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1 – 10 of 525We use a laboratory experiment to examine a multitask environment common to practice, in which managers have multiple responsibilities, including both managerial reporting, as in…
Abstract
We use a laboratory experiment to examine a multitask environment common to practice, in which managers have multiple responsibilities, including both managerial reporting, as in participative budgeting settings, and effort provision toward daily tasks. Consistent with typical contracting arrangements, we examine incomplete contracts where honesty and effort are not enforceable. In such a multitask environment, when employers choose to offer comparatively generous wages to managers, we predict that managers will elect to provide higher effort. Meanwhile, we remain agnostic ex ante about the degree of misreporting due to findings in studies on gift exchange, moral licensing, and moral wiggle room. Overall, we find evidence that reciprocity, consistent with the gift-exchange model, does extend across both tasks. Implications for theory and practice are discussed.
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David J. Cooper and John P. Lightle
We augment a standard bilateral gift-exchange game to allow employees to communicate their gratitude for, or disapproval toward, the wage assigned to them by their manager. This…
Abstract
We augment a standard bilateral gift-exchange game to allow employees to communicate their gratitude for, or disapproval toward, the wage assigned to them by their manager. This provides employees with a means of reciprocation or emotion expression toward the employee which is not available in a standard gift-exchange game and may substitute for the higher-than-equilibrium efforts commonly seen in this environment. We find that employees express gratitude or disapproval according to the wage received, but these messages are not a substitute for monetary reciprocation as the relationship between wages and effort is unchanged. These results suggest that employees view the messages as a form of emotional expression independent from rewarding or punishing managers. Average wage levels are little affected by allowing messages, although wages do fall more over time in the absence of messages and individual managers’ wage choices are affected by the messages they receive.
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There is growing scholarly interest in the use of penalty in employment contracts which reduce employees' pay if the employee's performance does not meet a pre-specified…
Abstract
Purpose
There is growing scholarly interest in the use of penalty in employment contracts which reduce employees' pay if the employee's performance does not meet a pre-specified performance threshold. Prior accounting research has focused exclusively on the effect of penalty on employee performance. In this study, the authors extend earlier research by examining how penalty affects the employers' wage offers. Prior research suggests that employers' generous wage offers in employment contracts are normally translated as trust by employees who in turn reciprocate with higher effort. The authors present a theory that predicts penalty reduces employers' wage offers. Then, the authors propose unrestricted communication between employers and employees as a potential moderator for the negative effect of penalty on trust and reciprocity.
Design/methodology/approach
The authors implement a controlled lab experiment with a 2 × 3 experimental design (Penalty: Present and Absent; and Communication: None, One-Way and Two-Way).
Findings
The authors develop their predictions by utilizing insights from motivational-crowding and organizational communication theories. The authors hypothesize and find evidence that employers' ability to penalize employees can reduce employers' motivation to offer generous wages. As a result, reduced trust demotivates employees to provide high effort. However, the authors find that a two-way communication moderates the negative effect of penalties by restoring trust, thereby, increasing reciprocity. Finally, the authors find evidence that relationship-oriented messages explain the moderating effect of communication.
Research limitations/implications
This study is subject to limitations inherent in all experimental studies. The decisions in the study experiment are less complex than those found in practice. Moreover, there are significantly higher costs and potential benefits to shirk on effort in practice. The authors encourage future research on other organizational features that would influence the generalizability of their theory and results. Nonetheless, this study makes an important contribution to the literature on trust, reciprocity, gift-exchange contracts, managerial controls and communication.
Practical implications
This paper has several important implications for theory and practice. The authors show that the presence of penalty may not automatically result in increasing employees' effort level, contrary to traditional economic theory predictions. This effect is driven mainly by the crowding out effect of a penalty on employers' desire to signal trust. Therefore, the presence of an open communication channel may become an important tool to reverse the psychological effect of reduced trust when penalty is present. Therefore, the study's findings contribute to the trust–reciprocity literature on how management control system influences employers' and employees' behavior. These findings are especially germane given the trend in the workplace toward establishing open communication at different levels within the firm hierarchy. The study also contributes to the literature on trust–reciprocity as critical informal controls and social norms in accounting practices (Bicchieri, 2006; Stevens, 2019), shedding light on how firms may influence employees' reciprocity in management control practices and induce them to act in line with the firm's objectives by opening communication channels.
Originality/value
Prior accounting research document that penalty in employment contracts increases employee performance due to loss aversion. The study, however, demonstrates that the positive effect of penalty is not sustained in a gift-exchange contract. Specifically, the study's experimental results provide evidence that the availability of penalties can psychologically change the way employers perceive their decisions on offering generous wages (i.e. trust) and consequently reduce employees' reciprocation of high effort levels. Yet, the authors propose a two-way communication as a restorative mechanism for the lost trust. Implications for theory and practice are discussed.
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John Duffy and Daniela Puzzello
We study a microfounded search model of exchange in the laboratory. Using a within-subjects design, we consider exchange behavior with and without an intrinsically worthless token…
Abstract
We study a microfounded search model of exchange in the laboratory. Using a within-subjects design, we consider exchange behavior with and without an intrinsically worthless token object. While these tokens have no redemption value, like fiat money they may foster greater exchange and welfare via the coordinating role of having prices of goods in terms of tokens. We find that welfare is indeed improved by the presence of tokens provided that the economy starts out with a supply of such tokens. In economies that operate for some time without tokens, the later surprise introduction of tokens does not serve to improve welfare. We also explore the impact of announced changes in the economy-wide stock of tokens (fiat money) on prices. Consistent with the quantity theory of money, we find that increases in the stock of money (tokens) have no real effects and mainly result in proportionate changes to prices. However, the same finding does not hold for decreases in the stock of money.
