Stories at Work
AbstractOrganizational stories are commonplace and a crucial force shaping employee behavior. We show how an organization's choice of story can be formally incorporated into its design problem. In our simple model, the organization optimally becomes either "purpose driven," which involves pairing flat money incentives with a story that emphasizes the importance of generating output (e.g., saving lives, putting a person on the moon), or "incentive driven," which involves pairing steep money incentives with a narrower story that emphasizes the importance of maintaining ethical standards (e.g., maintaining quality, helping peers). We illustrate the applicability of these results using a variety of examples.
CitationAkerlof, Robert, Niko Matouschek, and Luis Rayo. 2020. "Stories at Work." AEA Papers and Proceedings, 110: 199-204. DOI: 10.1257/pandp.20201093
- D23 Organizational Behavior; Transaction Costs; Property Rights
- L15 Information and Product Quality; Standardization and Compatibility
- L21 Business Objectives of the Firm
- M14 Corporate Culture; Diversity; Social Responsibility