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The Effects of Self-Managed and Closely-Managed Teams on Labor Productivity and Product Quality: An Empirical Analysis of a Cross Section of Establishments

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  • Jed DeVaro

    (Cornell University)

Abstract

I estimate the effect of team production on labor productivity and product quality using a cross section of British establishments. A distinguishing feature of this study is its use of a structural model that treats as endogenous the organizations’ choices of teams and whether or not to grant autonomy to team members. One of the main findings is that the typical establishment enjoys statistically significant increases in labor productivity (but not product quality) from using teams, though there is no statistically significant difference between the predicted gains from autonomous versus non- autonomous teams. I show that standard methodological approaches that treat teams and autonomy as exogenous induce biases of two forms: 1) the benefits from teams are inflated, 2) the benefits of autonomous teams relative to those of non-autonomous teams are inflated. Both biases are particularly severe in the case of product quality.

Suggested Citation

  • Jed DeVaro, 2005. "The Effects of Self-Managed and Closely-Managed Teams on Labor Productivity and Product Quality: An Empirical Analysis of a Cross Section of Establishments," Labor and Demography 0510002, University Library of Munich, Germany.
  • Handle: RePEc:wpa:wuwpla:0510002
    Note: Type of Document - doc; pages: 57
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    File URL: https://econwpa.ub.uni-muenchen.de/econ-wp/lab/papers/0510/0510002.doc
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    Citations

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    Cited by:

    1. Marino, Anthony & Zabojnik, Jan, 2006. "Work-Related Perks, Agency Problems, and Optimal Incentive Contracts," Queen's Economics Department Working Papers 273583, Queen's University - Department of Economics.
    2. Anthony M. Marino & Ján Zábojník, 2008. "Work-related perks, agency problems, and optimal incentive contracts," RAND Journal of Economics, RAND Corporation, vol. 39(2), pages 565-585.
    3. DeVaro, Jed & Farnham, Martin, 2011. "Two perspectives on multiskilling and product-market volatility," Labour Economics, Elsevier, vol. 18(6), pages 862-871.
    4. Heywood, John S. & Jirjahn, Uwe, 2009. "Profit sharing and firm size: The role of team production," Journal of Economic Behavior & Organization, Elsevier, vol. 71(2), pages 246-258, August.
    5. Derek C. Jones & Takao Kato, 2011. "The Impact of Teams on Output, Quality, and Downtime: An Empirical Analysis Using Individual Panel Data," ILR Review, Cornell University, ILR School, vol. 64(2), pages 215-240, January.
    6. Jed Devaro & Fidan Ana Kurtulus, 2011. "What types of organizations benefit from teams, and how do they benefit?," UMASS Amherst Economics Working Papers 2011-16, University of Massachusetts Amherst, Department of Economics.

    More about this item

    Keywords

    teams; autonomy; labor productivity; product quality;

    JEL classification:

    • J - Labor and Demographic Economics

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