Social Capital, Corporate Culture, and Incentive Intensity

We study the design of incentives in a firm in which cooperation among workers is important. Since cooperation is not observed, the firm is unable to reward workers for it. Workers may, nonetheless, cooperate because they derive direct utility from cooperation. This utility is endogenously determine...

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Bibliographic Details
Published inThe Rand journal of economics Vol. 33; no. 2; pp. 243 - 257
Main Authors Rob, Rafael, Zemsky, Peter
Format Journal Article
LanguageEnglish
Published Santa Monica RAND 01.07.2002
The RAND Corporation
Rand, Journal of Economics
Rand Corporation
SeriesRAND Journal of Economics
Subjects
Business structures
Contract incentives
Cooperation
Corporate culture
Cultural differences
Economic research
Economics
Human capital
Incentives
Literature
Organizational behavior
Production
Productivity incentives
Profitability theory
Public goods
Social capital
Social evolution
Studies
Workers
Working papers
United States
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Summary:We study the design of incentives in a firm in which cooperation among workers is important. Since cooperation is not observed, the firm is unable to reward workers for it. Workers may, nonetheless, cooperate because they derive direct utility from cooperation. This utility is endogenously determined and depends on how much others have cooperated in the past as well as on the firm's incentive intensity. Consequently, incentives are chosen with the aim of enhancing workers' utility from cooperation or of building "social capital." We show that the optimal choice of incentives can create cultural differences across firms.
Bibliography:ObjectType-Article-2
SourceType-Scholarly Journals-1
ObjectType-Feature-1
content type line 23
ISSN:0741-6261
1756-2171
DOI:10.2307/3087432