Collaborative Research: Institutional capacity as an organizational challenge: a field experiment in Pakistan

Duke University, Durham NC

Investigators

Abstract

Abstract Vyborny Collaborative Research: Institutional Capacity as an Organizational Challenge: A Field Experiment Efficient management of organizations---businesses, governments or non-profits--is central to economic growth and development. Although there have been some studies of organizational efficiency in businesses, few have studied organizational efficiency in the public and non-governmental sectors---sectors that are becoming increasingly large shares of modern economies. This research will use a unique field experiment, involving a large donor organization and over 800 recipient community organizations, to study the efficiency in large, multitiered and complex organizations with emphasis on how information flowing through the organization is used, and how to effectively incentivize agents to achieve the organization's goals. This research will seek to answer three major questions: (i) can a transparent self-reporting tool and non-monetary incentive scheme motivate community organizations to achieve their goals; (ii) how do parts of a large complex organization respond to and use new information they receive; and (iii) how does the response to new information depend on the characteristics of the organization? The results of this research will lead to improvement in the performance of large, complex organizations generally. Efficiency in these organizations will improve the performance of economies worldwide. Large organizations face challenges in managing information, setting incentives and delegating decision-making power to the relevant personnel. Existing empirical work investigate incentive problems in private organizations. However, limited attention has been paid to the performance of large non-profit and government organizations. This project will use a unique field experiment to address three issues---information and communication within organizations, divergent preferences within organizations, and performance of non-government organizations. The experimental design will allow the PIs to test three main ideas: (i) Can community organizations be incentivized through self-reporting and non-financial rewards to improve their performance; (ii) How does each part of a large, complex organization respond to new information on performance indicators; (iii) Do the responses of management and workers to the receipt of new information and incentives depend on organizational characteristics of the organization, communication costs between parts of the organization, and decentralization of decision making authority? To answer the first question, over 800 recipient community organizations will be surveyed and then randomized into different self-reporting schemes using a two-by-two factorial design with controls. This design allows the PIs to test for the impact of self-reporting on service delivery or governance. To answer the second and third questions, the PIs will carry out a novel revealed-preference ranking experiment involving both junior and senior management staff members. The results of this research will strengthen our understanding of the determinants of efficiency in organizations and in the process, contribute to increased efficiency of economies worldwide.