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Personal Relations and their Effect on Behavior in an Organizational Setting: An Experimental Study

Jordi Brandts and Carles Solà ()

UFAE and IAE Working Papers from Unitat de Fonaments de l'Anàlisi Econòmica (UAB) and Institut d'Anàlisi Econòmica (CSIC)

Abstract: We study how personal relations affect performance in organizations. In the experimental game we use a manager has to assign different degrees of decision power to two employees. These two employees then have to make distributive decisions which affect themselves and the manager. Our focus is on the effects on managers' assignment of decision power and on employees' distributive decisions of one of the employees and the manager knowing each other personally. Our evidence shows that managers tend to favor employees that they personally know and that these employees tend, more than other employees, to favor the manager in their distributive decisions. However, this behavior does not affect the performance of the employees that do not know the manager. All these effects are independent of whether the employees that know the manager are more or less productive than those who do not know the manager. The results shed light on discrimination and nepotism and its consequences for the performance of family firms and other organizations.

Keywords: Family firms; nepotism; corporate governance; procedural fairness; experiments (search for similar items in EconPapers)
JEL-codes: C92 D23 M50 (search for similar items in EconPapers)
Pages: 36
Date: 2006-12-01
New Economics Papers: this item is included in nep-bec, nep-cbe, nep-exp and nep-soc
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Journal Article: Personal relations and their effect on behavior in an organizational setting: An experimental study (2010) Downloads
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Persistent link: https://EconPapers.repec.org/RePEc:aub:autbar:692.07

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