Does Gradualism Build Coordination?
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What is it about?
Coordination is at the core of a wide variety of economic activities and organizational performance. However, efficient coordination outcomes are often difficult to attain without effective coordination mechanisms. Managers routinely face the challenge of how best to induce a high level of effort and facilitate coordination across multiple agents both within and across organizations, which has been a central issue in the practice and science of organizational management. Leading business magazines such as the Harvard Business Review routinely run articles on how to promote teamwork and coordination. In this study, we propose and test one mechanism to promote coordination, which we call gradualism: starting small and gradually increasing the stake of a coordination project within a fixed group. The corresponding hypothesis is that allowing agents to coordinate first on small and easy-to-achieve goals (projects) and slowly increasing the level of goals facilitates subsequent coordination on otherwise hard-to-achieve outcomes. We find that subjects in the Gradualism treatment, who are more likely to experience successful coordination at the end of the first stage than subjects in the other treatments, are 12.2 percentage points more likely to contribute upon entering a new group when we reshuffle subjects from all treatments into new groups in the second stage. However, subjects who were initially in the Gradualism treatment become less likely to contribute when they find that their contributions are not rewarded in the new environment, possibly because the new group members may have had different coordination outcomes previously. This result provides suggestive evidence of the role of beliefs that players carry from old groups to new ones and later update on the basis of the performance of the new groups.
Why is it important?
Gradualism is used by managers and leaders in a wide range of real-world settings. Team building often adopts a gradual method: to help build coordination in collaborative projects involving pivotal efforts from all members, new employees and teams are initially given smaller or easier tasks, which ensure that they can then coordinate well in larger or harder tasks later. For example, law enforcement units, police Special Weapons and Tactics teams, and special military groups are initially given ordinary low-stake tasks until proven effective before they are assigned to resolve more critical high-stake situations. In financial markets, microfinance institutions often offer group loans that start small and increase in size upon successful repayment by all members of the group. For entrepreneurship, the success of a startup venture requires the effort and input from all partners with various expertise and resources, and the growth path involves starting very small (e.g., little capital) and then progressing through funding rounds in which larger and larger investments are made. In the international affairs arena, leaders of international organizations also adopt the gradualist approach to facilitate international coordination. Abbott and Snidal (2002) highlight the function of the gradualist approach in the development of the 1997 Organization for Economic Cooperation and Development Anti Bribery Convention. Combating bribery of foreign public officials in international business transactions requires inputs from all countries involved; otherwise, the corrupted business can easily circumvent the campaign and exercise in the countries with least effort on anticorruption. Thus, the international antibribery collaboration reflects a multiplayer coordination problem, which involves the strategic uncertainty about the effort level other partner countries are willing to exert. Breaking the final goal into a series of steps has allowed the countries to avoid the failure in previous big-bang approaches, which sought an immediate international treaty requiring others states to adopt the equivalent antibribery regulation as in the United States.
The following have contributed to this page: Dr. Plamen Nikolov