Krafcik, John F. (1988). "Triumph of the lean production system". Sloan Management Review. 30(1): 41–52.
Describes the lean production system that was first developed in Japanese manufacturing, showing that plants operating with a “lean” production policy can manufacture a wide range of models, yet maintain high levels of quality and productivity. An important feature of the lean system is cutting inventories, which has the effect of increasing the complementarity and interdependence of workers and teams. In response, workers have an incentive to monitor and discipline one another, and to propose productivity-enhancing innovations-- an important source of the lean production advantage.
Knez, M. and D. Simester (2001) “Firm-Wide Incentives and Mutual Monitoring at Continental Airlines”. Journal of Labor Economics 19(4): 743-772.
In February 1995 Continental Airlines introduced an incentive scheme that promised monthly bonuses to all 35,000 hourly employees if the company achieved a firm-wide performance goal. Evidence indicates that the incentive scheme raised employee performance despite the apparent threat of free riding. This could be explained by mutual monitoring among employees within each work group, and by the extreme complementarity between Continental’s work teams: a plane cannot depart on time if it doesn’t arrive on time from its previous destination.
Brandts, Jordi and David J. Cooper, (2007). "It's what you say, not what you pay: An experimental study of manager-employee relationships in overcoming coordination failure." Journal of the European Economic Association 5(6): 1223-1268.
Studies manager–employee interactions in experiments set in a corporate environment where payoffs depend on employees coordinating at high effort levels; the underlying game being played repeatedly by employees is a weak-link game. Finds that communication is a more effective tool than incentive changes for leading organizations out of performance traps.
Boning, Brent., Casey Ichniowski, and Kathryn Shaw, (2007). "Opportunity counts: Teams and the effectiveness of production incentives." Journal of Labor Economics 25(4): 613-650.
Using unique panel data on production lines in U.S. minimills, analyzes the adoption of problem-solving teams and group incentive pay and their effects on productivity. Results show that teams give workers a valuable opportunity to solve problems in more complex production processes, while standard operating procedures appear to suffice elsewhere.
Winter, Eyal. 2004."Incentives and Discrimination" American Economic Review,94(3): 764-773.
Provides a theoretical analysis of optimal contracting under production complementarities. Shows that the optimal incentive mechanisms may have to reward agents differentially even when they are identical, and even when they are induced to take the same action. The intuition is that creating a ‘big’ player, or a leader –one who has a greater financial stake in the outcome than the others—can help the entire team co-ordinate their actions in supplying efficient effort levels.
Goerg, Sebastian, Kube, Sebastian, and Zultan, Ro’i. 2010 “Treating Equals Unequally: Incentives in Teams, Workers' Motivation and Production Technology” Journal of Labor Economics, Vol 28(4): 747-772.
Experimentally investigates Winter’s prediction in the above article. Confirms that unequal rewards can increase productivity by facilitating coordination, and that this effect strongly interacts with the exact shape of the production function.
Bandiera, Oriana., Stephen Hansen, Andrea Prat and Raffaella Sadun, (2017). “CEO Behavior and Firm Performance,” NBER working paper number 23248.
Measures the behavior of 1,114 CEOs in six countries parsing granular CEO diary data through an unsupervised machine learning algorithm, which uncovers two distinct behavioral types: “leaders” and “managers. Firms with leader CEOs are on average more productive, and this difference arises only after the CEO is hired.
Lavy, Victor and Adi, Boiko, (2017). “Management Quality in Public Education: Superintendents Value-Added, Students’ Outcomes and Mechanisms,” NBER working paper number 24028.
Presents evidence about the ways that school superintendents add value in Israel’s primary and middle schools. Exploits a quasi-random matching of superintendent and schools, and estimates that superintendent value added has positive and significant effects on primary and middle school students’ test scores in math, Hebrew, and English.
Bloom Nicholas., Kalina Manova, John Van Reenen, Stephen Teng Sun and Zhihong Yu, (2018). “Managing Trade: Evidence from China and the US,” NBER, Working Paper No. 24718.
Presents a heterogeneous-firm model in which management ability increases both production efficiency and product quality. Combining six micro-datasets on management practices, production and trade in Chinese and American firms shows broad support for the model's predictions.
Kosfeld, Michael, forthcoming “The Role of Leaders in Inducing and Maintaining Cooperation: The CC Strategy” The Leadership Quarterly.
