The correlation between GDP per capita and TFP indicates that firms are more productive in high-income countries. These productivity differences across countries can largely be explained by differences in management practices. Firms in high-income countries continuously innovate, using ideas from employees as one potential source of innovation. However, firms in developing countries do not innovate as much and are often less efficient. An important barrier to adopt surplus-enhancing innovations is the misalignment of incentives leading to informational constraints, i.e. the lack of upward flows of information from shop floor workers to managers. Building on these findings about the adoption of innovations, this project experimentally tests further barriers for upward information flows to understand how the culture in firms in developing countries can be changed to enable workers to generate upward flows of innovative ideas.
In this project, Schreiber conducts an RCT to test the efficacy of two sets of cross-randomised interventions designed to increase contributions to suggestion boxes from 1,600 workers in a Bangladeshi garment factory. The first set of interventions decreases the costs of idea generation by providing free lunch to workers to discuss ideas individually or jointly. The second set of interventions increases the perceived benefit of idea generation by motivational feedback from managers, and improves the “technology” of idea generation, i.e. skills, by improvement-oriented feedback from managers. To financially incentivise workers to exert their voices, all interventions are carried out under a competition structure, in which the best three submitted ideas per month are rewarded with prizes. The main outcomes of interest include the quantity and quality of suggestions put forward but also worker-related outcomes, such as absenteeism, turnover and worker well-being, that may be positively influenced by increased involvement in idea generation.
In the context of high trade concentration and little exposure to new technologies, low wages are no longer sufficient to keep countries like Bangladesh internationally competitive. A better understanding of ways to increase efficiency is becoming increasingly important and this project could identify cost-effective, scalable and productivity-enhancing strategies to this end. There may also be indirect benefits to workers from feeling more included in the decision-making processes of the firm.
