Individual participation and incentive coordination in watershed ecological compensation project: insights from China's Xin'an River Basin pilot

The success or failure of executing the watershed ecological compensation (WEC) policy is primarily contingent on incentive designs. How do different contractual designs influence the actions of micro-individuals in WEC? How may individuals be enticed to engage in WEC project? Taking the first inter-provincial WEC-Xin'an River Basin (XRB) pilot in China as a case, this study investigates the impacts of government-oriented, market-oriented, and incentive-cooperation contracts on individuals' behavior based on the framework of Stackelberg games. Subsequently, differences in efforts and profits of diverse individuals are compared and analyzed for each contract. The case-specific numerical example is then utilized to validate theoretical outcomes and to support subsequent key insights. First, the government-oriented contract exhibits effectiveness in bolstering the efforts and interests of micro-individuals, whereas it also places the government under tremendous financial strain. Second, the market-oriented contract formed by the output contribution rate assists in overcoming deficiencies of excurrent government-oriented contract. But it remains controversial if, in the absence of government inspection, investors that devote more cooperative-efforts are not rewarded with further dividends, ultimately diminishing their enthusiasm for the WEC-XRB project. Lastly, the incentive-cooperation contract reinforced by market dominance is advantageous for improving the efficacy of water resource management under the existing government-oriented policy relying on command-and-control instruments.

Managing Uncertainty: An Experiment on Delegation and Team Selection

We study how organizations use team selection and delegation of authority jointly to navigate uncertain environments. To do so, we model a managerial decision environment in which a manager both determines the skill heterogeneity of the workers and determines whether to retain or delegate the ability to allocate tasks. Delegation enables better-informed workers to allocate tasks more efficiently when uncertainty is high relative to the incentive conflict between manager and worker. Our novel approach allows us to illustrate that this conflict is endogenously determined by the team selection decision. Experimental data support—although not globally—the direction of our theoretical hypotheses and offer insight into how and why choices deviate from expected behavior. Notably, we identify behavioral characteristics that aid decisions along each dimension. Deliberative thinking improves all decisions under low uncertainty and improves team selection regardless of the level of uncertainty. Risk tolerance improves all decisions in highly uncertain situations and helps managers optimally delegate decision rights in all settings. The results highlight potentially costly ways in which managers seek to simplify their decisions but show how deliberative thinking and risk tolerance can improve performance in a complementary manner.

The Contractual Governance of Transactions Within Firms

A central theoretical premise is that firms internalize transactions that are not suited for formal contracting. Yet, there is growing evidence that firms rely on formal contracts to govern some of their transactions within the firm. This paper discusses why firms use formal contracts between units within the firm and develops propositions for when formal contracts arise. Internalization does not eliminate transactional problems, and informal agreements for transactions between units often suffer from problems in understanding what the other unit will do and whether it will do what it promises. We argue that many of the features that make formal contracts valuable tools for market exchange are beneficial within firms, even if court enforcement of the contract is not possible. We suggest that formal contracts between units serve as communication and commitment devices that address coordination and incentive problems within the firm by providing clarity and credibility on the rights allocated to the units in the transaction.

Complexity and Knowledge in Organisational Context: Concepts, Approaches, Boundaries and Relations

The study sought to understand the relationship among organisations, knowledge and complexity so that managers could develop more effective strategies when working with organisational knowledge and complexity. The theoretical framework of the theme was elaborated from Web of Science and then an analysis of identified approximations, relations and boundaries was carried out. Aiming at greater consistency regarding the approximations and boundaries among the studied themes, we sought complex organisations that contemplated knowledge as a resource. The initial search retrieved 95 articles, and after content analysis was performed, we identified 25 articles considering complex organisations as social organisms and knowledge as a resource. In this sense, difficulties were observed regarding the definition of the concept of complex organisation, as well as regarding the understanding of knowledge as a resource. After the analysis of the 25 articles, eight pointed to some characteristic of complex organisations, and this corpus does now allow to relate and identify the impact of knowledge on complexity, or complexity on knowledge. From these considerations, we discuss ways to manage complexity and knowledge as elements inserted in the organisational context.

Generalized Trust, External Sourcing, and Firm Performance in Economic Downturns

Going beyond prior research that has focused on dyadic, party-specific trust, this study investigates the importance of generalized trust, which is not specific to a counterparty and originates from a broader context. We analyze how generalized trust at the regional level affects the extent to which a firm relies on external suppliers and the performance effects of doing so. Furthermore, we assess how these relationships are impacted by an economic downturn. We exploit differences in generalized trust across 145 regions in 12 European countries and use data on more than a million small- and medium-sized enterprises (SMEs) before and during the Great Financial Crisis (from 2008 to 2010). Control variables are selected via a double-selection procedure based on machine learning. We find that firms in high generalized trust regions, compared with those in low generalized trust regions, source more externally (but do not reduce external sourcing less in an economic downturn) and benefit more from external sourcing during an economic downturn.

Market Competition and the Effectiveness of Performance Pay

It is well established that the effectiveness of pay-for-performance (PfP) schemes depends on employee- and organization-specific factors. However, less is known about the moderating role of external forces such as market competition. Our theory posits that competition generates two counteracting effects—the residual market and competitor response effects—that vary with competition and jointly generate a curvilinear relationship between PfP effectiveness and competition. Weak competition discourages effort response to PfP because there is little residual market to gain from rivals, whereas strong competition weakens incentives because an offsetting response from competitors becomes more likely. PfP hence has the strongest effect under moderate competition. Field data from a bakery chain and its competitive environment confirm our theory and let us refute several alternative interpretations.

