Cooperativeness is essential to individual and organizational success. We exploit a unique feature of conference calls to study individual executives' cooperativeness, indicated by their directly inviting colleagues to respond to analysts' questions, and its relation with their career outcomes and firm performance. After validating our measure, we find that cooperativeness is associated with relevant executive characteristics. Older, more senior, and more experienced executives are more likely to display cooperativeness. We also find that cooperativeness persists but can be influenced by colleagues. Turning to the relation with career and firm outcomes, we find robust evidence of a positive association between cooperativeness and the likelihood of being promoted to chief executive officer (CEO). Appointing CEOs who are more cooperative than their predecessors is associated with an average three-day abnormal return of 0.6% around the announcement of the appointment.

Product and service quality is fundamental to firm value creation, yet it is well recognized as difficult to observe ex ante. Existing quality proxies are limited in coverage, lack cross-firm comparability, and primarily rely on lagging indicators that capture product or service failures only after they materialize. Exploiting employees’ informational advantage as informed insiders and firsthand observers of firms’ internal operations, we develop and validate a novel, forward-looking measure of firm-year-level product and service quality using over 4.3 million employee reviews on Glassdoor. Leveraging machine learning models trained on a subset of firms with third-party customer satisfaction data, we construct quality indices for S&P 1500 firms spanning 2008 to 2023. The resulting quality measures exhibit meaningful variation across firms and within firms over time. In out-of-sample tests, our quality indices demonstrate strong predictive power for future quality provision, emerging as the single most important predictor relative to firm fundamentals and Glassdoor ratings. We validate our measure by examining its association with alternative quality metrics. We show that our quality measures are useful in predicting important quality-related firm outcomes such as product recalls, brand value, and profitability. We also construct an alternative set of quality measures using a zero-shot prompt-based approach and a supervised fine-tuning approach with GPT models to assess the potential of LLMs and generative AI in capturing firm-level quality provision. Our paper shows the value of employee voices as a powerful, forward-looking, and scalable signal of firm quality provision. The paper offers implications for stakeholders seeking to identify quality-related risks and opportunities before they become externally visible. Institutional subscribers to the NBER working paper series, and residents of developing countries may download this paper without additional charge at www.nber.org.

Prior research has pointed to differences in organizational capital as a reason for the persistent performance discrepancies among otherwise similar firms. In this paper, we develop and validate a new measure of organizational capital. Based on over a million crowd-sourced employee reviews scraped from Glassdoor, we construct the measure of organizational capital at the firm-year level using the word embedding model and ChatGPT-generated synthetic reviews. Our measure varies over time in accordance with macro trends, and differs both across and within firms, reflecting firm heterogeneity and major internal changes. We validate our measure by testing empirical predictions of the properties of organizational capital discussed in prior literature. Our findings suggest that this measure captures a slowly evolving intangible asset that is significantly associated with firm performance and top management's influence, aligning with the conceptualization of organizational capital by Dessein and Prat. We further showcase applications of our measure in accounting, economics, finance, and management literature. Taken together, the paper provides implications for various stakeholders who are interested in assessing and managing firms' organizational capital.

Upward influencers, employees who are more favorably perceived by their supervisors than their peers and subordinates, are predicted by economic and accounting theories and are found to be ubiquitous in many organizations. Despite their prevalence, the role of upward influencers in teams remains underexplored. This paper fills this void by using proprietary data from a service-providing organization that allows for the identification of upward influencers based on its 360-degree person evaluation. We find an inverted U-shaped relationship between the fraction of upward influencers in a team and team performance. In cross-sectional analyses, we show that this relationship is driven by conditions when the need for collaboration and information sharing is high and when managers are less experienced. Additional tests exploring the mechanisms for the role of upward influencers in teams suggest that they impair team horizontal relationships through lowering the willingness to communicate, share knowledge, and offer mutual assistance among team members. Yet, teams with upward influencers build better vertical relationships with supervisors, which, in return, is associated with supervisors allocating more of their time to provide team members with feedback and guidance. Taken together, this study contributes to the understanding of upward influencers in teams.

