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Knowledge Sharing and Individual Performance

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Using two years of data from a Japanese bank, we present statistical evidence that knowledge management works. (1) Workers who consumed more documents shared via a Q&A platform exhibited roughly a 10% …

Using two years of data from a Japanese bank, we present statistical evidence that knowledge management works. (1) Workers who consumed more documents shared via a Q&A platform exhibited roughly a 10% productivity gain. (2) These gains accrue disproportionately to less skilled workers. (3) Workers who answered more questions were promoted at a faster rate.

Presented at NBER Economics of IT Workshop July 22 - 23, 2011.

Published in: Business, Technology

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  • 1. The Introduction The Data Existence of PPDs Identification Strategy IV IV Conclusion Knowledge Sharing & Individual Performance: Evidence from a Japanese Bank Marco Di Maggio and Marshall Van Alstyne MIT Economics Dept. & Boston University and MIT NSF Grant #0925004Knowledge and Performance MIT Economics Dept. & Boston University and MIT
  • 2. The Introduction The Data Existence of PPDs Identification Strategy IV IV ConclusionThe Motivation: Productivity In U.S. manufacturing, the average difference in productivity between the highest and lowest percentiles is roughly 1.92 and the autoregressive coefficients are on the order of 0.6 to 0.8.Knowledge and Performance MIT Economics Dept. & Boston University and MIT
  • 3. The Introduction The Data Existence of PPDs Identification Strategy IV IV ConclusionThe Motivation: Productivity In U.S. manufacturing, the average difference in productivity between the highest and lowest percentiles is roughly 1.92 and the autoregressive coefficients are on the order of 0.6 to 0.8. Existing research has linked productivity to a number of factors e.g. technology, demand, human capital and market structure.Knowledge and Performance MIT Economics Dept. & Boston University and MIT
  • 4. The Introduction The Data Existence of PPDs Identification Strategy IV IV ConclusionThe Motivation: Productivity In U.S. manufacturing, the average difference in productivity between the highest and lowest percentiles is roughly 1.92 and the autoregressive coefficients are on the order of 0.6 to 0.8. Existing research has linked productivity to a number of factors e.g. technology, demand, human capital and market structure. However, to create persistent performance differences the advantageous inner workings must be difficult to imitate.Knowledge and Performance MIT Economics Dept. & Boston University and MIT
  • 5. The Introduction The Data Existence of PPDs Identification Strategy IV IV ConclusionThe Motivation: Productivity This suggests that performance variation might be due to management practices, communication, and individual talent which are softer and more informal than factors identified in the literature.Knowledge and Performance MIT Economics Dept. & Boston University and MIT
  • 6. The Introduction The Data Existence of PPDs Identification Strategy IV IV ConclusionThe Motivation: Productivity This suggests that performance variation might be due to management practices, communication, and individual talent which are softer and more informal than factors identified in the literature. Main empirical challenge for economics: the absence of high-quality data on performance and individual practices.Knowledge and Performance MIT Economics Dept. & Boston University and MIT
  • 7. The Introduction The Data Existence of PPDs Identification Strategy IV IV ConclusionThe Motivation: Productivity This suggests that performance variation might be due to management practices, communication, and individual talent which are softer and more informal than factors identified in the literature. Main empirical challenge for economics: the absence of high-quality data on performance and individual practices. We have very fine-grained data including every database access and all individual productivity of bank loan officers for two years.Knowledge and Performance MIT Economics Dept. & Boston University and MIT
  • 8. The Introduction The Data Existence of PPDs Identification Strategy IV IV ConclusionThe Question Does access to shared information increase the productivity of knowledge workers? Consider a knowledge management platform for shared documents and Q&AKnowledge and Performance MIT Economics Dept. & Boston University and MIT
  • 9. The Introduction The Data Existence of PPDs Identification Strategy IV IV ConclusionOutline 1. Data 2. Existence of Persistent Performance Differences (PPDs) 3. Identification Strategy 4. Main Results 5. Robestness 6. Concluding RemarksKnowledge and Performance MIT Economics Dept. & Boston University and MIT
