Cooperation in Large Organizations: Exploring the Role of Formal Structure using a Field Experiment
In this study we propose and document that dividing workers into groups/areas, a core feature of any formal organizational structure, can strongly sustain voluntary cooperation as organizations grow large. The empirical setting is a workplace safety methodology that builds on voluntary cooperation. Consistent with previous work, we first show that while cooperative effort reduces accidents, it suffers as the number of cooperators increase. Then, we experimentally manipulate the safety methodology by structuring workers randomly into separate groups. This restores cooperative effort and reduces the incidence of risky behavior and accidents. The mechanism for this result is the increase in the likelihood of repeated interactions that is produced by the group structure. Our result shows that dividing workers into groups/areas provides benefits that go beyond the specialization and coordination gains that have been the focus of the literature so far, also helping an organization to sustain cooperation as it grows large.