We examine the effect of internal employee coordination on customer trust, focusing specifically on employees' responsiveness to each other as an important, quantifiable, and objective aspect of internal coordination. Using proprietary data from a company with exogenous assignment of employees to teams that serve individual customers, we study how inter-employee responsiveness influences customer trust. Each customer is served via an app-based group chat by a randomly assigned team of employees. Our data include more than 2 million group chat messages with over 16 thousand customers. We find that inter-employee responsiveness serves as a credible signal that helps build customer trust, as evidenced by their subsequent contracting choices. The effect is more pronounced when the signal is (1) more frequent and (2) more intense. Our findings highlight the novel value of internal employee responsiveness as a credible signal that helps build trust with external stakeholders.

From 2008 to 2020, 180 of S P 1500 have disclosed employee diversity targets. We conduct the first analysis of firms’ employee diversity targets and ask three research questions: (i) who announces diversity targets? (ii) do firms deliver on their diversity targets? (iii) what are the implications of disclosure of such targets for employee hiring and investors? We find that firms with a greater willingness (proxied by past ESG penalties, higher CEO-to-median employee pay ratio, more media coverage, and after #MeToo and Black Lives Matter movements) and ability (proxied by financial strength, a blue-collar heavy labor force, and gender and ethnic minorities on boards) to improve employee diversity are more likely to disclose diversity targets. Exploiting the Revelio dataset of 15,639 firm-years for 1,203 distinct firms from 2008 to 2020, we observe that firms that disclosed a diversity target have indeed hired more diverse employees, but such diversity levels had already increased substantially prior to the target disclosure. Firms with numerical, forward-looking, and rank-and-file employee-targeted goals are associated with greater employee diversity relative to firms that announce other types of diversity goals. Moreover, improved diversity performance does not appear to occur at the cost of employee quality, as measured by Revelio. Overall our results have practical implications for how investors and stakeholders might want to interpret corporate diversity targets.

The pandemic crisis outbreak has impacted the hospitality industry tremendously. This study investigated the effect of job insecurity on service performance and examined the mediating role of cognitive appraisal and the moderating effect of uncertainty tolerance from the perspectives of cognitive appraisal theory of stress. The study collected a questionnaire from 316 hotel employees at three time points, with a one-month interval between the two time points. The SPSS PROCESS macro and MPLUS are used to test the research hypotheses. The results highlighted that the mediating role of challenge-hindrance appraisal, affirming that job insecurity positively impacts service performance via increasing challenge appraisal, and job insecurity negatively impacts service performance via increasing hindrance appraisal. Furthermore, the results show that uncertainty tolerance moderates the relationship between job insecurity and cognitive appraisal and also moderated the indirect effect of job insecurity on service performance through cognitive appraisal. The research results provide implications for human resource management in the hospitality industry.

We examine the early responses of employers and employees to Generative AI through the lens of classic management accounting theories. Our framework uses three dimensions of organizational architecture: organizational orientation, technological capacity, and occupational autonomy. On the employer side, we find evidence of both displacement and augmentation effects: firms with greater GenAI exposure reduce hiring while increasingly emphasizing GenAI-related skills in job postings. On the employee side, workers show a decline in their long-term outlook for the firm. Cross-sectional analyses further show that hiring declines are larger in firms with more coercive control systems, that GenAI skill demand increases more in jobs with higher innovation and independence, and that negative employee sentiment is more pronounced in firms with coercive orientations and greater technological capacity. Our results reveal a mismatch between adaptive employer responses and employees’ more negative reactions, and thus have implications for management control design in an era of intelligent automation.