  • 10. The Introduction The Data Existence of PPDs Identification Strategy IV IV ConclusionThe Data Scope: We collected terabytes of data containing every access to every document and Q&A exchange at a major Japanese bank. Observations: Our data include all loan officers, roughly 2800 people, located across 290 branches. We also have individual loan performance data, and tenure at the bank. Multi-Level:We also have branch data. Branches vary in size (7-110) and primary type of business, mainly due to location. Work Context: Six main groups to which each loan officer might belong: large existing account, small existing account, restructuring group, public sector, new strategic account, and new account. Time period: October 2006 - September 2008.Knowledge and Performance MIT Economics Dept. & Boston University and MIT
  • 11. The Introduction The Data Existence of PPDs Identification Strategy IV IV ConclusionIndividual Output Measures Quantitative Qualitative bank gross profit customer service individual loan profit contribution to branch liquid deposit profit operations loan volume contribution to reduced disclosed debt organization operations reduced estimated losses loan reinforcement Bank headquarters set branch Branch manager evaluation of targets, passed to loan officers. individual officers. Loan officer performance is reviewed semi-annually.Knowledge and Performance MIT Economics Dept. & Boston University and MIT
  • 12. The Introduction The Data Existence of PPDs Identification Strategy IV IV ConclusionQ&A ExampleKnowledge and Performance MIT Economics Dept. & Boston University and MIT
  • 13. The Introduction The Data Existence of PPDs Identification Strategy IV IV ConclusionA Document Corporate  Banking  Community   Library  /  View  Document   Return  to  Documents  list  /  Bookmark   [Links]  "Se?lement  products  (corporate)"   list  and  "Personnel  in  charge"  list   2006/11/14    10:50:56    (posted  by)  Corporate  se?lement   products  division,  product  development  group   [Last  update]  2010/10/18   [Body]  This  is  the  link  list  of  the  se?lement  products  (services)  pages.  Check  this  list   first  if  you  want  to  know  about  "processes",  "forms",  and  "proposal  templates"  of   the  se?lement  products!  If  you  want  to  inquire  about  those  products,  see   "personnel  in  charge"  list.   [TIPS]   •  There  are  "product  links  in  alphabeVcal  order"  and  "product  links  by  category".   You  can  find  products  from  category  in  case  you  dont  know  the  exact  name.   •  The  proposal  templates  are  renewed  for  the  8  key  products  and  4  new  products.   The  templates  present  soluVons  to  customers  issues,  using  pictures  and  real   screens/forms/papers  for  easy  understanding.   •  The  direct  links  to  those  proposal  are  available  at  the  top  of  the  list.   [How  to  get  there]   Portal  top  page  >  Divisions  >  Corporate  business  navigaVon  >  Products  and  Services  >   Se?lement   [Inquiry]   [NoVce]   See  "Personnel  in  charge"  list.   "Personnel  in  charge"  list  is  added.   [Update  history]   2010/10/18    .......   2010/10/1  .......   2010/9/8  .......   2010/9/7  .......   .......   A?achment  file        Se?lement  products  and   personnel  in  charge  list  20101019.xls  (429KB)  Knowledge and Performance MIT Economics Dept. & Boston University and MIT
  • 14. The Introduction The Data Existence of PPDs Identification Strategy IV IV ConclusionAlternate Explanations Table: Competing Hypotheses Questions Answers H1:People who ask questions get H3:People who answer questions useful advice, reduce search costs signal their greater expertise and are more productive. and are more productive. H2:People who ask questions are H4:People who answer questions inexperienced, less able and are distracted from their work are less productive. and are less productive.Knowledge and Performance MIT Economics Dept. & Boston University and MIT
  • 15. The Introduction The Data Existence of PPDs Identification Strategy IV IV ConclusionAlternate Explanations Table: Causal Hypotheses Questions Answers H1:People who ask questions get H3:People who answer questions useful advice, reduce search costs signal their greater expertise and are more productive. and are more productive. H2:People who ask questions are H4:People who answer questions inexperienced, less able and are distracted from their work are less productive. and are less productive.Knowledge and Performance MIT Economics Dept. & Boston University and MIT
