Discussion Papers no. 760

Identity management and incentives in the workplace

Becoming “We” instead of “I”

This article studies how a firm fosters formal and informal interaction among its employees to create a collective identity and positively influence their effort.

This article studies how a firm fosters formal and informal interaction among its employees to create a collective identity and positively influence their effort. We develop an agency model, in which employees have both a personal and a social ideal for effort. The firm does not observe the personal ideals, which gives rise to an adverse selection problem, but can make its workforce more sensitive to the social ideal by allocating part of working hours to social interaction. We show that there are two reasons why the firm invests in social capital. First, it reinforces the effectiveness of monetary incentives. Second, by creating a shared identity in the workforce, the firm is able to reduce the adverse selection problem. We also show that the firm allocates more time to bonding activities when employees have low personal ideals for effort or when they are more heterogeneous as regards these ideals.

About the publication

Title

Becoming “We” instead of “I”. Identity management and incentives in the workplace

Authors

Jocelyn Donze, Trude Gunnes

Series and number

Discussion Papers no. 760

Publisher

Statistics Norway

Topic

Discussion Papers

ISSN

1892-753X

Number of pages

30

Language

English

About Discussion Papers

Discussion papers comprise research papers intended for international journals and books. A preprint of a Discussion Paper may be longer and more elaborate than a standard journal article as it may include intermediate calculations, background material etc.

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