Identity, Supervision, and Work Groups

George A. Akerlof · Rachel E. Kranton

174 citations0/0 files storedAmerican Economic Review

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Experimental Behavioral Economics Studies Job Satisfaction and Organizational Behavior Economic Theory and Institutions

Abstract

“I want to tell my foreman to f*** off, but I can’t.” So says “Mike,” a steel handler we meet in Stud Terkel’s book Working (1974, xxxv). Many workers’ stories we read in Working and in ethnographies suggest workers greatly resent supervision. As a result, they exert lower effort and may sabotage production. Mike puts dents in the steel. Ethnographies also reveal workers who are not strictly monitored develop work group output norms. This paper uses the con cept of identity to study trade-offs in supervi sory policy. 1 We follow the social psychology literature and examine intrinsic incentives that depend on how workers see themselves in rela tion to the firm. When a supervisor monitors workers, workers adopt an identity in opposition to the firm. The firm gains information and can fine-tune its incentive pay. But resentful workers require high compensation to work in the firm’s interest. With no monitoring, workers are less hostile to the firm. But they may forge a work group identity, with norms that restrict output. We show that a firm may find it profitable to have lax supervision. When workers take on a work group identity, the cost per unit of effort can be lower than when workers view them selves in opposition to the firm. We shall present the model, and then discuss some classic studies of workplaces that portray these trade-offs. Our identity framework synthesizes an emerg ing body of economic theory and empirics on incentives and monitoring (e.g., Bruno Frey 1993; Gary Charness 2000; Daniel S. Nagin et al. 2002; Michael T. Rauh and Giulio Seccia 1 This paper provides a simple formal model of tradeoffs described loosely in Akerlof and Kranton (2005). We also discuss further implications of supervision versus work group cohesion.

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References

2000An Integrative Theory of Intergroup Conflict 1996Production, Information Costs and Economic Organization 2002Relational Contracts and the Theory of the Firm 2005Identity and the Economics of Organizations 1949The American Soldier: Adjustment During Army Life.1974Working: People Talk About What They Do All Day and How They Feel About What They Do 1993DOES MONITORING INCREASE WORK EFFORT? THE RIVALRY WITH TRUST AND LOYALTY 2012The Behavioralist Visits the Factory: Increasing Productivity Using Simple Framing Manipulations

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2012The Behavioralist Visits the Factory: Increasing Productivity Using Simple Framing Manipulations 2011Identity Economics: How our Identities Shape our Work, Wages, and Well-being 2018Nonmonetary Incentives and the Implications of Work as a Source of Meaning 2012Gender Discrimination in Job Ads: Evidence from China *2014Employee-Based Brand Equity: Why Firms with Strong Brands Pay Their Executives Less

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