  • 16. The Introduction The Data Existence of PPDs Identification Strategy IV IV ConclusionAlternate Explanations Table: Selection Hypotheses Questions Answers H1:People who ask questions get H3:People who answer questions useful advice, reduce search costs signal their greater expertise and are more productive. and are more productive. H2:People who ask questions are H4:People who answer questions inexperienced, less able and are distracted from their work are less productive. and are less productive.Knowledge and Performance MIT Economics Dept. & Boston University and MIT
  • 17. The Introduction The Data Existence of PPDs Identification Strategy IV IV ConclusionSummary of the Descriptive Statistics Individual loan officers (2800) On average: 500 (400) documents consulted every term, 78 (116) questions posted and 300 (150) answers provided. On average: a score of 50 (22) for total performance and 31 (17) for quantitative productivity; 10 years of previous experience in the bank. Branches (290) From 7 to 110 loan officers in each branch. Corr(Y , I d )=.03; Corr(Y , I q )=−.1;Corr(Y , I a )=.3.Knowledge and Performance MIT Economics Dept. & Boston University and MIT
  • 18. The Introduction The Data Existence of PPDs Identification Strategy IV IV ConclusionFacts: Individual Productivity Differences Kernel Density Estimation Te rm 1 Te rm 2 .03 .02 .01 Density 0 Te rm 3 Te rm 4 .03 .02 .01 0 0 50 100 0 50 100 Total Productivity Density Kernel DensityKnowledge and Performance MIT Economics Dept. & Boston University and MIT
  • 19. The Introduction The Data Existence of PPDs Identification Strategy IV IV ConclusionFacts: Heterogeneity within and between GroupsKnowledge and Performance MIT Economics Dept. & Boston University and MIT
  • 20. The Introduction The Data Existence of PPDs Identification Strategy IV IV ConclusionIndividual Transition Probabilities Are Sticky Table: Transition Probabilities for Total Performance <5% 5-25 25-50 50-75 75-95 > 95% Total <5% 14.78 29.29 29.55 16.89 7.12 2.37 100 5-25 6.42 25.61 28.62 22.95 13.25 3.14 100 25-50 2.41 19.94 28.06 27.12 18.24 4.24 100 50-75 1.59 13.81 26.44 29.33 21.6 7.22 100 75-95 1.64 9.83 20.61 25.73 30.58 11.6 100 > 95% 1.13 4.51 17.46 21.69 35.77 19.44 100 For a person in bottom 5%, there is a ∼ 15% chance he remains there, a ∼ 44% chance he remains in the lowest quartile, but only a ∼ 2% chance he jumps to the top 5%.Knowledge and Performance MIT Economics Dept. & Boston University and MIT
  • 21. The Introduction The Data Existence of PPDs Identification Strategy IV IV ConclusionFacts: Lower performers have fewer answers but morequestions.Knowledge and Performance MIT Economics Dept. & Boston University and MIT
  • 22. The Introduction The Data Existence of PPDs Identification Strategy IV IV ConclusionEmpirical Model d q a Pijkt = α1 Iijt + α2 Iijt + α3 Iijt + βXijt + ε ijt (1) Pijkt : Total performance of officer i at branch j in group k at time t. d Iijt : Number of documents accessed by officer i in branch j in term t. I q : Number of questions. I a : Number of answers provided. Xijt : tenure and indicator for previous experience of officer i; time, branch, group and individual fixed effects. We also allow for non-linear effects and interactions.Knowledge and Performance MIT Economics Dept. & Boston University and MIT
  • 23. The Introduction The Data Existence of PPDs Identification Strategy IV IV ConclusionThreats to Identification Correlation with unobserved shocks over time;Knowledge and Performance MIT Economics Dept. & Boston University and MIT
  • 24. The Introduction The Data Existence of PPDs Identification Strategy IV IV ConclusionThreats to Identification Correlation with unobserved shocks over time; Solution: we include Time Fixed Effects.Knowledge and Performance MIT Economics Dept. & Boston University and MIT
  • 25. The Introduction The Data Existence of PPDs Identification Strategy IV IV ConclusionThreats to Identification Correlation with unobserved shocks over time; Solution: we include Time Fixed Effects. Information usage is bundled with many other branch-level management practices.Knowledge and Performance MIT Economics Dept. & Boston University and MIT
  • 26. The Introduction The Data Existence of PPDs Identification Strategy IV IV ConclusionThreats to Identification Correlation with unobserved shocks over time; Solution: we include Time Fixed Effects. Information usage is bundled with many other branch-level management practices. Solution: we include Branch Fixed Effects.Knowledge and Performance MIT Economics Dept. & Boston University and MIT
  • 27. The Introduction The Data Existence of PPDs Identification Strategy IV IV ConclusionThreats to Identification Correlation with unobserved shocks over time; Solution: we include Time Fixed Effects. Information usage is bundled with many other branch-level management practices. Solution: we include Branch Fixed Effects. Correlation with unobserved individual characteristics.Knowledge and Performance MIT Economics Dept. & Boston University and MIT
