Does Facetime With The Boss Matter? Soft Information Communication And Organizational Performance

Samarth Gupta and Kaushalendra Kishore
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Samarth Gupta: Ahmedabad University
Kaushalendra Kishore: Centre for Advanced Financial Research and Learning (CAFRAL)

Working Papers from Centre for Advanced Financial Research and Learning (CAFRAL)

Abstract: Can better communication with the boss (she) improve the performance of the employees (he), even if he has authority for making decisions? The term boss, in our paper, refers to the person who decides the remuneration of the employee based on his performance. An employee’s performance depends not only on his effort but also on unpredictable factors beyond his control, which may be soft information. Communicating this soft information through face-to-face interaction would allow the employee to explain why he may have performed poorly (or well). Using the informativeness principle, the boss can offer more efficient contracts ex ante which share more risk and elicit higher level of effort by the employees. Using granular within bank data, we exploit exogenous change in the ability of bank managers to communicate with their boss and show that better communication improves their productivity. The results in the paper suggest that there may be an alternative complementary explanation (compared to Stein (2002)) for why small banks are more efficient at lending to small businesses.

Keywords: Soft information; Incentives; Organization; Banking (search for similar items in EconPapers)
JEL-codes: D21 D83 G21 L22 (search for similar items in EconPapers)
Pages: 34
Date: 2022-05
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Persistent link: https://EconPapers.repec.org/RePEc:ris:cafral:022285

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