Does Identity and Communication Affect Distribution Rules and Productivity of Self-Managed Teams?

Abstract

This paper examines experimentally the effect of social identity and communication on teams’ distributional rules and wealth creation. The context studied is team production technologies with multiple resource owners of different skills with self-managed organisation, where heterogeneity of skills might create a conflict between equity, equality and social welfare. Even though these types of teams are growing in popularity and skills diversity is a common feature, research has been scant. We aim to cover this gap by providing experimental evidence for the choice of distributional rules, based on a social identity theory. The results of a two-stage experiment, where subjects vote on the distributional rule in stage I and make their effort decisions in stage II, indicate that induced group identity and communication prompts preferences for equality even at the expense of wealth created. However, we find that compared to a setting where social interaction is absent, identity does not increase team efficiency...