Becoming "We" Instead of "I", Identity Management and Incentives in the Workplace

Donze, Jocelyn and Gunnes, Trude (2013): Becoming "We" Instead of "I", Identity Management and Incentives in the Workplace.

Abstract

In this article, we propose to view the firm as a locus of socialization in which employees with heterogeneous work attitudes can be motivated and coordinated through adherence to a social ideal of effort. We develop an agency model in which employees have both a personal and a social ideal of effort. The firm does not observe the personal ideals, but can make its workforce more sensitive to the social ideal by fostering interaction in the workplace. We show that there are two reasons why the firm invests in social bonding. First, it reinforces the effectiveness of monetary incentives. Second, strengthening the social ideal reduces the adverse selection problem and the need to devise distorted payment schemes. We also show that the firm allocates more time to social interaction when personal ideals of effort are low or heterogeneous.

• Item Type: MPRA Paper
• Language: English
• Keywords: agency theory, adverse selection, social interaction, social norms, norm regulation.
• Subjects: D - Microeconomics > D0 - General > D03 - Behavioral Microeconomics: Underlying Principles; D - Microeconomics > D2 - Production and Organizations > D21 - Firm Behavior: Theory; D - Microeconomics > D8 - Information, Knowledge, and Uncertainty > D86 - Economics of Contract: Theory; J - Labor and Demographic Economics > J3 - Wages, Compensation, and Labor Costs > J33 - Compensation Packages ; Payment Methods; M - Business Administration and Business Economics ; Marketing ; Accounting ; Personnel Economics > M5 - Personnel Economics

References

Akerlof, G. and R. Kranton (2008). Identity, Supervision, and Work Groups. American Economic Review. 98, 2, 212-217.

Bandiera, O. Barankay, I. and I. Rasul (2008). Social capital in the workplace: Evidence on its formation and consequences. Labour Economics, 15, 725-749.

Bandiera, O. Barankay, I. and I. Rasul (2010). Social Incentives in the Workplace. The Review of Economic Studies, 77, 417-458.

Casey, C. (1996). Corporate transformations: designer culture, designer employees and post-occupational solidarity. Organization, 3, 3, 317-339.

Cialdini, R. and M. Trost (2008). Social influence: social norms, conformity and compliance. In D. Gilbert, S. T. Fiske, & G. Lindzey (Eds.), The handbook of social psychology, 4th ed., Vol. 2, pp. 151-192. New York. McGraw Hill.

Cohen, D. and L. Prusak (2001. In Good Company. How social capital makes organizations work. Harvard Business School Press. Boston, MA.

Dur, R. and J. Sol (2010) Social interaction, co-worker altruism, and incentives. Games and Economic Behavior, 69, 2, 293-301.

Ellemers, D., De Gilder, and S. A. Haslam (2004). Motivating Individuals and Groups at Work: A Social Identity Perspective on Leadership and Group Performance. The Academy of Management Review, 29, 3, 459-478.

Fischer P. and S. Huddart (2008). Optimal Contracting with Endogenous Social Norms. American Economic Review, 98, 1459-75.

Friedley, S. and B. Manchester (2005). Building Team Cohesion: Becoming "We" Instead of "Me". National Forensic Journal, vol. 23, no. 1.

Holmstrom, B. and P. Milgrom (1987). Aggregation and Linearity in the Provision of Intertemporal Incentives. Econometrica 55, 303-28.

Huck, S., D. Kübler, and J. Weibull (2010). Social Norms and Economic Incentives in Firms. Journal of Economic Behavior & Organization 83 (2012) 173-185.

Kandel, E. and E.P. Lazear (1992). Peer Pressure and Partnerships. Journal of Political Economy, 100, 801-817.

Laffont J.J. and D. Martimort (2001). The Theory of Incentives: The Principal-Agent Model. Princeton University Press.

Milgrom, P. and Roberts, J. (1992). Economics, Organization, and Management. Englewood Cliffs, N.J.: Prentice-Hall, 1992

Pratt, M. (2000). The Good, the Bad, and the Ambivalent: Managing Identification among Amway Distributors. Administrative Science Quarterly, 45, 456-493.

Rotemberg, J. (1994). Human Relations in the Workplace. Journal of Political Economy, 102, 4, 684-717.

Tajfel, H. (1972). Social categorization. English manuscript of 'La catégorisation sociale.' In S. Moscovici (Ed.), Introduction à la psychologie sociale (Vol. 1, pp.272-302). Paris: Larousse.

Tajfel, H. and Turner, J. C. (1979). An Integrative Theory of Intergroup Conflict. In W.G. Austin & S. Worchel (Eds.), The Social Psychology of Intergroup Relations. Monterey, CA: Brooks-Cole.

Van Dick, R. (2004). My Job is my castle: identification in organizational contexts. International Review of Industrial and Organizational Psychology, 19.