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Team Governance: Empowerment or Hierarchical Control

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  • Friebel, Guido
  • Schnedler, Wendelin

Abstract

We investigate a team setting in which workers have different degrees of commitment to the outcome of their work. We show that if there are complementarities in production and if the team manager has some information about team members, interventions that the manager undertakes in order to assure certain efforts may have destructive effects: they can distort the way workers perceive their fellow workers and they may also lead to a reduction of effort by those workers that care most about output. Moreover, interventions may hinder the development of a cooperative organizational culture in which workers trust each other. Thus, our framework provides some first insights into the costs and benefits of interventions in teams. It identifies that team governance is driven by the importance of tasks that cannot be monitored. The more important these tasks, the more likely it is that teams are empowered.

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Paper provided by C.E.P.R. Discussion Papers in its series CEPR Discussion Papers with number 6575.

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Date of creation: Nov 2007
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Handle: RePEc:cpr:ceprdp:6575

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Keywords: incentives; informed principal; intrinsic motivation; team work;

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Citations

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Cited by:
  1. Schnedler, Wendelin & Vanberg, Christoph, 2014. "Playing 'Hard to Get': An Economic Rationale for Crowding Out of Intrinsically Motivated Behavior," Working Papers 0559, University of Heidelberg, Department of Economics.
  2. Grout, Paul & Schnedler, Wendelin, 2008. "Non-Profit Organizations in a Bureaucratic Environment," IZA Discussion Papers 3685, Institute for the Study of Labor (IZA).
  3. Danilov, Anastasia & Sliwka, Dirk, 2013. "Can Contracts Signal Social Norms? Experimental Evidence," IZA Discussion Papers 7477, Institute for the Study of Labor (IZA).
  4. Jurjen J.A. Kamphorst & Otto H. Swank, 2010. "When Galatea cares about her Reputation: How having Faith in your Workers reduces their Motivation to shine," Tinbergen Institute Discussion Papers 10-123/1, Tinbergen Institute.
  5. Wendelin Schnedler & Radovan Vadovic, 2011. "Legitimacy of Control," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 20(4), pages 985-1009, December.
  6. Wendelin Schnedler, 2011. "You Don't Always Get What You Pay For: Bonuses, Perceived Income and Effort," German Economic Review, Verein für Socialpolitik, vol. 12(1), pages 1-10, 02.
  7. von Siemens, Ferdinand A., 2013. "Intention-based reciprocity and the hidden costs of control," Journal of Economic Behavior & Organization, Elsevier, vol. 92(C), pages 55-65.
  8. Roberto Galbiati & Karl Schlag & Joel van der Weele, 2011. "Sanctions that Signal: an Experiment," Vienna Economics Papers 1107, University of Vienna, Department of Economics.
  9. Herold, Florian, 2010. "Contractual incompleteness as a signal of trust," Games and Economic Behavior, Elsevier, vol. 68(1), pages 180-191, January.

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