The Contingent Effect of Management Practices
New York University (NYU) - Department of Management and Organizational Behavior
Claudine Madras Gartenberg
New York University (NYU) - Leonard N. Stern School of Business
Columbia Business School - Finance and Economics
September 2, 2016
Columbia Business School Research Paper No. 15-48
This paper investigates how the success of a management practice depends on the nature of the long-term relationship between the firm and its employees. A large US transportation company is in the process of fitting its trucks with an electronic on-board recorder (EOBR), which provide drivers with information on their driving performance. In this setting, a natural question is whether the optimal managerial practice consists of: (1) Letting each driver know his or her individual performance only; or (2) Also providing drivers with information about their ranking with respect to other drivers. The company is also in the first phase of a multi-year initiative to remake its internal operations. This first phase corresponds to an overhaul of the relational contract with its employees, focusing exclusively on changing values toward a greater emphasis on teamwork and empowerment. The main result of our randomized experiment is that (2) leads to better performance than (1) in a particular site if and only if the site has not yet received the values intervention, and worse performance if it has. The result is consistent with the presence of a conflict between competition-based managerial practices and a cooperation-based relational contract. More broadly, it highlights the role of intangible relational factors in determining the optimal set of managerial practices.
Number of Pages in PDF File: 70
Keywords: Relational contracts, management practices, transportation, performance ranking
JEL Classification: M12, M14, M50, M54
Date posted: April 16, 2015 ; Last revised: September 17, 2016
© 2016 Social Science Electronic Publishing, Inc. All Rights Reserved.
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