Team formation with complementary skills

Abstract

Abstract One explanation for the prevalence of self‐managed work teams is that they enable workers with complementary skills to specialize in the tasks they do best, a benefit that may be enhanced if workers can sort themselves into teams. To assess this explanation, we design a real‐effort experiment to study the endogenous formation of teams, and its effect on productivity, when specialization either is or is not feasible. We find a strong positive interaction between endogenous team formation and the ability to specialize, indicating that endogenous team formation is a particularly effective mechanism for promoting team output in production environments that enable the exploitation of skill complementarities.

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