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The Impact of Group Contract and Governance Structure on Performance—Evidence from College Classrooms

Author

Listed:
  • Zeynep K. Hansen
  • Hideo Owan
  • Jie Pan
  • Shinya Sugawara

Abstract

In this article, we empirically analyze the effect of team characteristics on a team’s choice of group contract type (its governance structure) and examine the combined impact of team characteristics and the group contract choice on group and individual performance in a classroom setting. We utilize endogenous dummy variable models in both group-level and individual-level analyses due to the expected endogeneity of the contract choice. The estimation results confirm a statistically significant positive effect of a governance structure, democratic contract that includes a mechanism to punish free-riders on both group and individual performance. We also estimate switching regression models to account for the possible heterogeneous treatment effects but do not find any significant difference between the treated and the nontreated in the effect of the democratic contract option implying that the contract choice is not necessarily motivated by its performance-enhancing effect. (JEL D70, D86, I23)

Suggested Citation

  • Zeynep K. Hansen & Hideo Owan & Jie Pan & Shinya Sugawara, 2014. "The Impact of Group Contract and Governance Structure on Performance—Evidence from College Classrooms," The Journal of Law, Economics, and Organization, Oxford University Press, vol. 30(3), pages 463-492.
  • Handle: RePEc:oup:jleorg:v:30:y:2014:i:3:p:463-492.
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    File URL: http://hdl.handle.net/10.1093/jleo/ewt007
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    Citations

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    Cited by:

    1. Hideo Owan, 2014. "How should teams be formed and managed?," IZA World of Labor, Institute of Labor Economics (IZA), pages 1-83, August.
    2. Sander Hoogendoorn & Simon C. Parker & Mirjam van Praag, 2017. "Smart or Diverse Start-up Teams? Evidence from a Field Experiment," Organization Science, INFORMS, vol. 28(6), pages 1010-1028, December.

    More about this item

    JEL classification:

    • D70 - Microeconomics - - Analysis of Collective Decision-Making - - - General
    • D86 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Economics of Contract Law
    • I23 - Health, Education, and Welfare - - Education - - - Higher Education; Research Institutions

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