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American Economic Review: Vol. 100 No. 5 (December 2010)

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Organizational Structure, Communication, and Group Ethics

Article Citation

Ellman, Matthew, and Paul Pezanis-Christou. 2010. "Organizational Structure, Communication, and Group Ethics." American Economic Review, 100(5): 2478-91.

DOI: 10.1257/aer.100.5.2478

Abstract

This paper investigates experimentally how a group's structure affects its ethical behavior towards a passive outsider. We analyze one vertical and two horizontal structures (one requiring consensus, one implementing a compromise by averaging proposals). We also control for internal communication. The data support our main predictions: (1) horizontal, averaging structures are more ethical than vertical structures (where subordinates do not feel responsible) and than consensual structures (where responsibility is dynamically diffused); (2) communication makes vertical structures more ethical (subordinates with voice feel responsible); (3) with communication, vertical structures are more ethical than consensual structures (where in-group bias hurts the outsider). (JEL C92, D23, L21, M14)

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Authors

Ellman, Matthew (Institute of Economics, CSIC and Barcelona Graduate School of Economics)
Pezanis-Christou, Paul (U Strasbourg)

JEL Classifications

C92: Design of Experiments: Laboratory, Group Behavior
D23: Organizational Behavior; Transaction Costs; Property Rights
L21: Business Objectives of the Firm
M14: Corporate Culture; Social Responsibility


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