Incentivizing Complex Problem Solving in Teams – Evidence from a Field Experiment

Florian Englmaier (LMU Munich)
Stefan Grimm (LMU Munich)
David Schindler (Tilburg)
Simeon Schudy (LMU Munich)

Abstract : Despite the prevalence of non-routine analytical team tasks in modern economies, little is known about how incentives influence performance in these tasks. In a field experiment with more than 3000 participants, we document a positive effect of bonus incentives on the probability of completion of such a task. Bonus incentives increase performance due to the reward rather than the reference point (performance threshold) they provide. The framing of bonuses (as gains or losses) plays a minor role. Incentives improve performance also in an additional sample of presumably less motivated workers. However, incentives reduce these workers' willingness to "explore" original solutions.

Clarity, Communication and Trust in Teams: Evidence from an Agile Organization

Maria Guadalupe (INSEAD)

Abstract : This paper studies the importance of clarity, communication and trust between members of an organization in driving organizational performance. Gibbons and Henderson (2010, 2012) argue that Clarity (that which allows for the mutual understanding of actions and expectations within an organization) is as important as credibility/trust (the belief that others will honor their promises within and organization) to sustain performance in the context of a repeated game with moral hazard. But these two dimensions have not been measured systematically to assess their individual and also their relative importance empirically to explain performance. I study this in the context of the product development section of a large bank that is structured a following the Agile model i.e. around self-managed teams, with few interdependencies among them. I ran 5 surveys to about 300 teams between October 2015 and February 2017 that capture the main drivers of sustained cooperating relationships within teams proposed by theorists. Exploiting within team variation over time, I show how these features correlate with team efficiency, employee engagement and the extent to which there is learning. I also show to what extent there is learning over time within teams. The importance of the measured features which are “soft” in nature and dependent on interaction highlights the difficulty in copying organizational practices across firms.

From Friends to Foes: Identity and Team Performance

Nadzeya Laurentsyeva (LMU Munich)

Abstract : This project studies the consequences of an international political conflict for composition and performance of teams on GitHub, the world's largest open-source platform. I exploit the unexpected conflict between Russia and Ukraine following the annexation of Crimea in March 2014 and analyse the impact of this conflict on the online collaboration between Ukrainian and Russian programmers. Using microdata from GitHub, I show that the conflict exerted a strong negative effect on Ukrainian-Russian collaboration and provide evidence for the causal role of national identity. I then discuss potential channels, through which an identity shock could affect performance of online teams: first, by hindering communication within a diverse team and second, by changing the taste of some team members for projects initiated by a "hostile" social group.