The Impact of Teams on Output, Quality and Downtime: An Empirical Analysis Using Individual Panel Data

Derek Charles Jones and Takao Kato ()

No 2917, IZA Discussion Papers from Institute for the Study of Labor (IZA)

Abstract: To investigate the size and the timing of the direct impact of participatory arrangements on business performance, we assemble and analyze extraordinary daily data - for rejection, production and downtime rates for all operators in a single plant during a 35 month period, more than 77,000 observations. Consistent with core hypotheses that employee involvement enhances productivity and quality through mechanisms including employees becoming better motivated, more informed and paying greater attention to product details, we find that membership in offline teams: (i) initially enhances individual productivity by about 3%; (ii) and lowers rejection rates by about 27%. We also find that: (iii) these improvements are dissipated, typically at 10 to 16% per 100 days in a team; (iv) while initially teams lead to more downtime, these costs diminish over time; (v) the performance-enhancing effects of team membership are generally greater and more long-lasting for team members who are solicited by management; and (vi) similar relationships exist for more educated team members. These findings square with diverse hypotheses concerning predicted gains from complementarities in organizational design, the benefits that flow from management solicitation and enhanced education, but are inconsistent with hypotheses based on Hawthorne effects.

Keywords: teams; employee involvement; productivity; quality; econometric case study (search for similar items in EconPapers)
JEL-codes: M54 J50 J41 D20 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-bec and nep-eff
Date: 2007-07
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Working Paper: The Impact of Teams on Output, Quality and Downtime: An Empirical Analysis Using Individual Panel Data (2007)
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