Team collaborations in which each member’s output is critical to the overall success present organizations with difficult coordination problems. Despite the need for communication in such situations, team members often fail to share essential information. To examine why team communication and coordination fail, we develop a formal model with boundedly rational team members that links team size with the incentives to coordinate and the costs of communication. We show that even very small communication costs are enough to offset the expected individual benefit of sharing information with the team. Absent effective routines, the least efficient outcome is the most likely in the short and long run. Further, simulations lend support to a number of organizational routines and responses: mandating communication improves coordination and more so if the mandate recurs periodically. Increasing the incentives to coordinate is more important than subsidizing communication costs, which often adds little value unless the subsidies cover the costs completely. The results match a broad range of findings from the experimental and organizational literature, help to explain and provide a theoretical foundation for why team collaborations involving several organizational units often fail, and suggest new tests for promising communication routines.
- Jens DietrichsonTorsten JochemJens Gudmundsson
About this publication
Published inJournal of Economic Behavior & Organization