What Types of Organizations Benefit from Team Production, and How Do They Benefit?

Abstract

Abstract[Excerpt] Using data from a large cross section of British establishments, we ask how different firm characteristics are associated with the predicted benefits to organizational performance from using team production. To compute the predicted benefits from using team production, we estimate structural models for financial performance, labor productivity, and product quality, treating the firm's choices of whether or not to use teams and whether or not to grant teams autonomy as endogenous. One of the main results is that many firm characteristics are associated with larger predicted benefits from teams to labor productivity and product quality but smaller predicted benefits to financial performance. For example, this is true for union recognition as measured by the number of recognized unions in an establishment. Similarly, when a particular firm characteristic is associated with lower benefits from teams to labor productivity or product quality, the same characteristic is frequently associated with higher predicted benefits to financial performance. This is true for the degree of financial participation and employee ownership and also for establishment size and a number of industries. These results highlight the advantages of analyzing broader measures of organizational performance that are more inclusive of the wide spectrum of benefits and costs associated with teams than the labor productivity measures frequently studied in the teams literature. KeywordsBritish, firm, characteristics, team production, performance, model, financial, labor, productivity, product, quality, autonomy, endogenous, benefit, cost Abstract Using data from a large cross section of British establishments, we ask how different firm characteristics are associated with the predicted benefits to organizational performance from using team production. To compute the predicted benefits from using team production, we estimate structural models for financial performance, labor productivity, and product quality, treating the firm's choices of whether or not to use teams and whether or not to grant teams autonomy as endogenous. One of the main results is that many firm characteristics are associated with larger predicted benefits from teams to labor productivity and product quality but smaller predicted benefits to financial performance. For example, this is true for union recognition as measured by the number of recognized unions in an establishment. Similarly, when a particular firm characteristic is associated with lower benefits from teams to labor productivity or product quality, the same characteristic is frequently associated with higher predicted benefits to financial performance. This is true for the degree of financial participation and employee ownership and also for establishment size and a number of industries. These results highlight the advantages of analyzing broader measures of organizational performance that are more inclusive of the wide spectrum of benefits and costs associated with teams than the labor productivity me...

The Effects of Self‐Managed and Closely Managed Teams on Labor Productivity and Product Quality: An Empirical Analysis of a Cross‐Section of Establishments

“…In the present study of labor productivity and product quality, the point estimates favored autonomous teams. In an earlier analysis of financial performance in DeVaro (2006), the reverse was true. In the empirical teams literature, the most commonly used measures of performance are labor productivity and product quality, whereas broader measures of organizational performance such as profit are much rarer.…”

“…The new contribution of the present study is to investigate the implications of endogeneity of teams and autonomy in the labor productivity (and to a lesser extent product quality) models that have been the central focus of economic studies of team production. 2 The previous study that is nearest to the present analysis is DeVaro (2006), which considered financial performance as an outcome variable. That study also allowed for the endogeneity of teams and autonomy, finding a positive effect of teams for the typical workplace and no statistically significant difference between autonomous and nonautonomous teams in terms of their predicted benefits to financial performance.…”

“…However, biases from ignoring the endogeneity of teams and autonomy were found to be relatively modest. In the present paper, I apply the structural model that was developed in DeVaro (2006) to the study of labor productivity and product quality.…”

“…9 9 The 2004 WERS was released after this work was completed. I chose not to switch to the 2004 data set prior to publishing the paper, because I wanted to maintain comparability between the results in this paper and those in DeVaro (2006) and DeVaro and Kurtulus (2006), both of which use the 1998 WERS. …”

Organisational synergies, dissonance and spinoffs

“…In addition to providing access to knowledge for immediate projects, a team acts as an important source of new ideas. Individuals within the team acquire knowledge sets, offer their expertise to others as required, learn from each other and internalise organisational goals (deVaro and Kurtulus, 2006;Garicano, 2000).…”