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While much of the literature testing for shirking by professional athletes have used performance metrics, some works have quantified shirking in dollar terms by comparing salary to estimated marginal revenue product (MRP). However, Ordinary Least Squares (OLS) approaches to measuring shirking by comparing salary to MRP have an endogeneity problem, as salary and contract length are determined simultaneously. We test for shirking in Major League Baseball (MLB) using an MRP approach, addressing this potential endogeneity.

This paper uses instrumental variables regression to address potential endogeneity using MLB season-level player and team data from 2010 to 2017.

Using OLS regression, the impact of an additional year of guaranteed contract on shirking is estimated at approximately $1m in 2010 US dollars, and the impact of having a long-term contract is estimated at $5m, estimates comparable to those in the literature. Using instrumental variables regression, these impacts increase to $1.6m and over $9m in 2010 dollars.

Given large, causal shirking estimates, profit maximizing sports organizations should take caution when negotiating long-term contracts. These findings also have important implications for other labor market settings where workers feel job security.

To our knowledge, this is the first work testing for shirking in sports using an MRP approach which uses instrumental variables regression to address potential endogeneity.

Building on economic and psychological ownership theories, this study investigates whether group incentives can reduce shirking because these practices enable employees to feel psychological ownership that motivates them to prevent their own and coworkers shirking in a collective work setting. We analyzed a sample of 38,475 employees in eight companies that participated in the survey administered by the National Bureau of Economic Research (NBER) in 2005. Our findings reveal that (1) short-term-oriented group incentives (STOGIs) and long-term-oriented group incentives (LTOGIs) are positively related to self-shirking regulation and coworker-shirking intervention; (2) STOGIs have stronger relationships with these anti-shirking outcomes than LTOGIs; and (3) the interaction between LTOGIs and formal training is positively related to these anti-shirking outcomes. Although some scholars are concerned about the free rider problem in the collective working and rewarding structure, our work demonstrates how and why employee shirking may be mitigated in such settings.

With asymmetric investments in exchange (i.e. sourcing) relationships, both sourcing firms and suppliers invest but one party invests more than the other. This paper aims to examine the associations between asymmetric (i.e. unequal) investments in exchange relationships and the tendency of the strategic supplier base to shirk as perceived by the sourcing firm, as well as the moderation effects of cross-functional information sharing within a sourcing firm on these associations.

The authors analyzed survey data from 500 US middle-market manufacturers via ordinary least squares (OLS) estimation. Besides appropriate controls, the authors also employed the heteroskedasticity-based instrumental variable approach to ensure that analytical inferences are not influenced by endogeneity.

On average, when a sourcing firm invests more than its strategic supplier base into their exchange relationships, the perceived tendency of the strategic supplier base to shirk decreases. This negative association is more pronounced when a sourcing firm facilitates cross-functional information sharing. Conversely, when the strategic supplier base invests more than the sourcing firm into their exchange relationships, the perceived tendency of the strategic supply base to shirk is not detected unless the sourcing firm facilitates cross-functional information sharing.

Prior research reveals that investments by a sourcing firm or by suppliers influence supplier shirking. This paper provides new evidence as to how and why asymmetric investments in exchange relationships relate to the perceived tendency of the strategic supplier base to shirk and new evidence as to how and why cross-functional information sharing safeguards against this tendency when investments in exchange relationships are unequal.

This study aims to demonstrate that the investments in social capital do not always pay off. Although an important function of social capital is its potential for influencing co‐located companies' opportunistic behavior, social capital also has a negative side. This study seeks to examine the negative and positive effects of the social capital dimensions on a company's profitability and on the perception that co‐located firms free ride and shirk.

By including data from 224 firms in 112 true‐paired dyadic relationships, this study provides a unique and valid basis for empirical study within SEM analysis. The ability to link different information sources in the analysis creates a unique data set that controls for the confounding effects of common method biases in the analysis.

Markets with a low degree of collective activity gain less advantage from cognitive social capital, because its primary effect lies in its transparency and ability to detect opportunistic behavior. The effect of relational social capital is more stable because of the positive direct effect on profitability. Structural social capital indicates markets that would benefit from creating private incentives with the intention to transfer collective activities into private payoffs. This reduces the need to follow up the co‐localized businesses.

This study shows that the dimensions of social capital vary regarding whether they reduce or facilitate the perceived withholding efforts by co‐located firms.

Using a laboratory experiment, this study investigates agency theory determinants of managers’ adverse selection in resource allocation and an approach to solve agency problems. The results suggest that agents who experience an incentive to shirk, have private information, and/or face less risky sunk costs exhibit a greater tendency to either choose less profitable projects or continue losing projects. Consistent with agency theory predictions, we also found that the tendency to choose less profitable projects and continue losing projects declined when agents were compensated based on a variable (outcome-based) compensation scheme.