Employees have been resigning at higher rates in recent years, particularly since the start of the pandemic. This resignation is true at all wage levels within organizations, from low wage to more senior, mid-career employees with higher wages. This resignation is purported to be due to existing dissatisfaction with the workplace and, consequently, increased expectations around work, including but not limited to wages as well as non-wage benefits and workplace culture (e.g., Sull, Sull, and Zweig, 2022). Furthermore, firms face stakeholder and public pressure to become more inclusive across ethnic and racial groups, and better represent society at large. Many firms in the United States have struggled to both recruit and retain employees from underrepresented groups, highlighting managers’ need for best practices to retain this talent. Employee resignations are not only disruptive for employees, but also for the firms that employ them. Such turnover costs are often a significant component of human resource expenses that ultimately affect firm financial performance. Further, turnover can be an indicator of ineffective or even toxic workplace culture, which affects not only job tenure, but the ability of firms to be selective in hiring and the ultimate productivity of those they do hire. What are some of the factors that lead to higher turnover or reduce it? How do firms build a more effective workplace culture that attracts and retains talented employees? This symposium examines these questions from both a large-scale empirical and qualitative research perspective. Three presentations, including two quantitative studies examining wages, workplace culture and turnover, and a qualitative analysis of Walmart’s changes to wages and working conditions, bring forth timely and important research to understand how firms can respond to workplace challenges. Specific areas addressed in this symposium include: - how firms can increase diversity among employees, develop more equitable pay practices and create inclusive workplace cultures; - the impact of pay practices on employee turnover and firm performance; and - the impact of increased wages and benefits on workplace culture and performance within a specific firm. A full discussion is planned, one that encompasses academic commentary as well as translation to how this appears in the workplace with an ultimate objective to inform business practices. Do Diverse Directors Influence DEI Outcomes? Author: Jillian Grennan; U. of California, Berkeley Author: Wei Cai; Columbia Business School Author: Aiyesha Dey; Harvard Business School Author: Joseph Pacelli; Harvard Business School Author: Lin Qiu; Krannert School of Management, Purdue U. Still Broke Walmart’s Remarkable Transformation and the Limits of Socially Conscious Capitalism Author: Rick Wartzman; Drucker Institute, Claremont Graduate U. (When) Does Paying Living Wages Affect Employee Turnover and Firm Performance? Author: Nathan Barrymore; McCombs School of Business, U. of Texas at Austin Author: Rachelle Sampson; U. of Maryland

ABSTRACTMany organizations rely on formal management control systems that align employee values with organizational values (i.e., culture fit) to shape organizational culture. Using proprietary data from a highly decentralized organization, I examine employee-performance consequences of adopting a formal culture-fit measurement system in employee selection. I exploit the staggered feature of the adoption of the system and find that employees selected with the system perform significantly better than those without the system. However, the performance consequences of adopting the culture-fit measurement system exhibit significant variation, depending on (1) alignment of existing local culture and organizational values and (2) noise in the measurement of culture fit due to applicants’ gaming behavior. Taken together, this study implies that the adoption of a formal culture-fit measurement system can potentially alleviate difficulties in instilling organizational values and highlights the conditions under which such a system can be more effective in facilitating the diffusion of organizational culture.

We develop and validate new text-based measures of firms’ financial and non-financial value drivers. Using the Wayback Machine to access public US firms’ archived websites from 1995-2020, we scrape text from corporate homepages. We use Kaplan and Norton’s (1992) balanced scorecard, as well as Ittner and Larcker’s (2001) value-based management framework, to classify this text. We then construct at the yearly level standardized measures of firms’ financial and non-financial value drivers. We show that our measures vary over time in accordance with broad trends in the economy and changes in management practices. We show that our value driver measures vary both within and across industries, and we capture related yet distinct constructs that shed light on firm strategy. Finally, we validate our measures by documenting associations between firms’ value drivers and established accounting, financial, and non-financial measures. Our paper provides researchers with a means to construct value-driver measures for any firm that possesses or has possessed a website.

