Chapter 8 ECON 365 Flashcards
Why teams?
Production technology
Output sometimes hard to measure
Competition/ Sabotage
What are three reasons why you should have teams?
Production technology
Output sometimes hard to measure
Competition/ Sabotage
What is if a worker actually works he will not get the full benefit of his effort and there for the worker is under-invested
Free riding
What can create valuable knowledge transfer?
Teams
What are the two conditions must teams have to create valuable knowledge transfer?
- Members have idiosyncratic (private) information
2. Idiosyncratic information possessed by one member is valuable to others.
Teams can lead to what?
Specialization
Specialization can mead to what?
Productivity gains
What size team has communication problems, bureaucracy, confrontation, wasted time, more free rider problems
Large Teams
What size team has not much to gain from information transfer, peer monitoring more effective
Small teams
What are the five things that are incentives in teams?
Team bonus Profit sharing Stocks and options Implicit rewards norms
What are three things must you have to have bonus for finished project?
Small groups
well-defined project/outputs
short duration, so that team remains intact
The following is advantage what?
- Reward based on company profits, typically split in proportion to worker’s base salary
- can be motivating
- Shirking by worker, hurts shareholders
- Easier for workers to feel bad hurting someone they know
Profit Sharing
The following is disadvantages to what?
Team = Whole firm
-workers have their human capital already tied up in one firm, they should diversify their financial capital to reduce risk
Implies risk sharing (not optimal)
- workers are more risk averse than shareholder
- They demand a bigger compensation to accept risk
Profit sharing
The following is the effects of what:
Usually for high-level managers
- Cooperation is very important
- Impact on firm is big
- Makes them care about own and other people’s output
Stocks and options
The following is the implicit implicit incentives to what?
- Studies suggest US firms DO use implicit incentives for whole work force.
- Don’t make pay explicitly a function of team performance, but if profits rise, give bigger pay raise
- More expensive because of wage hikes usually go to all workers, not just senior management
Stocks and options
What are two ways to structure teams to maximize profit?
May want to rotate workers among tasks
Give managers bonus if their workers later promoted to management and so well.
The following are problems for the following?
- Multiple teams
- Put workers who need to cooperate on the same team
- Encourage cooperation among related teams by per-specifying that they must cooperate in order to earn full bonus
Teams
What are two methods of picking a team?
Alternating draws and Bidding for members
What is the following in information technology and decision making?
- facilitates product complexity, time-based competition
- Better collection and use of specific knowledge in real-time
- Lower-level employees have more info, better analysis tools
- facilitates ad hoc communication and groups
Decentralizing
What is a new era of production has begun, brought about by the combination of the computer and the self-regulation machine, socialists in India in the early 80’s protested computerization of banks
A dismal view
What is a new era of production has begun, brought about by the combination of the computer and the self-regulation machine, socialists in India in the early 80’s protested computerization of banks
A dismal view
What of the following are disadvantages?
Computer often replace human
Computer often make jobs less meaningful
end result: less empowered, less skilled workers
IT the job destroyer
What are three positive view of IT within jobs?
Creates jobs or even industries
often empowers even low skilled workers
places even grater value on skilled workers
What are three positive views of IT within firms
Speed up product cycle
facilitates customization and complexity
opens up new customers and products never before possible or even conceivable
