Delegation to workers across countries and industries: Interacting effects of social capital and coordination needs

Abstract

The degree to which firms delegate authority to non-managerial and non-supervisory workers varies substantially across countries and industries. By examining worker-level data from 14 countries, I empirically explain this variation by region-specific social capital that proxies workers’ degree of self-centeredness and the industry-specific need for coordination. The empirical results provide the first confirmation of Alonso et al.'s (2008) theoretical predictions: In particular, when self-centeredness of workers is very low, the degree of delegation is always high regardless of the need for coordination. Consistent with the theory, as coordination becomes important, better horizontal communication among co-workers occurs to sustain the same delegation level.