The Learning Effects Of Monitoring

Date Added: Nov 2010
Format: PDF

This paper investigates the relationship between monitoring, decision-making, and learning among lower level employees. The author exploits a field-research setting in which business units vary in the "Tightness" with which they monitor employee decisions. They find that tighter monitoring gives rise to implicit incentives in the form of sharp increases in employee termination linked to "Excessive" use of decision-rights. The results are consistent with an experimentation hypothesis in which tight monitoring of decisions leads to more control but less learning.