Fostering Innovation Through Empowered Workers - Experimental Evidence from the Bangladeshi Garment Industry

Abstract: Informational constraints are often a crucial barrier to adopt surplus-enhancing innovations in firms in developing countries. How can the culture in firms be changed to overcome this barrier and to increase upward flows of ideas as an important source of innovation? We conduct a randomized controlled trial in one Bangladeshi garment factory to test the efficacy of voice-enhancing interventions. The first intervention aims to reduce upward communication costs at the worker-level by randomly assigning workers to participate at lunch sessions with co-workers to think about ideas. The second intervention aims to reduce upward communication costs at the supervisor-level by randomly assigning supervisors to participate at a training program on how to increase workers' voices. Interim findings suggest that workers are better off as a result of a reduction in upward communication costs at the worker-level. I find evidence of positive effects on firm- and worker-related outcomes, i.e. higher job satisfaction, lower absenteeism and working time. A reduction in upward communication costs at the supervisor-level, through guidance from supervisors, shifts up the quality distribution of ideas and encourages workers to submit more meaningful ideas. However, it steers workers away from critical topics they would raise without any guidance, such as their supervisors’ misbehavior. As potential channels, I consider higher perceived efficacy and more confidence into upward communication of treated workers and supervisors.