ABSTRACTThis study examines how the design of incentive contracts for tasks defined as workers' official responsibilities (i.e., standard tasks) influences workers' propensity to engage in employee‐initiated innovation (EII). EII corresponds to innovation activities that are not formally assigned to workers but are nonetheless encouraged and considered to be important for the company's success. Like other extra‐role behaviors, EII is difficult to incentivize directly. Therefore, it is important to understand whether and how explicit incentive contracts designed for the workers' standard tasks may indirectly influence their EII activity. We use field data from a manufacturing company that uses a dedicated information system to track workers' EII idea submissions. We find theory‐consistent evidence that, compared to workers receiving fixed pay, employees rewarded for their standard tasks with variable compensation contracts exhibit a lower propensity to engage in EII. This result is concentrated among ideas benefiting other constituents and activities beyond the proponents' standard task (i.e., broad‐scope ideas). In contrast, we find no difference attributable to standard task incentive design in the proposal of innovation ideas narrowly focused on the proponent's standard task (i.e., narrow‐scope ideas). Our findings suggest that variable pay narrows employees' conceptual focus around the standard task and hinders employee engagement in broad‐scope innovation activities compared to fixed compensation contracts. We contribute to the literature on incentives for innovation by showing that standard task compensation contracts have spillover effects on EII behavior. We also contribute to the nascent literature on EII by showing that innovation types, defined based on their relation with the proponent's standard task, matter. Our results are relevant for practitioners in that managers relying on variable pay contracts to incentivize standard task performance should expect lower employee engagement in broad‐scope EII.

We examine the incentive effects of subjectivity in allocating tournament-based rewards and punishments. We use data from a company where reward and punishment decisions are based on a combination of objective metrics and subjective performance assessments. Rankings based on the objective metrics and the ultimate payoff allocations are disclosed to all members of the organization. This information allows employees to observe whether and how managers subjectively override the objective rankings. Consistent with expectancy theory, we predict and find that subjective rewards and punishments manifesting as favorable (unfavorable) deviations from formula-based payoff expectations are associated with subsequent performance improvements (declines). These performance responses are incremental to the effects of receiving a reward or punishment per se. Our results suggest that managers can benefit from using subjective rewards, but using subjective punishments can be very costly in the absence of sufficiently strong ex ante incentive effects associated with the prospect of subjective penalties. Our findings contribute to the literature on subjectivity in performance evaluations and have important practical implications for designing incentive systems. This paper was accepted by Brian Bushee, accounting. Funding: The authors appreciate the Harvard Business School for financial support during the development of this study. Supplemental Material: Data are available at https://doi.org/10.1287/mnsc.2022.4501 .

We examine whether greater board diversity is associated with more diverse workforce hiring, more equitable pay practices, and more inclusive corporate cultures. Using a variety of quasi-experimental designs, we document increases in managerial and staff diversity in the years following a diverse director's appointment, consistent with diversity initiatives ``trickling down'' within a firm. We also find that employees perceive improvements in the culture, stronger community-building norms, and approve more of senior management. We, however, see limited real effects in terms of gender and racial pay gaps. Additional findings show board diversity works through allyship, homophily, and cognitive diversity channels. Finally, we examine the extent to which environmental, social, governance (ESG) ratings capture these within-firm social gains and document discrepancies.

Gamified training is a novel management control system in which companies use gamification techniques to engage and motivate employees to learn. This study empirically examines the performance consequences of gamified training using data from a natural field experiment in a professional services firm. We find that, on average, the main effect of adopting the gamified training platform on performance is significantly positive. We also study whether outcomes depend on how engaged the office is in the gamified training platform (i.e. office engagement) and who is engaged in the gamified training platform (i.e. leader engagement). Our findings suggest that the benefits of gamified training are greater when employees are more engaged—as revealed by their readiness to log onto the gamified training platform— and when more leaders, who are actively engaged in selling to clients and who serve as role models for their employees, actively participate in the gamified training platform.

