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Collaboration, motivation, and the size of organizations

Author: Loch, Christoph H. ; Huberman, Bernardo A.INSEAD Area: Technology and Operations ManagementIn: Journal of Organizational Computing and Electronic Commerce, vol. 6, no. 2, 1996 Language: EnglishDescription: p. 109-130.Type of document: INSEAD ArticleNote: Please ask the Library for this articleAbstract: We present an analytical model of an organization that offers operational drivers of limits on team size. The model trades off benefits from collaborative problem solving against the disadvantages of diminishing motivation when groups get large. Collaboration is represented as parallel employee activity combined with frequent sharing of partial information, with a resulting superlinear performance increase over team size. Motivation is modeled by team members periodically setting an effort level either to contribute to the best of their ability or to "cruise" at the minimum level not recognizable as shirking. Each individual decision is limited by bounded rationality based on team rewards, the time horizon of team interaction, and individual expectations about colleagues' behavior. A manager should enlarge his or her organization up to the minimum of the limit set by the cooperation barrier and the exogenous performance limit
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We present an analytical model of an organization that offers operational drivers of limits on team size. The model trades off benefits from collaborative problem solving against the disadvantages of diminishing motivation when groups get large. Collaboration is represented as parallel employee activity combined with frequent sharing of partial information, with a resulting superlinear performance increase over team size. Motivation is modeled by team members periodically setting an effort level either to contribute to the best of their ability or to "cruise" at the minimum level not recognizable as shirking. Each individual decision is limited by bounded rationality based on team rewards, the time horizon of team interaction, and individual expectations about colleagues' behavior. A manager should enlarge his or her organization up to the minimum of the limit set by the cooperation barrier and the exogenous performance limit

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