This paper summarizes recent findings from behavioral economics experiments in the lab and in the field on the role of leaders in human cooperation. According to the author, successful leaders need to do three things. First, they need to trust workers, in order not demotivate the motivated. Second, leaders need to punish, in order to motivate the non-motivated. Finally, leaders need to attract (and retain) motivated workers for their team.
Hoffman, Mitch and Steve Tadelis 2021. “People Management Skills, Employee Attrition, and Manager Rewards: An Empirical Analysis” Journal of Political Economy 129(1).
Using personnel data from a large high-tech firm, the authors show that a manager’s survey-measured people management skills have a strong negative relation to employee turnover, but have few effects on other outcomes, such as employee salary growth, probability of promotion, or patenting. Better people managers themselves receive higher subjective performance ratings, higher promotion rates, and larger salary increases.
Huber, Kilian, Volker Lindenthal, and Fabian Waldinger (2021). Discrimination, Managers, and Firm Performance: Evidence from "Aryanizations" in Nazi Germany Journal of Political Economy 129(9): 2455-2503.
To measure the effects of highly qualified managers on firm performance, the authors study the expulsions of senior Jewish managers from large corporations in Nazi Germany. Firms that lost Jewish managers experienced persistent reductions in stock prices, dividends, and returns on assets. The authors conclude that individual managers matter for firm performance, and that discrimination against qualified business leaders causes first-order economic losses.
Giardili, Soledad, Kamalini Ramdas, and Jonathan W. Williams 2022 Leadership and Productivity: A Study of U.S. Automobile Assembly Plants Management Science, forthcoming.
The authors study the effect of plant managers on productivity in U.S. auto-assembly plants during 1993–2007. Using data from managers who switched plants, they find, first, that there are substantial differences in managers’ productivity. Plant managers also learn from plant-specific experience, i.e. their performance improves the longer they remain at the same plant.
Antonakis, John, Giovanna d’Adda, Roberto A. Weber, and Christian Zehnder 2022 “Just Words? Just Speeches?” On the Economic Value of Charismatic Leadership Management Science, Vol. 68, No. 9: 6355-6381.
Sociologists and psychologists argue that charisma – the ability to persuade and motivate-- . plays an important role, over and above the design of optimal economic incentives. Little causals evidence of the effects of charisma exists however. The authors conduct field and laboratory experiments that measure the effects of the style of a leader’s motivational speech on followers’ propensity to undertake personally costly but socially beneficial actions. In the field experiment, workers who were given a charismatic speech increased their output by about 17% relative to workers who listen to a standard speech. In a similar lab experiment on public goods provision, a charismatic speech increased public good contributions by up to 19%.
Roberts, John, and Kathryn L. Shaw. 2022 Managers and the Management of Organizations NBER working paper no. 30730.
The authors critically review the literature in Organizational and Personnel Economics concerning the role of managers and management practices. Their focus is on the middle managers who populate the hierarchies between top executives and front-line employees. They are especially concerned with research that brings together theoretical modeling and empirical investigation.
Giardili, Soledad, Kamalini Ramdas, and Jonathan W. Williams 2023. “Leadership and Productivity: A Study of U.S. Automobile Assembly Plants” Management Science, Vol. 69, No. 3: 1500-1517.
The authors study the effect of plant managers on productivity in U.S. auto-assembly plants during 1993–2007. The find that ‘managers matter’: the interquartile range of the effect of individual plant managers on average hours-per-vehicle is about 30%. That said, there is strong evidence that managers can learn from experience, with a particular car model or assembly plant.
Sadun, Raffaella. 2023 CEOs and Firm Performance. NBER Reporter, number 1. (March)
In this review of her own research, Professor Sadun describes recent empirical work that generates direct evidence on what top managers do, how they differ from one another, and whether these differences matter for firms’ performance.
Acemoglu, Daron, Alex X. He, and Daniel le Maire 2023 Eclipse of Rent-Sharing: The Effects of Managers’ Business Education on Wages and the Labor Share in the US and Denmark unpublished paper, MIT.
This paper provides evidence from the US and Denmark that managers with a business degree (“business managers”) reduce their employees’ wages. Within five years of the appointment of a business manager, wages decline by 6% and the labor share by 5 percentage points in the US, and by 3% and 3 percentage points in Denmark. Evidence from manager retirements, manager deaths, and an instrumental variables (IV) strategy all indicate that these effects are likely causal. Further, the authors use IV methods (based on role models) to show that these effects result from practices and values acquired in business education (not self-selection into business education.