Efficiency and Sustainability in Teamwork: The Role of Entry Costs

Abstract

This research studies how incentives to cooperation and sustainability through up-front pay mechanisms can impact teamwork. For this purpose, we carry out certain laboratory experiments on the two-player Minimum Effort Game. First, we compare two treatments: one with "free play teams", against teams forced to make a non-refundable up-front payment that covers the total output in case of maximum contribution, which we call "optimal entry cost teams". In the second comparison, experimental results are focused on different amounts in the up-front pay in order to test the theoretical prediction that higher entry costs might improve efficiency (optimal entry cost treatment vs. medium entry cost treatment). We find that the up-front pay mechanism induces higher effort levels compared to the "free play teams", which converge to the efficient and sustainable solution. The increase in the up-front pay, however, does not seem to accelerate such a convergence. These findings provide evidence for a new mechanism to encourage efficiency and sustainability in firms.

Examining the Factors Behind the Success and Sustainability of China’s Creative Research Group: An Extension of the Teamwork Quality Model

“…In recent years, many scholars have discussed the relationship between teamwork and factors related to team sustainability [11,26,[66][67][68]. However, few studies have explored this relationship from the perspective of integrated teamwork-related factors, such as the relationship between static factors (rationality of team structure, ROTS), dynamic process factors (teamwork quality, TWQ), and team success and sustainability.…”

“…Since the 21st century, many studies have combined economics, sociology, organizational behavior and psychology to develop theories for explaining or predicting teamwork, team performance and team success and sustainability [9][10][11][12][13][14][15][16][17].…”