  • 28. The Introduction The Data Existence of PPDs Identification Strategy IV IV ConclusionThreats to Identification Correlation with unobserved shocks over time; Solution: we include Time Fixed Effects. Information usage is bundled with many other branch-level management practices. Solution: we include Branch Fixed Effects. Correlation with unobserved individual characteristics. Solution: we shall show Individual Fixed Effects.Knowledge and Performance MIT Economics Dept. & Boston University and MIT
  • 29. The Introduction The Data Existence of PPDs Identification Strategy IV IV ConclusionThreats to Identification Correlation with unobserved shocks over time; Solution: we include Time Fixed Effects. Information usage is bundled with many other branch-level management practices. Solution: we include Branch Fixed Effects. Correlation with unobserved individual characteristics. Solution: we shall show Individual Fixed Effects. Our measure of information access may be noisy.Knowledge and Performance MIT Economics Dept. & Boston University and MIT
  • 30. The Introduction The Data Existence of PPDs Identification Strategy IV IV ConclusionThreats to Identification Correlation with unobserved shocks over time; Solution: we include Time Fixed Effects. Information usage is bundled with many other branch-level management practices. Solution: we include Branch Fixed Effects. Correlation with unobserved individual characteristics. Solution: we shall show Individual Fixed Effects. Our measure of information access may be noisy. Solution: our estimates identify a lower bound.Knowledge and Performance MIT Economics Dept. & Boston University and MIT
  • 31. The Introduction The Data Existence of PPDs Identification Strategy IV IV ConclusionThreats to Identification Correlation with unobserved shocks over time; Solution: we include Time Fixed Effects. Information usage is bundled with many other branch-level management practices. Solution: we include Branch Fixed Effects. Correlation with unobserved individual characteristics. Solution: we shall show Individual Fixed Effects. Our measure of information access may be noisy. Solution: our estimates identify a lower bound. EndogeneityKnowledge and Performance MIT Economics Dept. & Boston University and MIT
  • 32. The Introduction The Data Existence of PPDs Identification Strategy IV IV ConclusionThreats to Identification Correlation with unobserved shocks over time; Solution: we include Time Fixed Effects. Information usage is bundled with many other branch-level management practices. Solution: we include Branch Fixed Effects. Correlation with unobserved individual characteristics. Solution: we shall show Individual Fixed Effects. Our measure of information access may be noisy. Solution: our estimates identify a lower bound. Endogeneity Solution: we propose an Instrumental Variable approach.Knowledge and Performance MIT Economics Dept. & Boston University and MIT
  • 33. The Introduction The Data Existence of PPDs Identification Strategy IV IV ConclusionDependent Variable: Log of Performance Table: Panel Model I – Fixed Effects Estimates Log(Tot. Performance) (1) (2) (3) (4) (5) Log(Number Documents) 0.0493*** 0.0562*** 0.0226** 0.0300*** 0.0216** (0.0103) (0.0106) (0.0104) (0.0107) (0.0109) Log(Number Questions) -0.0505*** -0.0335*** -0.0246*** -0.0217*** -0.0195*** (0.00452) (0.00506) (0.00498) (0.00504) (0.00519) Log(Number Answers) 0.0508*** 0.00848 0.00533 0.00337 0.00475 (0.00301) (0.0065) (0.0064) (0.00643) (0.00692) Log(Tenure) 0.0632*** 0.0674*** 0.105*** 0.100*** 0.1000*** (0.0086) (0.00862) (0.00848) (0.00827) (0.00812) College 0.108*** 0.113*** 0.105*** 0.0924*** 0.0891*** (0.0276) (0.0276) (0.0263) (0.0258) (0.0255) Time Fixed Effects YES YES YES YES Group Fixed Effects YES YES YES Branch Fixed Effects YES YES Time * Branch Fixed Effects YES Observations 9,805 9,805 9,805 9,805 9,805 Number of Officers 2,916 2,916 2,916 2,916 2,916 R-squared 0.0629 0.0582 0.1567 0.3049 0.467 Tenure and college freshness both significant.Knowledge and Performance MIT Economics Dept. & Boston University and MIT
  • 34. The Introduction The Data Existence of PPDs Identification Strategy IV IV ConclusionDependent Variable: Log of Performance Table: Panel Model I – Fixed Effects Estimates Log(Tot. Performance) (1) (2) (3) (4) (5) Log(Number Documents) 0.0493*** 0.0562*** 0.0226** 0.0300*** 0.0216** (0.0103) (0.0106) (0.0104) (0.0107) (0.0109) Log(Number Questions) -0.0505*** -0.0335*** -0.0246*** -0.0217*** -0.0195*** (0.00452) (0.00506) (0.00498) (0.00504) (0.00519) Log(Number Answers) 0.0508*** 0.00848 0.00533 0.00337 0.00475 (0.00301) (0.0065) (0.0064) (0.00643) (0.00692) Log(Tenure) 0.0632*** 0.0674*** 0.105*** 0.100*** 0.1000*** (0.0086) (0.00862) (0.00848) (0.00827) (0.00812) College 0.108*** 0.113*** 0.105*** 0.0924*** 0.0891*** (0.0276) (0.0276) (0.0263) (0.0258) (0.0255) Time Fixed Effects YES YES YES YES Group Fixed Effects YES YES YES Branch Fixed Effects YES YES Time * Branch Fixed Effects YES Observations 9,805 9,805 9,805 9,805 9,805 Number of Officers 2,916 2,916 2,916 2,916 2,916 R-squared 0.0629 0.0582 0.1567 0.3049 0.467 Tenure and college freshness both significant. One standard deviation rise in document access predicts 11% rise in output.Knowledge and Performance MIT Economics Dept. & Boston University and MIT
