A lack of management skills is an important reason for low labour productivity in developing countries. This problem is compounded in small- and medium-sized exporting firms as workers are hired temporarily based on export orders (who arrive as part of predetermined teams) and the search for workers is outsourced to middlemen. There is little understanding of how these teams are formed, how they perform in such an environment and how middlemen work to reduce labour market search frictions. In this project, Karrar Hussain will work with garments’ factories in Faisalabad, Pakistan to answer the following questions: 1) What individual and team characteristics are correlated with labour productivity?; 2) What characteristics of the team leaders are correlated with the productivity of their teams?; 3) What type of team leaders are selected by the team members and do they select optimally?; and 4) What makes middlemen good in their search for labour? The eventual goal of this project is to use the knowledge taken from it to design an experiment to manipulate team composition and worker-leader relations to improve factory performance.
The project will collect information from seven-hundred workers including team leaders from three factories. These workers will make up around one hundred teams. First, the researcher will measure productivity based on output, quality and defects per worker and team per hour over a one-month period and how often complaints arise from the workers. Second, he will measure team leader and worker characteristics such as education, experience, compensation, professional training, network, and Big-Five personality traits using surveys as well as cognitive skills and managerial skills. Altruism, trust and reciprocity will be measured through lab-in-the-field games. Endogenous team composition may influence workers to care more for their teammates, but they may not have changed more generalised behavior. Therefore, these traits towards teammates and other workers will be measured.
Weak management skills are a large problem for Pakistan, just like most developing countries. The labour productivity trend for Pakistan shows a decline from growth in the 1980s. This research would help to understand how factories in developing countries can improve worker and team productivity. It will help measure and understand the determinants of productivity in situations where there is substantial delegation of authority (from factory owners to middlemen) and labour is obtained through informal contracts using middlemen. Considering that most owners face credit and time constraints for investments in human capital, this research is needed to gain an understanding of team dynamics to push for a change in management techniques. Already at an initial stage, there is interest from three different factory owners to explore how productivity can be increased. Furthermore, the Government of Pakistan has made it a priority to increase the country's exports and helping firms improve productivity can be one part of this strategy.
