Incentives That Induce Task-Related Effort, Helping, and Knowledge Sharing in Workgroups
Cooperation and coordination among employees can yield significant productivity gains. In this study, we explore the design of optimal incentive systems that induce task-related effort, helping, and knowledge sharing within workgroups. We identify three distinct types of employee linkages that must be accommodated in the design of effective incentive systems: (1) outcome linkages, whereby the outcome of one employee's task is influenced by that of another; (2) help linkages, whereby each employee can directly expend effort on helping another; and (3) knowledge linkages, whereby each employee can share job-related knowledge with another. We analytically investigate the effect of each type of employee linkage, and some combinations of these linkages, on the optimal design of incentive systems. Our analytical results demonstrate how, by optimally weighting individual-level and workgroup-level incentives, managers can balance the need to induce cooperation and coordination among employees with the need to manage employees' incentive-related risk. Counter to conventional wisdom, we also demonstrate that both group and individual incentives are necessary to facilitate cooperative behaviors such as knowledge sharing in workgroups. Further, we empirically test some of the insights developed from the analytical models; our empirical findings support these analytical results.
Volume (Year): 53 (2007)
Issue (Month): 10 (October)
|Contact details of provider:|| Postal: 7240 Parkway Drive, Suite 300, Hanover, MD 21076 USA|
Web page: http://www.informs.org/
More information through EDIRC
References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Gibbons, Robert & Murphy, Kevin J, 1992.
"Optimal Incentive Contracts in the Presence of Career Concerns: Theory and Evidence,"
Journal of Political Economy,
University of Chicago Press, vol. 100(3), pages 468-505, June.
- Robert Gibbons & Kevin J. Murphy, 1991. "Optimal Incentive Contracts in the Presence of Career Concerns: Theory and Evidence," NBER Working Papers 3792, National Bureau of Economic Research, Inc.
- Gibbons, R. & Murphy, K.J., 1990. "Optimal Incentive Contracts In The Presence Of Career Concerns: Theory And Evidence," Working papers 563, Massachusetts Institute of Technology (MIT), Department of Economics.
- Murphy, K.J. & Gibbons, R., 1990. "Optimal Incentive Contracts in the Presence of Career Concerns : Theory and Evidence," Papers 90-09, Rochester, Business - Managerial Economics Research Center.
- Che,Y.K. & Yoo,S.W., 1998.
"Optimal incentives for teams,"
8, Wisconsin Madison - Social Systems.
- Lazear, Edward P, 1989. "Pay Equality and Industrial Politics," Journal of Political Economy, University of Chicago Press, vol. 97(3), pages 561-80, June.
- Itoh, Hideshi, 1991. "Incentives to Help in Multi-agent Situations," Econometrica, Econometric Society, vol. 59(3), pages 611-36, May.
- Robert Gibbons, 2005. "Incentives Between Firms (and Within)," Management Science, INFORMS, vol. 51(1), pages 2-17, January.
- Itoh, Hideshi, 1992. "Cooperation in Hierarchical Organizations: An Incentive Perspective," Journal of Law, Economics and Organization, Oxford University Press, vol. 8(2), pages 321-45, April.
- Bengt Holmstrom & Paul R. Milgrom, 1985.
"Aggregation and Linearity in the Provision of Intertemporal Incentives,"
Cowles Foundation Discussion Papers
742, Cowles Foundation for Research in Economics, Yale University.
- Holmstrom, Bengt & Milgrom, Paul, 1987. "Aggregation and Linearity in the Provision of Intertemporal Incentives," Econometrica, Econometric Society, vol. 55(2), pages 303-28, March.
- Emmanuelle Auriol & Guido Friebel & Lambros Pechlivanos, 2002. "Career Concerns in Teams," Journal of Labor Economics, University of Chicago Press, vol. 20(2), pages 289-307, Part.
- John Boudreau & Wallace Hopp & John O. McClain & L. Joseph Thomas, 2003. "On the Interface Between Operations and Human Resources Management," Manufacturing & Service Operations Management, INFORMS, vol. 5(3), pages 179-202, September.
- Sridhar Balasubramanian & Pradeep Bhardwaj, 2004. "When Not All Conflict Is Bad: Manufacturing-Marketing Conflict and Strategic Incentive Design," Management Science, INFORMS, vol. 50(4), pages 489-502, April.
- Jonathon N. Cummings, 2004. "Work Groups, Structural Diversity, and Knowledge Sharing in a Global Organization," Management Science, INFORMS, vol. 50(3), pages 352-364, March.
When requesting a correction, please mention this item's handle: RePEc:inm:ormnsc:v:53:y:2007:i:10:p:1533-1550. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Mirko Janc)
If references are entirely missing, you can add them using this form.