  • 35. The Introduction The Data Existence of PPDs Identification Strategy IV IV ConclusionDependent Variable: Log of Performance Table: Panel Model I – Fixed Effects Estimates Log(Tot. Performance) (1) (2) (3) (4) (5) Log(Number Documents) 0.0493*** 0.0562*** 0.0226** 0.0300*** 0.0216** (0.0103) (0.0106) (0.0104) (0.0107) (0.0109) Log(Number Questions) -0.0505*** -0.0335*** -0.0246*** -0.0217*** -0.0195*** (0.00452) (0.00506) (0.00498) (0.00504) (0.00519) Log(Number Answers) 0.0508*** 0.00848 0.00533 0.00337 0.00475 (0.00301) (0.0065) (0.0064) (0.00643) (0.00692) Log(Tenure) 0.0632*** 0.0674*** 0.105*** 0.100*** 0.1000*** (0.0086) (0.00862) (0.00848) (0.00827) (0.00812) College 0.108*** 0.113*** 0.105*** 0.0924*** 0.0891*** (0.0276) (0.0276) (0.0263) (0.0258) (0.0255) Time Fixed Effects YES YES YES YES Group Fixed Effects YES YES YES Branch Fixed Effects YES YES Time * Branch Fixed Effects YES Observations 9,805 9,805 9,805 9,805 9,805 Number of Officers 2,916 2,916 2,916 2,916 2,916 R-squared 0.0629 0.0582 0.1567 0.3049 0.467 Tenure and college freshness both significant. One standard deviation rise in document access predicts 11% rise in output. One standard deviation rise in questions predicts 5% fall in output.Knowledge and Performance MIT Economics Dept. & Boston University and MIT
  • 36. The Introduction The Data Existence of PPDs Identification Strategy IV IV ConclusionLoan Officer Fixed Effects Table: Panel Model II - Individual Fixed Effects Log(Tot. Performance) (1) (2) (3) (4) (5) Log(Number Documents) 0.0480*** 0.0430*** 0.0467*** 0.0292* 0.0374** (0.0104) (0.0161) (0.0172) (0.0171) (0.0178) Log(Number Questions) -0.0543*** -0.0408*** -0.0176** -0.0153** -0.0104 (0.00452) (0.00664) (0.00708) (0.00702) (0.00715) Log(Number Answers) 0.0511*** 0.0519*** -0.00604 -0.00668 -0.0062 (0.00301) (0.00326) (0.00741) (0.00733) (0.00748) Individual Fixed Effects YES YES YES YES Time Fixed Effects YES YES YES Group Fixed Effects YES YES Branch Fixed Effects YES Observations 9,806 9,806 9,806 9,806 9,806 R-squared 0.032 0.048 0.059 0.081 0.157 Number of questions is no longer significant.Knowledge and Performance MIT Economics Dept. & Boston University and MIT
  • 37. The Introduction The Data Existence of PPDs Identification Strategy IV IV ConclusionLoan Officer Fixed Effects Table: Panel Model II - Individual Fixed Effects Log(Tot. Performance) (1) (2) (3) (4) (5) Log(Number Documents) 0.0480*** 0.0430*** 0.0467*** 0.0292* 0.0374** (0.0104) (0.0161) (0.0172) (0.0171) (0.0178) Log(Number Questions) -0.0543*** -0.0408*** -0.0176** -0.0153** -0.0104 (0.00452) (0.00664) (0.00708) (0.00702) (0.00715) Log(Number Answers) 0.0511*** 0.0519*** -0.00604 -0.00668 -0.0062 (0.00301) (0.00326) (0.00741) (0.00733) (0.00748) Individual Fixed Effects YES YES YES YES Time Fixed Effects YES YES YES Group Fixed Effects YES YES Branch Fixed Effects YES Observations 9,806 9,806 9,806 9,806 9,806 R-squared 0.032 0.048 0.059 0.081 0.157 Number of questions is no longer significant. But, effect of document access is even larger.Knowledge and Performance MIT Economics Dept. & Boston University and MIT
  • 38. The Introduction The Data Existence of PPDs Identification Strategy IV IV ConclusionQuantile Regression Estimates d q a Quant θ (yijt |·) = α1θ Iijt + α2θ Iijt + α3θ Iijt + β θ Xijt + ε ijt (2) All variables are as previously defined. Bootstrapped standard errors based on 1000 replications. Effect of document, question, and answer access on loan officer performance at the θ th conditional quantile of log performance is measured by vector αθ .Knowledge and Performance MIT Economics Dept. & Boston University and MIT
  • 39. The Introduction The Data Existence of PPDs Identification Strategy IV IV Conclusion Table: Quantile Regression Estimates Log(Total Performance) 10th 25th 50th 75th 90th Log(Number Documents) 0.0391** 0.0409*** 0.0250* 0.002 -0.012 (0.017) (0.012) (0.014) (0.013) (0.010) Log(Number Questions) -0.0207*** -0.0251*** -0.0372*** -0.0361*** -0.0164*** (0.007) (0.008) (0.007) (0.006) (0.006) Log(Number Answers) 0.004 0.008 0.013 0.0209** 0.006 (0.010) (0.012) (0.012) (0.009) (0.007) Observations 9,805 9,805 9,805 9,805 9,805 Effect of document access is 0 for top two quantiles, but positive and significant for bottom three quantiles. A 10% increase is associated with a rise in performance of at least 20%.Knowledge and Performance MIT Economics Dept. & Boston University and MIT
