Collaboration, Motivation, and the Size of Organizations

@ARTICLE{
 AUTHOR = "Bernardo A. Huberman and Christoph H. Loch",
 TITLE = "Collaboration, Motivation, and the Size of Organizations",
 JOURNAL="Journal of Organizational Computing",
VOLUME="6",
PAGES="109-130",
YEAR = 1996
}

We present an analytical model of an organization that offers operational drivers of limits on team size. The model trades off benefits from collaborative problem solving against the disadvantages of diminishing motivation when groups get large. Collaboration is represented as parallel employee activity combined with frequent sharing of partial information, with a resulting superlinear performance increase over team size. Motivation is modeled by team members periodically setting an effort level either to contribute to the best of their ability or to "cruise" at the minimum level not recognizable as shirking. Each individual decision is a limited by bounded rationality based on team rewards, the time horizon of team interaction, and individual expectations about colleagues' behavior. The decision collapses to a simple "barrier rule". Work hard when a certain "barrier percentage" of team members work hard, and otherwise shirk. The influence of team size on this barrier percentage depends on the extent of benefits from collaboration: As long as performance increases quadratically with team size, the increased benefits resulting from collaboration exactly balance the temptation to shirk, with the barrier percentage approaching a fixed limit for large team sizes. As soon as the performance increase slows to anything less than quadratic, shirking eventually sets in and limits the possible size of the team. This implies that cooperation is sustainable in large organizational units, provided the problem-solving processes used are powerful enough to ensure sufficient performance increases. Thus, effective problem-solving methods are of double value, improving direct productivity and mitigating the social dilemma from team production. A manager should enlarge his or her organization up to the minimum of the limit set by the cooperation barrier and the exogenous performance limit.