The Contingent Effect of Management Practices

Andrea Prat, Steven Blader and Claudine Gartenberg

No 11057, CEPR Discussion Papers from C.E.P.R. Discussion Papers

Abstract: 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 "lean-management journey", which corresponds to an overhaul of the relational contract with its employees. This phase focuses exclusively on changing employee values, mainly 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.

Keywords: Management; Relational contracts; Relative ranking (search for similar items in EconPapers)
JEL-codes: D2 (search for similar items in EconPapers)
Date: 2016-01
New Economics Papers: this item is included in nep-bec, nep-cta, nep-hrm and nep-ppm
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (9)

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Related works:
Journal Article: The Contingent Effect of Management Practices (2020)
Working Paper: The Contingent Effect of Management Practices (2016)
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