  • 40. The Introduction The Data Existence of PPDs Identification Strategy IV IV Conclusion Table: Quantile Regression Estimates Log(Total Performance) 10th 25th 50th 75th 90th Log(Number Documents) 0.0391** 0.0409*** 0.0250* 0.002 -0.012 (0.017) (0.012) (0.014) (0.013) (0.010) Log(Number Questions) -0.0207*** -0.0251*** -0.0372*** -0.0361*** -0.0164*** (0.007) (0.008) (0.007) (0.006) (0.006) Log(Number Answers) 0.004 0.008 0.013 0.0209** 0.006 (0.010) (0.012) (0.012) (0.009) (0.007) Observations 9,805 9,805 9,805 9,805 9,805 Effect of document access is 0 for top two quantiles, but positive and significant for bottom three quantiles. A 10% increase is associated with a rise in performance of at least 20%. Effect of questions is negative and significant across all quantiles.Knowledge and Performance MIT Economics Dept. & Boston University and MIT
  • 41. The Introduction The Data Existence of PPDs Identification Strategy IV IV Conclusion Table: Quantile Regression Estimates Log(Total Performance) 10th 25th 50th 75th 90th Log(Number Documents) 0.0391** 0.0409*** 0.0250* 0.002 -0.012 (0.017) (0.012) (0.014) (0.013) (0.010) Log(Number Questions) -0.0207*** -0.0251*** -0.0372*** -0.0361*** -0.0164*** (0.007) (0.008) (0.007) (0.006) (0.006) Log(Number Answers) 0.004 0.008 0.013 0.0209** 0.006 (0.010) (0.012) (0.012) (0.009) (0.007) Observations 9,805 9,805 9,805 9,805 9,805 Effect of document access is 0 for top two quantiles, but positive and significant for bottom three quantiles. A 10% increase is associated with a rise in performance of at least 20%. Effect of questions is negative and significant across all quantiles. Information access appears to help loan officers in the left tail of the distribution but is not significant for officers in the right tail.Knowledge and Performance MIT Economics Dept. & Boston University and MIT
  • 42. The Introduction The Data Existence of PPDs Identification Strategy IV IV ConclusionDependent Variable: Qualitative Measure Table: Panel Model III - Qualitative Performance Measure Log(Qualitative Performance) (1) (2) (3) (4) (5) Log(Number Documents) 0.0587*** 0.0616*** 0.0416*** 0.0382*** 0.0459*** (0.00872) (0.00866) (0.00866) (0.00894) (0.0157) Log(Number Questions) -0.0812*** -0.0251*** -0.0171*** -0.0188*** -0.00715 (0.00383) (0.00421) (0.00419) (0.00427) (0.0063) Log(Number Answers) 0.139*** 0.00157 -0.001 4.76E-05 -0.00969 (0.00271) (0.00554) (0.00551) (0.00554) (0.00659) Log(Tenure) 0.0648*** 0.0791*** 0.100*** 0.104*** (0.0069) (0.00683) (0.00687) (0.00676) College 0.0654*** 0.0752*** 0.0747*** 0.0641*** (0.0224) (0.022) (0.0214) (0.0212) Time Fixed Effects YES YES YES YES Group Fixed Effects YES YES YES Branch Fixed Effects YES YES Individual Fixed Effects YES Observations 9,801 9,801 9,801 9,801 9,801 R-squared 0.3023 0.3692 0.3716 0.3965 0.421 Restricting the model to qualitative estimates of performance leaves the key results unchanged.Knowledge and Performance MIT Economics Dept. & Boston University and MIT
  • 43. The Introduction The Data Existence of PPDs Identification Strategy IV IV Conclusion Promotion & AdvancementKnowledge and Performance MIT Economics Dept. & Boston University and MIT
  • 44. The Introduction The Data Existence of PPDs Identification Strategy IV IV ConclusionPromotion Table: Promotion Probability Promotion (Probit) (1) (2) (3) (4) Number Documents 3.63E-06 3.40E-06 4.61E-06 9.43E-05 (3.77E-06) (4.00E-06) (3.56E-06) (0.00021) Number Questions -0.00172** -0.00174** -0.00154** -0.00245** (0.000719) (0.000718) (0.00069) (0.00099) Number Answers 0.00106*** 0.00107*** 0.00106*** 0.00153*** (2.88E-04) (2.87E-04) (0.00029) (0.00041) Lag Productivity 0.00194 0.00177 0.00152 0.00146 (0.00205) (0.00203) (0.00207) (0.00252) Tenure 0.107*** 0.107*** 0.108*** 0.148*** (0.00963) (0.00967) (0.00965) (0.0164) College -0.227 -0.229 -0.22 -0.294 (0.254) (0.254) (0.258) (0.267) Time Fixed Effects YES YES YES Group Fixed Effects YES YES Branch Fixed Effects YES Observations 6,971 6,971 6,971 6,971 We observe just over 200 promotions. Tenure is by far the largest predictor.Knowledge and Performance MIT Economics Dept. & Boston University and MIT
  • 45. The Introduction The Data Existence of PPDs Identification Strategy IV IV ConclusionPromotion Table: Promotion Probability Promotion (Probit) (1) (2) (3) (4) Number Documents 3.63E-06 3.40E-06 4.61E-06 9.43E-05 (3.77E-06) (4.00E-06) (3.56E-06) (0.00021) Number Questions -0.00172** -0.00174** -0.00154** -0.00245** (0.000719) (0.000718) (0.00069) (0.00099) Number Answers 0.00106*** 0.00107*** 0.00106*** 0.00153*** (2.88E-04) (2.87E-04) (0.00029) (0.00041) Lag Productivity 0.00194 0.00177 0.00152 0.00146 (0.00205) (0.00203) (0.00207) (0.00252) Tenure 0.107*** 0.107*** 0.108*** 0.148*** (0.00963) (0.00967) (0.00965) (0.0164) College -0.227 -0.229 -0.22 -0.294 (0.254) (0.254) (0.258) (0.267) Time Fixed Effects YES YES YES Group Fixed Effects YES YES Branch Fixed Effects YES Observations 6,971 6,971 6,971 6,971 We observe just over 200 promotions. Tenure is by far the largest predictor. Lagged productivity is not significant.Knowledge and Performance MIT Economics Dept. & Boston University and MIT
