Social Norms and Firm Productivity: Evidence from Knitwear Factories

In some settings, firms do not adopt productivity-enhancing managerial practices, and hence are less productive than firms with different practices. This award funds research that explores one factor that may explain why firms do not adopt certain communications-related management practices---local social norms around communication between members of social groups with different social status. The research suggests that in some societies, high-status individuals are unwilling to learn from low-status individuals, even if doing so improves their work performance. The researchers test this theory on workers in six knitwear firms using two well-designed field experiments. The research will improve our understanding of possible barriers to productivity growth and career advancement of low-social status workers. The results of this research will contribute to the development of policies to increase the adoption of new technologies, improve productivity, economic growth and the well-being of people in low-income settings. The research results will also provide important inputs into US foreign aid policy formulation and implementation. This award funds a research project that investigates why firms in developing countries do not endogenously implement productivity-enhancing management practices. The PI hypothesizes that some social norms, such as norms around communication between high- and low-status individuals, hinder the adoption of productivity enhancing management practices. The researchers will use two field experiments to test this hypothesis in six knitwear factories. The first is an incentivized survey experiment to examine workers’ willingness to participate in teaching sessions with workers of the same versus the opposite social status (anonymous instructors is the control group). The second is a field experiment in which the researchers inject information about productivity-enhancing practices into the firm through selected men and women and study how gender affects information diffusion across workers and quantify the downstream effects on untrained workers’ productivity. The results of this research will advance generalizable knowledge about social relationships and productivity, as well as contribute to the adoption of new technologies, and improve productivity, economic growth and the well-being of people in low-income countries.This award reflects NSF's statutory mission and has been deemed worthy of support through evaluation using the Foundation's intellectual merit and broader impacts review criteria.