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Personal Relations and their Effect on Behavior in an Organizational Setting: An Experimental Study

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  • Jordi Brandts

    ()

  • Carles Solà

    ()

Abstract

We study how personal relations affect performance in organizations. In the experimental game we use a manager has to assign different degrees of decision power to two employees. These two employees then have to make distributive decisions which affect themselves and the manager. Our focus is on the effects on managers' assignment of decision power and on employees' distributive decisions of one of the employees and the manager knowing each other personally. Our evidence shows that managers tend to favor employees that they personally know and that these employees tend, more than other employees, to favor the manager in their distributive decisions. However, this behavior does not affect the performance of the employees that do not know the manager. All these effects are independent of whether the employees that know the manager are more or less productive than those who do not know the manager. The results shed light on discrimination and nepotism and its consequences for the performance of family firms and other organizations.

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Bibliographic Info

Paper provided by Unitat de Fonaments de l'Anàlisi Econòmica (UAB) and Institut d'Anàlisi Econòmica (CSIC) in its series UFAE and IAE Working Papers with number 692.07.

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Length: 36
Date of creation: 01 Dec 2006
Date of revision:
Handle: RePEc:aub:autbar:692.07

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Keywords: Family firms; nepotism; corporate governance; procedural fairness; experiments;

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Cited by:
  1. Hammermann, Andrea & Mohnen, Alwine & Nieken, Petra, 2012. "Whom to Choose as a Team Mate? A Lab Experiment about In-Group Favouritism," IZA Discussion Papers 6286, Institute for the Study of Labor (IZA).
  2. Abeler, Johannes & Altmann, Steffen & Goerg, Sebastian & Kube, Sebastian & Wibral, Matthias, 2011. "Equity and Efficiency in Multi-Worker Firms: Insights from Experimental Economics," IZA Discussion Papers 5727, Institute for the Study of Labor (IZA).
  3. Saima Naeem & Asad Zaman, 2013. "For Love or Money? Motivating Workers," PIDE-Working Papers 2013:90, Pakistan Institute of Development Economics.
  4. Andrej Angelovski & Jordi Brandts & Carles Sola, 2014. "Hiring and Escalation Bias in Subjective Performance Evaluations: A Laboratory Experiment," BELIS Working Papers 2014-02, BELIS, Istanbul Bilgi University.
  5. Glenn Dutcher, 2011. "How does the social distance between an employee and a manager affect employee competition for a reward?," Working Papers 2011-29, Faculty of Economics and Statistics, University of Innsbruck.
  6. Robin, Stéphane & Rusinowska, Agnieszka & Villeval, Marie Claire, 2014. "Ingratiation: Experimental evidence," European Economic Review, Elsevier, vol. 66(C), pages 16-38.
  7. Banuri, Sheheryar & Eckel, Catherine, 2012. "Experiments in culture and corruption : a review," Policy Research Working Paper Series 6064, The World Bank.

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