The Division of Gains from Complementarities in Human-Capital-Intensive Activity

Sendil K. Ethiraj () and Pranav Garg ()
Additional contact information
Sendil K. Ethiraj: Stephen M. Ross School of Business, University of Michigan, Ann Arbor, Michigan 48109
Pranav Garg: Stephen M. Ross School of Business, University of Michigan, Ann Arbor, Michigan 48109

Organization Science, 2012, vol. 23, issue 3, 725-742

Abstract: This study uses data from the National Basketball Association to explore organizational mechanisms that affect the division of firm surplus in human-capital-intensive activity. It builds on the idea that reciprocal interdependence among team members creates the potential for complementarity. Complementarity, in turn, translates into higher firm surplus. The division of this surplus is subject to bargaining between the firm owner and labor. We argue that when complementarity increases, the firm owner's share of surplus will grow if interdependence among team members is symmetric. Furthermore, we identify three levers that make complementarity amenable to managerial design: the nature of interaction among team members, the relative dominance of team members, and the composition of a team. We find that greater interaction among team members and higher recruitment of team-oriented individuals are associated with increased complementarity, whereas dominant team members are associated with reduced complementarity. The study contributes to the literature on organization design by extending its implications to the division of surplus in human-capital-intensive activity.

Keywords: complementarities; organization design; appropriation; human capital (search for similar items in EconPapers)
Date: 2012
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (15)

Downloads: (external link)
http://dx.doi.org/10.1287/orsc.1110.0659 (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:inm:ororsc:v:23:y:2012:i:3:p:725-742

Access Statistics for this article

More articles in Organization Science from INFORMS Contact information at EDIRC.
Bibliographic data for series maintained by Chris Asher ().