Please use this form to submit your study for inclusion into our database. It will be checked by a member of the Innovation Growth Lab team, who may be in contact to ask for more information. Your email address * Your name * Title * The name of the study Short summary In the context of a fruit producer in the UK, social connections increase productivity of connected workers, but their effect on the allocation of managerial effort hinders firm productivity under fixed wages. Thus managerial behaviour is shaped by both social connections with subordinates and monetary incentives. In this setting, it is in the firm's best interest to foster social ties between management and workers, but to introduce monetary incentives to achieve an efficient interplay between social relationships and incentives. A brief description of the project's goals and its current state Abstract <p>We present evidence on the effect of social connections between workers and managers on productivity in the workplace. To evaluate whether the existence of social connections is beneficial to the firm's overall performance, we explore how the effects of social connections vary with the strength of managerial incentives and worker's ability. To do so, we combine panel data on individual worker's productivity from personnel records with a natural field experiment in which we engineered an exogenous change in managerial incentives, from fixed wages to bonuses based on the average productivity of the workers managed. We find that when managers are paid fixed wages, they favor workers to whom they are socially connected irrespective of the worker's ability, but when they are paid performance bonuses, they target their effort toward high ability workers irrespective of whether they are socially connected to them or not. Although social connections increase the performance of connected workers, we find that favoring connected workers is detrimental for the firm's overall performance.</p> The full abstract of the study, if available Links http://onlinelibrary.wiley.com/doi/10.3982/ECTA6496/epdf Links to any published papers and related discussions Authors * Affiliations Academic and other institutes that the authors of the study are members of Delivery partner Organisations involved in delivering the trial, if appropriate Year Year Year199419951996199719981999200020012002200320042005200620072008200920102011201220132014201520162017201820192020202120222023202420252026 Month MonthJanFebMarAprMayJunJulAugSepOctNovDec Day Day12345678910111213141516171819202122232425262728293031 Journal Journal publishing the study, if available Publication stage * Working Paper Published Ongoing Research Forthcoming Discussion Paper Research theme * Entrepreneurship Innovation Business Growth Country Country or countries where this study took place. Topics What sort of topics does the study cover? Sample attributes Hypotheses / research question Does the existence of social connections between workers and managers affect the performance of connected workers and that of the firm as a whole? Sample Trial population and sample selection The firm is a leading UK producer of soft fruit. Individuals operate in one of two tiers of the firm hierarchy -- workers and managers. Behaviour of managers and workers in the fruit picking division is analysed during the 2003 season. Workers and managers are hired from eight countries in Eastern Europe on seasonal contracts that last between 3 and 6 months. Features that increase the likelihood of individuals forming social connections are: 1) workers and managers are of similar ages and have similar socioeconomic backgrounds, 2) they live and work on the farm site for the duration of their stay (and average of 100 days). Managers are each assigned to a group of around 20 workers, and their task is to monitor the quality (ripe fruit is picked, fruit is not damaged, fruit is correctly classified by size) of fruit picking and to organise the field logistics. Number of treatment groups Size of treatment groups 144 workers and 10 managers (51 days worth of production data) Size of control group Unit of analysis Clustered? Yes No Cluster details Trial attributes Treatment description Employees did not know they were taking part in an experiment. Strength of managerial incentives were exogenously varied by changing the managerial compensation scheme from fixed wages to the same level of fixed wages plus a performance bonus that was increasing in the average productivity of the workers on the field for a given day. Workers were paid according to piece rates throughout. Rounds of data collection Baseline data collection and method The firm's personnel records containing information on each worker's productivity for each field day, presence/absenteeism for all workers and managers each field day, dates/seasonality, and Social Connections indicated by individual's nationality, date of arrival, and accommodation location on the farm. Data collection method and data collected Evaluation Outcome variables <p>Daily productivity of each worker.</p> Results <p>When managers are paid fixed wages, productivity of a given worker is 9% higher when the worker is socially connected to his manager, relative to when he is not. Due to piece rate wages for workers, this translates to a proportionate change in their earnings. When managers are paid performance bonuses, being socially connected to the manager has no effect on workers' productivity. The introduction of managerial performance pay significantly decreases the productivity of low ability workers when they are connected to their manager relative to when they were connected to their manager when he/she was paid a fixed wage. The managerial performance pay increases the productivity of high ability workers, especially when they are not connected to their managers. An increase in the level of social connections between managers and workers has a negative effect on the firms' average productivity when managers are paid fixed wages, and has no effect when managers are paid performance bonuses.</p> Intervention costs Not available. Cost benefit ratio Reference Bandiera, O., Barankay, I., & Rasul, I., 2009. 'Social Connections and Incentives in the Workplace: Evidence From Personnel Data'. Econometrica, vol. 77, pages 1047–1094. Citation for use in academic references
