Becoming “We” Instead of “I”, Identity Management and Incentives in the Workplace
AbstractThis article studies how a firm fosters formal and informal interaction among its employees to create a collective identity and positively influence their effort. We develop an agency model, in which employees have both a personal and a social ideal for effort. The firm does not observe the personal ideals, which gives rise to an adverse selection problem, but can make its workforce more sensitive to the social ideal by allocating part of working hours to social interaction. We show that there are two reasons why the firm invests in social capital. First, it reinforces the effectiveness of monetary incentives. Second, by creating a shared identity in the workforce, the firm is able to reduce the adverse selection problem. We also show that the firm allocates more time to bonding activities when employees have low personal ideals for effort or when they are more heterogeneous as regards these ideals.
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Bibliographic InfoPaper provided by Bureau d'Economie Théorique et Appliquée, UDS, Strasbourg in its series Working Papers of BETA with number 2013-17.
Date of creation: 2013
Date of revision:
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agency theory; social interaction; social norms; norm regulation.;
Other versions of this item:
- Donze, Jocelyn & Gunnes, Trude, 2013. "Becoming "We" Instead of "I", Identity Management and Incentives in the Workplace," MPRA Paper 44769, University Library of Munich, Germany.
- Jocelyn Donze & Trude Gunnes, 2013. "Becoming “We” instead of “I” : Identity management and incentives in the workplace," Discussion Papers 760, Research Department of Statistics Norway.
- D2 - Microeconomics - - Production and Organizations
- D8 - Microeconomics - - Information, Knowledge, and Uncertainty
- J3 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs
- M5 - Business Administration and Business Economics; Marketing; Accounting - - Personnel Economics
This paper has been announced in the following NEP Reports:
- NEP-ALL-2013-11-02 (All new papers)
- NEP-CDM-2013-11-02 (Collective Decision-Making)
- NEP-CTA-2013-11-02 (Contract Theory & Applications)
- NEP-HRM-2013-11-02 (Human Capital & Human Resource Management)
- NEP-SOC-2013-11-02 (Social Norms & Social Capital)
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