffered by IPOs and that investors and managers can potentially mitigate post-IPO reductions in innovative output by directing capital acquired in the IPO process to the acquisition of AI analytics capabilities.