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Collaboration, Motivation, and the Size of Organizations

  • Christoff Loch

We present an analytical model of an organization that offers operational drivers of limits on team size. The model trades off benefits from collaborative problem solving against the disadvantages of diminishing motivation when groups get large. When the performance increase is linear with the number of team members, there is a barrier that prevents cooperation for large teams. When the performance increase is superlinear however, collaborative problem solving benefits balance motivational effects. Thus effective problem solving methods are of double value, improving direct productivity and mitigating the social dilemma of team production. The resuls imply that managers should enlarge their organizations up to the minimum limit set by the cooperation barrier and the exogenous performance limit.

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Paper provided by Xerox Research Park in its series Working Papers with number _005.

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Date of creation: Jan 1995
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Handle: RePEc:wop:xeroxp:_005
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  1. Erik Brynjolfsson & Haim Mendelson, 1997. "Information Systems and the Organization of Modern Enterprise," Working Paper Series 200, MIT Center for Coordination Science.
  2. Paul Milgrom & John Roberts, 1988. "Economic Theories of the Firm: Past, Present, and Future," Canadian Journal of Economics, Canadian Economics Association, vol. 21(3), pages 444-58, August.
  3. Erik J. Brynjolfsson & Thomas Malone & Vijay Gurbaxani & Ajit Kambil, 1991. "Does Information Technology Lead to Smaller Firms?," Working Paper Series 123, MIT Center for Coordination Science.
  4. Alchian, Armen A & Demsetz, Harold, 1972. "Production , Information Costs, and Economic Organization," American Economic Review, American Economic Association, vol. 62(5), pages 777-95, December.
  5. Calvo, Guillermo A & Wellisz, Stanislaw, 1978. "Supervision, Loss of Control, and the Optimum Size of the Firm," Journal of Political Economy, University of Chicago Press, vol. 86(5), pages 943-52, October.
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