  • 46. The Introduction The Data Existence of PPDs Identification Strategy IV IV ConclusionPromotion Table: Promotion Probability Promotion (Probit) (1) (2) (3) (4) Number Documents 3.63E-06 3.40E-06 4.61E-06 9.43E-05 (3.77E-06) (4.00E-06) (3.56E-06) (0.00021) Number Questions -0.00172** -0.00174** -0.00154** -0.00245** (0.000719) (0.000718) (0.00069) (0.00099) Number Answers 0.00106*** 0.00107*** 0.00106*** 0.00153*** (2.88E-04) (2.87E-04) (0.00029) (0.00041) Lag Productivity 0.00194 0.00177 0.00152 0.00146 (0.00205) (0.00203) (0.00207) (0.00252) Tenure 0.107*** 0.107*** 0.108*** 0.148*** (0.00963) (0.00967) (0.00965) (0.0164) College -0.227 -0.229 -0.22 -0.294 (0.254) (0.254) (0.258) (0.267) Time Fixed Effects YES YES YES Group Fixed Effects YES YES Branch Fixed Effects YES Observations 6,971 6,971 6,971 6,971 We observe just over 200 promotions. Tenure is by far the largest predictor. Lagged productivity is not significant. Loan officers might be signaling via answers in the data.Knowledge and Performance MIT Economics Dept. & Boston University and MIT
  • 47. The Introduction The Data Existence of PPDs Identification Strategy IV IV ConclusionSummary of Panel Results A standard deviation increase in information access is associated with an increase in total and qualitative performance of 6–10%. A standard deviation increase in the number of questions is associated with a reduction in performance of 4%, while an increase in answers predicts a performance rise of 2%. The probability of being promoted is positively correlated with information production and negatively correlated with information gathering.Knowledge and Performance MIT Economics Dept. & Boston University and MIT
  • 48. The Introduction The Data Existence of PPDs Identification Strategy IV IV ConclusionIdentification Strategy: Exogenous Variation We observe 650 loan officers switching branch. This is an involuntary transfer due to a Japanese term limit law to prevent corruption. This allows us to disentangle the individual fixed effects from the branch fixed effects. The identification assumption: the rotation and the allocation to a new branch are not correlated with individual productivity. ”Job rotation is quite regular thing for RMs, just like the solar system rotate around the sun.” It is not performance based.Knowledge and Performance MIT Economics Dept. & Boston University and MIT
  • 49. The Introduction The Data Existence of PPDs Identification Strategy IV IV ConclusionCausal Model: The Term Limit We can use the average information access at the previous branch (excluding officer i) at t − 1 as an instrument for information access of officer i at time t. Motivation: branches differ in their cultural inclinations to use the knowledge platform. Branch 1 instrument correlated with information consumption and productivity at branch 1 but not branch 2.Knowledge and Performance MIT Economics Dept. & Boston University and MIT
  • 50. The Introduction The Data Existence of PPDs Identification Strategy IV IV ConclusionCausal Model: The Term Limit We can use the average information access at the previous branch (excluding officer i) at t − 1 as an instrument for information access of officer i at time t. Motivation: branches differ in their cultural inclinations to use the knowledge platform. Branch 1 instrument correlated with information consumption and productivity at branch 1 but not branch 2. It is invalid if there exists correlation between unobserved ability and original assignment to branches.Knowledge and Performance MIT Economics Dept. & Boston University and MIT
  • 51. The Introduction The Data Existence of PPDs Identification Strategy IV IV ConclusionCausal Model: The Term Limit We can use the average information access at the previous branch (excluding officer i) at t − 1 as an instrument for information access of officer i at time t. Motivation: branches differ in their cultural inclinations to use the knowledge platform. Branch 1 instrument correlated with information consumption and productivity at branch 1 but not branch 2. It is invalid if there exists correlation between unobserved ability and original assignment to branches. It is invalid if the effect of the loan officer on the branch practices is too strong.Knowledge and Performance MIT Economics Dept. & Boston University and MIT