In standard discussions (capitalistic economy), business firms and the income‐distribution property of production factors are dealt with in a manner in which they are independent from each other and there is no interaction as such between them. Furthermore, no role whatso‐ever is assumed for externalities. If we accept that there is interaction between production factors and these factors because of the existence of externalities affects each other, therefore it is only natural to come to this conclusion that both the definition of business firm and the share of production factors should be changed. The proposal developed in this paper is based on this very important consideration. The profit share of Mudareb (profit‐sharing agent) has been used in this paper to cover more general issues, such as labor's income share in an Islamic system. The Mudareb's relative share might be justified on the grounds that he has the appropriate expertise, profession, so to speak. This justification can be extended to “labor” in general, be it in industry, services, and other economic activities. It seems that, it is not only the degree of expertise and skill which determines the labor's share, but also its interaction with other expertises which makes one qualified to share part of the profit. This interaction provides better results than the same of individual skills. The application of the proposal not only increases output and hence the total revenue of a firm, but also helps keep the production cost at its lowest possible level. Furthermore, it leads one to look at a firm as an interacting body of different expertise. Increase in efficiency together with low production costs are to the mutual benefits of both the workers and the firm. Furthermore, there would not only be zero monitoring cost, but also eliminates shirking while increasing the effort of the workers to its maximum level.

The purpose of this paper is to examine whether reputation element affects the decision relative performance of trust, bonus and incentive contracts using social laboratory experiments.

The study conducts the following lab experiments bonus–incentive treatment without reputation, bonus–incentive treatment with reputation and trust–incentive treatment with reputation.

The study finds that the reputation and fairness concerns, in contrast to self-interest, may have a decisive impact on the actual and optimal choices in the reciprocity-based contracts. The principal pays higher salaries in the bonus contract as compared to an incentive contract.

The study contributes to the behavioral economic literature in the following dimensions. The existing literature on lab experiments considers a bonus contract as better than the debt contract; however, it does not consider the trust contract better than the debt contract.

For many exporting firms, success in foreign markets hinges to a large extent on the performance of their foreign intermediaries (Albaum, Strandskov, & Duerr, 2002; Ellis, 2000; Root, 1987). In spite of the key role played by intermediaries in foreign markets – i.e. sales agents and independent distributors (Solberg & Nes, 2002) – exporters often regard them as temporary arrangements and second-best alternatives to conducting foreign marketing, sales, and service activities in-house. The typical assumption is that foreign intermediaries are low-control entry modes (Hill, 2003; Root, 1987) that do not have the potential of exploiting the full sales potential of export markets. In other words, foreign intermediary arrangements could have inherent limitations that foster mediocre rather than excellent market performance. Several studies report that exporters generally distrust foreign intermediaries and suspect them of shirking at any given occasion (Beeth, 1990; Nicholas, 1986; Petersen, Benito, & Pedersen, 2000). Poor performance is sometimes expected. On the other hand, foreign intermediaries often find that exporters put in place incentive structures that do not induce them to achieve excellent performance. Hence, it is asserted that foreign intermediaries may deliberately seek mediocrity rather than very poor or outstanding performance.

The purpose of the paper is to study how technology choice is affected by capital accumulation when there is unemployment and firms engage in oligopolistic competition.

In this infinite horizon model, unemployment results from the existence of efficiency wages. Consumers choose saving optimally, and there is capital accumulation. Firms producing intermediate goods engage in oligopolistic competition and choose technologies to maximize profits. A more advanced technology has a higher fixed cost but a lower marginal cost of production.

In the steady state, it is shown that an increase in population size or a decrease in the discount rate leads intermediate good producers to choose more advanced technologies and the wage rate increases. Interestingly, the equilibrium unemployment rate decreases with the size of the population.

In this model, unemployment results from the existence of efficiency wages and firms engage in oligopolistic competition. One difficulty with efficiency wage models is that saving is not allowed. However, in this model, consumers choose saving optimally, and capital accumulation is allowed. With oligopolistic competition, the authors show that an increase in population size or a decrease in the discount rate leads intermediate good producers to choose more advanced technologies and the wage rate increases. The equilibrium unemployment rate decreases with the size of the population.

The purpose of this paper is to answer the question: What happens to the outcomes of pay dispersion when the employees own stock in their own company?

The data set consisted of over 20,000 employee surveys. Pay dispersion was measured with the Gini coefficient. The outcome variables were attitudes and behaviors with numerous controls. The moderation effect of employee ownership was investigated at the individual and group level using multilevel regression analysis.

Most hypothesized outcomes did not yield statistically significant results. The results that were statistically significant had two patterns: first, higher pay dispersion was consistently associated with improved attitudes and behaviors; and second, employee ownership moderated the outcomes of pay dispersion for certain outcomes and job types (e.g. perceptions of company fairness among administrative support personnel, or absenteeism and production personnel). There was no evidence to support a link between pay dispersion and attitudes across job types (vertical), only within job types (horizontal).

All the data were self-reported in surveys. Attitudes were measured with single items rather than validated scales. The data were cross-sectional, so no causality can be inferred.

While both higher pay dispersion and employee ownership can motivate employees, the interaction between them can be negative, especially in a cooperative environment. Consideration should be given to this when designing compensation packages.

There was a surprisingly strong link between higher pay differentials and improved attitudes, suggesting that the opportunity for higher pay is more influential than any feelings of inequity.

The effect of employee ownership on the outcomes of pay dispersion has never been investigated. This should be valuable given how widely higher pay is used to attract, retain and motivate employees (leading to pay dispersion) as well as how increasingly popular employee ownership is becoming.