Consistently Mediocre: Modular Collaboration and Organizational Performance
42 Pages Posted: 30 Jun 2021
Date Written: June 17, 2021
We explore the relationship between modularity in the collaboration patterns among individual employees and the level and variance of organizational performance. Using remarkably fine-grained data from the European club football (soccer) industry between 2010-2019, we measure modularity in the patterns of collaboration within these organizations based on millions of in-game passes involving over 10,000 players in 139 clubs. First, we find that high modularity in collaboration is associated with lower variance in club performance. We document two related mechanisms that appear to lower performance variance: modular collaboration softens the downside of negative exogenous shocks to employees’ productive capacity, but modularity also limits the upside of positive exogenous shocks to employees’ productive capacity. Second, we find that the modularity of employees’ collaboration patterns is associated with a lower average level of club performance. We document a possible mechanism underlying the relationship: rivals seem better able to predict the actions of modular clubs. We conclude that modular collaboration patterns may lock organizations into "consistently mediocre" performance in competitive settings by limiting the upside of positive shocks and by making the organization easier for rivals to anticipate and counteract.
Keywords: Modularity, collaboration, competition, strategy, human capital
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