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Teamwork Management in an Era of Diminishing Commitment

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  • Auriol, Emmanuelle
  • Friebel, Guido
  • Pechlivanos, Lambros

Abstract

This paper studies management when the principal has different degrees of commitment power. In a model in which both the principal and agents are symmetrically uncertain about the agents' innate abilities, implicit incentives arise when the principal is not able to commit herself to long-term contracts. The presence of implicit incentives makes the agents more reluctant to behave cooperatively (they actually have incentives to 'sabotage' their colleagues). This forces the principal to offer more 'collectively oriented' incentive schemes than in the presence of commitment, in order to induce the desired level of cooperation. Moreover, teamwork exposes agents to higher risks than the ones they are exposed to in a Taylorist workplace. We find that the optimal team size is constrained by risk considerations, and is decreasing in the uncertainty of the production technology and in the time horizon of the team.

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Bibliographic Info

Paper provided by C.E.P.R. Discussion Papers in its series CEPR Discussion Papers with number 2281.

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Date of creation: Nov 1999
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Handle: RePEc:cpr:ceprdp:2281

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Related research

Keywords: Career Concerns; Collective Orientation Of Incentive Schemes; Commitment; Sabotage; Team Size; Teamwork;

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Cited by:
  1. Michael T. Rauh, 2013. "Incentives, Wages, Employment, and the Division of Labor in Teams," Working Papers 2013-16, Indiana University, Kelley School of Business, Department of Business Economics and Public Policy.
  2. Daniel S. Hamermesh, 2000. "12 Million Salaried Workers Are Missing," NBER Working Papers 8016, National Bureau of Economic Research, Inc.
  3. Carmen Beviá & Luis C. Corchón, 2006. "Rational Sabotage in Cooperative Production with Heterogeneous Agents," Economics Working Papers we20090204, Universidad Carlos III, Departamento de Economía.

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