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Andrew G. Parsons, Paul W. Ballantine and Ann‐Marie Kennedy
The purpose of this paper is to investigate the recipient side of gift exchange by establishing the combination/level of gift benefits preferred by the recipient. It investigates…
Abstract
Purpose
The purpose of this paper is to investigate the recipient side of gift exchange by establishing the combination/level of gift benefits preferred by the recipient. It investigates the association between these benefits and the nature of the relationship between the gift giver and recipient.
Design/methodology/approach
A total of 250 people were surveyed about a recent gift receipt experience. Levels of symbolic, experiential, and functional benefits sought from the gift were established. Canonical correlation was used to analyse the interrelationships of relational variables (relationship type, strength, and length) and the preferred gift benefits.
Findings
People prefer gifts with a greater symbolic meaning (see with lower levels of functional and experiential benefits) from people close to them. People who have not known each other for long, but have a strong emotional connection, prefer gifts that are primarily functional. It shows that benefit associations are significant to gift recipients, the type of relationship the recipient is in has a significant effect on the desired combined level of benefit associations, and the symbolism of meaning for gifts can be expressed through benefit associations.
Originality/value
Studies of gift exchange focus on the gift giver and the benefits gained from the act of giving. The results show that the exchange process used by sociologists and consumer behaviorists to describe and explain gift‐giving activity cannot assume the same levels of benefits associated with the gift occurring on each side of the exchange. It is also shown for the first time that the type of giver, and the relationship the recipient has with the giver, will modify recipient preferences.
The purpose of this paper is to examine which forms of compensation are more efficient at affecting employee attitudes, thus extending efficiency wage theory from wage-based…
Abstract
Purpose
The purpose of this paper is to examine which forms of compensation are more efficient at affecting employee attitudes, thus extending efficiency wage theory from wage-based compensation to profit sharing and stock-based compensation.
Design/methodology/approach
Three models of efficiency wage theory were tested: shirking, turnover and gift exchange. The effects of those three modes of compensation (wages, profit sharing and stock) were contrasted for the three models of efficiency wage theory.
Findings
The findings were that raising wages is the most efficient form of compensation in the turnover and shirking models, while in the gift exchange model profit sharing and stock-based compensation may function like efficiency wages.
Originality/value
This is the first study of this particular issue.
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The chapter examines and challenges the assumed necessity of a linkage between remembered series of exchanges, amicable social relations, and prestige found in the work of Marcel…
Abstract
Purpose
The chapter examines and challenges the assumed necessity of a linkage between remembered series of exchanges, amicable social relations, and prestige found in the work of Marcel Mauss and many subsequent theorists of reciprocity and gift exchange.
Methodology
The chapter uses the nearly 500 year history of the giving and taking of the Koh-i-noor Diamond by rulers of South and Central Asia, commencing with Babur, the first Mughal emperor, and ending with Queen Victoria, which includes some gift giving and much taking by force, to explore what happens when only two of the three elements Mauss assumed central to understanding gift exchange are present.
Findings
Based on a review of the historical material, the chapter demonstrates that though historical narratives or memories of exchanges were central to enhancing the prestige of the parties to the exchange and the diamond itself, that process could and did occur in the absence of any on-going amicable social relations, including in situations in which exchange or transfer of the diamond were coerced and nothing was given in return to the dispossessed former owner of the gem.
Originality/value
By suggesting an alternative configuration of the factors necessary for the association of exchange and prestige, the chapter provides the opportunity to reconsider assumptions common in the literature on gift exchange and further enhance our understanding of this central element of social theory.
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S.A. Ogunrombi, I.I. Ekoja and S.E. Oji
This study uses official documents and interviews to examine the creative ways that Abubakar Tafawa Balewa University Library adapts to survive austerity. To circumvent the…
Abstract
This study uses official documents and interviews to examine the creative ways that Abubakar Tafawa Balewa University Library adapts to survive austerity. To circumvent the shortfalls in books and journal acquisitions, the Library receives enhanced funding, uses UNESCO coupons and actively solicits for gifts, exchanges, and repository privileges. To sustain basic services and to have a steady supply of stationery, the library has commercialised its photocopying, video coverage, lamination, training programme, and other services. The setting up of the National Documentation and Information Centre has the double blessing of attracting books and donations of journals, and of raising funds for the running of the Library’s essential services.
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Academic research concerning the implications of international business protocols is practically nonexistent. Most information is in the practitioner literature, is scattered and…
Abstract
Academic research concerning the implications of international business protocols is practically nonexistent. Most information is in the practitioner literature, is scattered and tends to focus on do’s and don’ts of etiquette rather than protocol. The results of this research shows that there are important differences between the USA and Chile in their approach to the protocol of bonding which involves public relations based on gift exchange, relationships, friendship, and loyalty. The implications of these differences are the particular expectations that American and Chilean participants in the business transaction have about the behaviour of the other. When these expectations are not fulfilled, or they are violated, then there is a high possibility that the relationship will fail with the resulting breakdown of customer relations.
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