Structuring mental health support for frontline caregivers during COVID-19: lessons from organisational scholarship on unit-aligned support

Background

Although the COVID-19 pandemic exposes frontline caregivers to severe prolonged stresses and trauma, there has been little clarity on how healthcare organisations can structure support to address these mental health needs. This article translates organisational scholarship on professionals working in organisations to elucidate why traditional approaches to supporting employee mental health, which often ask employees to seek assistance from centralised resources that separate mental health personnel from frontline units, may be insufficient under crisis conditions. We identify a critical but often overlooked aspect of employee mental health support: how frontline professionals respond to mental health services. In high-risk, high-pressure fields, frontline professionals may perceive mental health support as coming at the expense of urgent frontline work goals (ie, patient care) and as clashing with their central professional identities (ie, as expert, self-reliant ironmen/women).

Findings

To address these pervasive goal and identity conflicts in professional organisations, we translate the results of a multiyear research study examining the US Army’s efforts to transform its mental health support during the wars in Iraq and Afghanistan. We highlight parallels between providing support to frontline military units and frontline healthcare units during COVID-19 and surface implications for structuring mental health supports during a crisis. We describe how an intentional organisational design used by the US Army that assigned specific mental health personnel to frontline units helped to mitigate professional goal and identity conflicts by creating personalised relationships and contextualising mental health offerings.

Conclusion

Addressing frontline caregivers’ mental health needs is a vital part of health delivery organisations’ response to COVID-19, but without thoughtful organisational design, well-intentioned efforts may fall short. An approach that assigns individual mental health personnel to support specific frontline units may be particularly promising.

On a Firm’s Optimal Response to Pressure for Gender Pay Equity

We present a theory of how a rational, profit-maximizing firm would respond to pressure for gender pay equity by strategically distributing raises to reduce the pay gap between its female and male employees at minimum cost. Using formal analysis and pay data from a real employer, we show that (1) employees in low-paying jobs and whose pay-related observables are similar to those of men at the firm are most likely to get raises; (2) counterintuitively, some men may get raises, and giving raises to certain women would increase the pay gap; and (3) a firm can reduce the gender pay gap as measured by a much larger percentage than the overall increase in pay to women at the firm. We also identify the conditions under which a firm could “explain away” a gender pay gap using other pay-related observables, such as job category, as well as the conditions under which this strategy would backfire. Our paper helps explain some empirical puzzles, such as the tendency for some men to get raises after gender equity pay reviews, and yields a rich set of implications for empirical research and practice.

The online appendix is available at https://doi.org/10.1287/orsc.2018.1248 .

Inequity-aversion and relative kindness intention jointly determine the expenditure of effort in project teams

The literature on team cooperation has neglected the effects of relative kindness intention on cooperation, which we measure by comparing the kindness intentions of an agent to her group members to the kindness shown by other members to this same agent. We argue that the agent’s emotional reaction to material payoff inequity is not constant, but rather affected by her relative kindness intention. Then, we apply the model to team projects with multiple partners and investigate how inequity-aversion and relative kindness intention jointly influence team cooperation. We first consider the case of homogeneous agents, where their marginal productivity levels and technical capacities are the same, and then consider the case of heterogeneous agents, where their marginal productivity levels and technical capacities are not the same. Our results show that inequity-aversion has no effect on effort expenditure in the former case, but does affect it in the latter case. The consideration of relative kindness intention may impact the agents’ optimal cooperative effort expenditure when their technical capacities are different. In addition, it is beneficial for team cooperation, and might not only reduce the negative impact but also enhance the positive impact of inequity-aversion on the agents’ effort expenditures.

A model of functional integration and conflict

Purpose

– The purpose of this article is to generate theory on how functional integration and conflict interrelate by studying the interface between production and purchasing.

Design/methodology/approach

– An interpretive single case research methodology is adopted. The authors rely on in-depth interviewing of managers in the production and purchasing functions of a construction company, as well as by its suppliers.

Findings

– Given low functional integration, antagonistic reasoning within each function and resultant conflicting behaviors are allowed to develop in a negative cycle, escalating the conflict between purchasing and production. This process leads to the creation of two opposing functional sourcing models that serve as blueprints for behavior.

Research limitations/implications

– The single case methodology was chosen to maximize depth and detail and form an ideal foundation for theory building. Future qualitative and quantitative studies should inquire further into the studied phenomenon to increase analytical and statistical generalizability of the proposed model.

Practical implications

– The findings can help managers understand how poor integration between functions can develop into cross-functional conflict. Facing a conflicting functional relationship, managers must resort to conflict resolution methods, instead of attempting to integrate, as several integrative devices are not appropriate in conflicting interfaces.

Originality/value

– The proposed model contributes by connecting the constructs of integration, group reasoning, and conflict, thereby generating knowledge on conflict development processes in cross-functional interfaces. Furthermore, the article contributes by uncovering the difficulties associated with implementing spend consolidation, a prevailing sourcing strategy.