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The Impact of Teams on Output, Quality and Downtime: An Empirical Analysis Using Individual Panel Data

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Abstract

To investigate the size and the timing of the direct impact of participatory arrangements on business performance, we assemble and analyze extraordinary daily data-- for rejection, production and downtime rates for all operators in a single plant during a 35 month period, more than 77,000 observations. Consistent with core hypotheses that employee involvement enhances productivity and quality through mechanisms including employees becoming better motivated, more informed and paying greater attention to product details, we find that membership in offline teams: (i) initially enhances individual productivity by about 3%; (ii) and lowers rejection rates by about 27%. We also find that: (iii) these improvements are dissipated, typically at 10 to 16% per 100 days in a team; (iv) while initially teams lead to more downtime, these costs diminish over time; (v) the performance-enhancing effects of team membership are generally greater and more long-lasting for team members who are solicited by management; (vi) similar relationships exist for more educated team members. These findings square with diverse hypotheses concerning predicted gains from complementarities in organizational design, the benefits that flow from management solicitation and enhanced education, but are inconsistent with hypotheses based on Hawthorne effects.

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  • Jones, Derek & Kato, Takao, 2007. "The Impact of Teams on Output, Quality and Downtime: An Empirical Analysis Using Individual Panel Data," Working Papers 104-24, Department of Economics, Colgate University.
  • Handle: RePEc:cgt:wpaper:104-24
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    Cited by:

    1. Uwe Jirjahn & Steffen Mueller, 2014. "Non-union worker representation, foreign owners, and the performance of establishments," Oxford Economic Papers, Oxford University Press, vol. 66(1), pages 140-163, January.
    2. Adel Ben Youssef & Ludivine Martin & Nessrine Omrani, 2014. "The Complementarities between Information Technologies Use, New Organizational Practices and Employees' Contextual Performance: Evidence from Europe in 2005 and 2010," Revue d'économie politique, Dalloz, vol. 124(4), pages 493-504.
    3. Kato, Takao & Shu, Pian, 2011. "Competition, Group Identity, and Social Networks in the Workplace: Evidence from a Chinese Textile Firm," IZA Discussion Papers 6219, Institute of Labor Economics (IZA).
    4. Kato, Takao & Kauhanen, Antti, 2013. "Performance Pay and Enterprise Productivity: The Details Matter," ETLA Working Papers 21, The Research Institute of the Finnish Economy.
    5. Kato, Takao & Shu, Pian, 2008. "Performance Spillovers and Social Network in the Workplace: Evidence from Rural and Urban Weavers in a Chinese Textile Firm," IZA Discussion Papers 3340, Institute of Labor Economics (IZA).
    6. KATO Takao & KODAMA Naomi, 2015. "Performance-related Pay and Productivity: Evidence from Japan," Discussion papers 15088, Research Institute of Economy, Trade and Industry (RIETI).
    7. Adel Ben Youssef & Ludivine Martin & Nessrine Omrani, 2014. "The complementarities between Infomation and Communication Technologies Use, New Organizational Practices and Employee's Contextual Performance: Evidence from Europe in 2005 and 2010," Post-Print halshs-01068238, HAL.
    8. Shaw, Kathryn, 2009. "Insider econometrics: A roadmap with stops along the way," Labour Economics, Elsevier, vol. 16(6), pages 607-617, December.
    9. Ludivine Martin, 2017. "Do Innovative Work Practices and Use of Information and Communication Technologies Motivate Employees?," Industrial Relations: A Journal of Economy and Society, Wiley Blackwell, vol. 56(2), pages 263-292, April.
    10. Kato, Takao & Kodama, Naomi, 2017. "Women in the Workplace and Management Practices: Theory and Evidence," IZA Discussion Papers 10788, Institute of Labor Economics (IZA).

    More about this item

    JEL classification:

    • M54 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Personnel Economics - - - Labor Management
    • J50 - Labor and Demographic Economics - - Labor-Management Relations, Trade Unions, and Collective Bargaining - - - General
    • J41 - Labor and Demographic Economics - - Particular Labor Markets - - - Labor Contracts
    • D20 - Microeconomics - - Production and Organizations - - - General

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