Based on the transaction theory of stress and the theory of resource conservation, which introduces knowledge acquisition and intrinsic motivation as mediating variables, a chain mediating model for the influence of challenge-hindrance stress on innovation performance is constructed. Data of 295 samples collected in three stages were used to testify hypothesis. The results confirmed a positive relationship between challenge stress and innovation performance, and a negative relationship between hindrance stress and innovation performance. Intrinsic motivation and knowledge acquisition play a parallel and chain mediating role in the relationship between challenge-hindrance stress and innovation performance. These findings contribute to a deeper understanding of how challenge -hindrance stress affects innovation performance and provide important practical guidance for improving innovation performance.

We examine whether firms take remedial actions in response to major violations of (i) environmental law; (ii) labor laws associated with wage theft, workplace safety, and discrimination; and (iii) consumer safety rules. To empirically address this question, we construct a novel, hand-collected dataset of remedial actions taken by firms, based on hand-classification of 10,270 press releases, in the years preceding and subsequent to a major violation (e.g., an oil spill or a major labor lawsuit verdict). Regardless of whether the firm is exposed for environmental or social (labor and customer) violations, remedial actions seem to focus on customers and employees, especially women. Remedial actions in response to violations occur more frequently in more diverse workplaces. In terms of consequences, the effect of remedial actions on recidivism varies with the type of underlying violation: after an environmental violation, only direct environment-focused remedial actions (but not any type of action targeting investors, customers, or employees) are correlated with a reduction in future environmental violations. Conversely, after a social violation, indirect actions – especially those targeted at consumers – appear to be correlated with fewer future violations.

Many organizations face novel risks. Novel risks are unforeseen, hard to manage, and, despite the challenges in preparing for and managing them, surprisingly understudied in academia. This paper uses the unexpected COVID-19 pandemic as a setting to examine how organizations can build firm capital to prepare for novel risks. We define four types of firm capital: (1) financial, (2) human, (3) organizational, and (4) industrial. Our findings show that firms with more of these four pre-crisis capital types prior to the pandemic have better stock performance. Therefore, our paper provides important managerial implication for firms that want lower adverse consequences from future novel risk events.

Many organizations acknowledge that inclusiveness, or the practice of directly engaging colleagues in activities, is becoming increasingly important as businesses become more complex. However, inclusive managers remain significantly understudied in large-sample archival research, largely because inclusiveness is difficult to measure. We overcome this barrier and develop a measure of managers’ inclusiveness by observing the interactions among corporate managers during conference calls, the only circumstance where interactions among managers can be regularly observed. We examine inclusive managers’ characteristics, individual career outcomes, leadership team outcomes and firm outcomes. We find that inclusive managers are more likely to be female and older. They are twice as likely as the average manager to be promoted to CEO, and appointing an inclusive CEO increases the inclusiveness of the executive team. Teams composed of inclusive managers also have greater retention. Lastly, firms where inclusive managers are promoted to CEO experience more positive stock market reactions to the promotion announcements.

Incentive contracts for front-line employees generally specify explicit performance measures for the tasks included in their main responsibilities. Yet, organizations often encourage employees to engage in desirable (but not required) behaviors that extend beyond their assigned standard execution tasks. Using data from a manufacturing company that encourages their employees to engage in employee-initiated innovation, we examine how the design of incentive contracts for employees' standard execution tasks influences their propensity to submit innovation ideas. Consistent with theory, we show that high-powered incentives are associated with less innovation idea submissions. This effect is driven by ideas with broader scope than the employee’s standard task. Our findings suggest that high-powered incentives increase the pressure to deliver on performance measures explicitly included in incentive contracts, thereby limiting the scope of employee-initiated innovation to task-specific suggestions. Our results contribute to the literature on the unintended consequences resulting from pay-for-performance compensation contracts.