The Impact of Teams on Output, Quality, and Downtime: An Empirical Analysis Using Individual Panel Data

Abstract

The authors use the econometric case study method to investigate the direct impact of offline teams on productivity in a non-unionized subsidiary of a multinational firm from January 1999 through November 2001. They analyze daily data on rejection, production, and downtime rates for both team and non-team-member operators. They hypothesize that team membership without complementary involvement practices is initially sufficient to enhance productivity and quality control. Further, the use of teams leads initially to more downtime, but this cost will diminish over time. Findings indicate that membership in offline teams initially increases individual productivity by about 3% and lowers rejection rates by about 27%. These improvements dissipate, however, typically at a rate of 10 to 16% per 100 days in a team. For these benefits to be sustained, team membership must be complemented with measures that provide extrinsic rewards. The authors also find that the performance-enhancing effects of team membership are generally greater and longer-lasting for more educated members.