STRATEGIC SHIRKING: A THEORETICAL ANALYSIS OF MULTITASKING AND SPECIALIZATION

Jed DeVaro and Oliver Gürtler

International Economic Review, 2016, vol. 57, issue 2, 507-532

Abstract: We provide a new theory to explain why firms multitask workers instead of specializing them. Workers overperform in tasks they like and underperform in tasks they dislike to favorably influence future job assignments. Anticipating this, firms may find it optimal to commit to future multitasking to induce workers to appropriately allocate effort early in the employment relationship. We show that when the product market is volatile, so that future product prices are uncertain, the firm's ability to credibly commit to a multitasking strategy diminishes. This generates a negative relationship between multitasking and product market volatility, consistent with recent empirical evidence.

Date: 2016
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