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The value of top-down communication for organizational performance

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  • Leif Brandes
  • Donja Darai

Abstract

We design a laboratory experiment to identify causal performance effects of top-down communication between managers and their subordinates. Our focus lies on communication that resolves uncertainty about the work environment but does not provide task-specific knowledge. Recent articles in the business press report a lack of such communication in real-world organizations and associate it with reduced organiza- tional performance. Our results confirm this observation. We find that top-down communication is a profitable way for managers to increase employee performance in the presence of uncertainty. Specifically, we show that non-communication is the worst option for managers. However, 50 percent of our experimental managers use top-down communication too restrictively. Overall, managers forego 30 percent of their potential profits through non-communication. We show that organizations can overcome this problem by adopting automated information procedures, which are equally effective.

Suggested Citation

  • Leif Brandes & Donja Darai, 2014. "The value of top-down communication for organizational performance," ECON - Working Papers 157, Department of Economics - University of Zurich.
  • Handle: RePEc:zur:econwp:157
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    File URL: http://www.econ.uzh.ch/static/wp/econwp157.pdf
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    References listed on IDEAS

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    More about this item

    Keywords

    Communication procedures; non-instrumental-information; employee motivation;

    JEL classification:

    • C92 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Group Behavior
    • D23 - Microeconomics - - Production and Organizations - - - Organizational Behavior; Transaction Costs; Property Rights
    • D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search; Learning; Information and Knowledge; Communication; Belief; Unawareness
    • M54 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Personnel Economics - - - Labor Management

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