Cooperation and the Boundaries of the Firm: A Framed-Field Experiment

Abstract

This paper studies the effect of firm boundaries on inter-individual cooperation in corporate settings. I conduct a framed-field linear public good game experiment in the natural environment of the workplace. I use information about the actual boundaries of two firms, which are a parent firm and its subsidiary. I document differences in the overall level of cooperation across the parent firm, its subsidiary, and an intra-corporate group that comprises players from both the parent firm and the subsidiary. In stark contrast to previous results, I find that cooperation is increasing over time within the parent firm, indicating that firms can foster stronger cooperation within their boundaries. In other treatments the standard declining cooperation is not rejected. Overall, I find higher levels of contribution to the public good relative to conventional laboratory experiments. I estimate the importance of individuals' identity and find that higher weight placed on identity is associated with higher contributions, but only within the parent firm. Higher levels of self-awareness can help explain patterns of cooperation within the boundaries of the firm.

Keywords: Cooperation, firm boundaries, identity, public good game, framed-field experiment.

JEL Classification: C93, D2, H41, L2.