Working Papers, Department of Economics, Aarhus School of Business, University of Aarhus
Peer Effects, Social Networks, and Intergroup Competition in the Workplace
() and Pian Shu
Abstract: Using weekly data for defect rates (proportion of
defective output) for all weavers in a Chinese textile firm during a 12
months (April 2003 - March 2004) period, we provide some of the first
rigorous evidence on the presence and nature of peer effects in the
manufacturing workplace. First, a worker is found to put in more effort and
improve her performance when she is working with more able teammates.
Second, by exploiting the well-documented fact that an exogenouslyformed
strong divide between urban resident workers and rural migrant workers
exists in firms in Chinese cities, we provide novel evidence on the
interplay between social networks (urban resident group and rural migrant
group) and peer effects. Specifically, we find that a worker puts in more
effort when she is working with more able outgroup teammates but not when
working with more able ingroup teammates, pointing to intergroup
competition as a powerful source of the peer effects. Such peer effects
across the social network, combined with the presence of incentive to
outperform teammates at this firm, are largely consistent with recent
experimental evidence on the important role that group identities play in
facilitating altruistic behaviors.
Keywords: peer effects in the workplace; social networks; intergroup competition; (follow links to similar papers)
JEL-Codes: J24; (follow links to similar papers)
49 pages, August 7, 2009
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