Document Type

Working Paper

Publication Date

Summer 7-7-2007

JEL Codes

M54, J50, J41, D20

Working Paper Number



To investigate the size and the timing of the direct impact of participatory arrangements on business performance, we assemble and analyze extraordinary daily data-- for rejection, production and downtime rates for all operators in a single plant during a 35 month period, more than 77,000 observations. Consistent with core hypotheses that employee involvement enhances productivity and quality through mechanisms including employees becoming better motivated, more informed and paying greater attention to product details, we find that membership in offline teams: (i) initially enhances individual productivity by about 3%; (ii) and lowers rejection rates by about 27%. We also find that: (iii) these improvements are dissipated, typically at 10 to 16% per 100 days in a team; (iv) while initially teams lead to more downtime, these costs diminish over time; (v) the performance-enhancing effects of team membership are generally greater and more long-lasting for team members who are solicited by management; (vi) similar relationships exist for more educated team members. These findings square with diverse hypotheses concerning predicted gains from complementarities in organizational design, the benefits that flow from management solicitation and enhanced education, but are inconsistent with hypotheses based on Hawthorne effects.


The paper has benefited from suggestions from participants at seminars and conferences at Hitotsubashi, Oxford, Tokyo, Kyoto, Osaka, Hosei, the Institute of Statistical Research, Union College, Helsinki School of Economics, New South Wales, Wesleyan, Cornell, Upjohn Institute, Washington, San Francisco, Bavaria, Illinois at Urbana-Champaign, UBC, and Simon Fraser. Grant and Fellowship support from the Russell Sage/Rockefeller Foundation Future of Work Program, NSF (SES-0522118), the Institute of Innovation Research at Hitotsubashi, Tokyo and the Abe Fellowship Program are gratefully acknowledged.

Included in

Economics Commons