  • 52. The Introduction The Data Existence of PPDs Identification Strategy IV IV ConclusionCausal Model: The Term Limit We can use the average information access at the previous branch (excluding officer i) at t − 1 as an instrument for information access of officer i at time t. Motivation: branches differ in their cultural inclinations to use the knowledge platform. Branch 1 instrument correlated with information consumption and productivity at branch 1 but not branch 2. It is invalid if there exists correlation between unobserved ability and original assignment to branches. It is invalid if the effect of the loan officer on the branch practices is too strong. It is invalid if they learned some other practices from the previous branch.Knowledge and Performance MIT Economics Dept. & Boston University and MIT
  • 53. The Introduction The Data Existence of PPDs Identification Strategy IV IV Conclusion Job RotationKnowledge and Performance MIT Economics Dept. & Boston University and MIT
  • 54. The Introduction The Data Existence of PPDs Identification Strategy IV IV ConclusionSwitching Increases Demand for Information Table: Effect of Switching on Document Access Log(Number Documents) (1) (2) (3) (4) Switch 0.0199** 0.0218** (0.009) (0.009) After Switch 0.0125 0.0150* (0.008) (0.008) Log(Tenure) -0.0218 -0.0217 (0.014) (0.014) College 0.278*** 0.279*** (0.042) (0.042) Time Fixed Effects YES YES YES YES Group Fixed Effects YES YES YES YES Branch Fixed Effects YES YES YES YES Individual Fixed Effects YES YES R-squared 0.3342 0.347 0.334 0.346 Observations 10,055 10,055 10,055 10,055 Increase in demand for documents on changing jobs is consistent with a learning hypothesis that diminishes over time.Knowledge and Performance MIT Economics Dept. & Boston University and MIT
  • 55. The Introduction The Data Existence of PPDs Identification Strategy IV IV Conclusion Table: Effect of Switching on Performance Log(Total Performance) (1) (2) (3) (4) (5) (6) (7) Switch -0.111*** -0.0317 -0.118*** -0.0461* -0.108*** (0.012) (0.027) (0.012) (0.027) (0.013) Switch*Tenure -0.00778*** -0.00726*** (0.002) (0.002) After Switch -0.0889*** -0.0915*** (0.010) (0.012) Log(Number Documents) 0.0470*** 0.0469*** 0.0287*** 0.0283*** 0.0274** 0.0387** 0.0348** (0.010) (0.010) (0.010) (0.010) (0.010) (0.018) (0.018) Log(Number Questions) -0.0515*** -0.0516*** -0.0210*** -0.0210*** -0.0205*** -0.00851 -0.0078 (0.005) (0.005) (0.005) (0.005) (0.005) (0.007) (0.007) Log(Number Answers) 0.0569*** 0.0571*** 0.0059 0.00618 0.00476 -0.00394 -0.0052 (0.003) (0.003) (0.006) (0.006) (0.006) (0.007) (0.007) Log(Tenure) 0.0636*** 0.0700*** 0.0994*** 0.105*** 0.0994*** (0.009) (0.009) (0.008) (0.008) (0.008) College 0.106*** 0.104*** 0.0915*** 0.0907*** 0.0897*** (0.027) (0.028) (0.026) (0.026) (0.026) Time Fixed Effects YES YES YES YES YES Group Fixed Effects YES YES YES YES YES Branch Fixed Effects YES YES YES YES YES Individual Fixed Effects YES YES Observations 9,805 9,805 9,805 9,805 9,805 9,805 9,805 R-squared 0.0698 0.0701 0.3078 0.308 0.3054 0.166 0.165 Switching jobs appears to significantly reduce performance.Knowledge and Performance MIT Economics Dept. & Boston University and MIT
  • 56. The Introduction The Data Existence of PPDs Identification Strategy IV IV ConclusionInstrument: Variation in branch attitudes toward information access Table: First Stages Documents Answers Questions Documents Prev Branch 7.398*** -0.654* -0.214 (0.744) (0.362) (0.248) Answers Prev Branch -14.439*** 4.190*** -1.637** (2.282) (1.112) (0.757) Questions Prev Branch 8.420*** 2.271** 7.437*** (2.157) (1.052) (0.718) Tenure -10.419*** -4.132*** -2.688*** (2.622) (1.278) (0.873) College 54.021 19.242 -2.409 (69.580) (33.915) (23.161) F-Test 50.289 16.774 49.343 Time Fixed effects YES YES YES Group Fixed Effects YES YES YES Observations 618 618 618 Document IV specification F-test >> 20 ⇒ instrument is not weak. Tenure reduces demand for information.Knowledge and Performance MIT Economics Dept. & Boston University and MIT
  • 57. The Introduction The Data Existence of PPDs Identification Strategy IV IV ConclusionIV: Variation in branch attitudes Table: IV Estimates (1) (2) (3) (4) (5) (6) Total Performance OLS IV OLS IV OLS IV Number Documents -0.00123 0.0197** -0.00138 0.0225*** -0.00347 0.0194** (0.003) (0.008) (0.003) (0.008) (0.003) (0.008) Number Questions -0.0306*** -0.133** -0.0287*** -0.104*** -0.0169** -0.0908*** (0.008) (0.061) (0.008) (0.034) (0.008) (0.033) Number Answers 0.0175*** 0.112 0.0148** 0.0727** 0.0114* 0.0674** (0.007) (0.080) (0.007) (0.036) (0.007) (0.034) Tenure 0.387** 0.871** 0.385** 0.689*** 0.603*** 0.819*** (0.172) (0.382) (0.174) (0.242) (0.183) (0.223) College -3.736 -7.538 -3.714 -6.748 -3.414 -6.015 (4.809) (6.436) (4.806) (5.74) (4.839) (5.544) Time Fixed Effects YES YES YES YES Group Fixed Effects YES YES Observations 618 618 618 618 618 618 OLS estimates of document access n.s. but IV estimates are significant.Knowledge and Performance MIT Economics Dept. & Boston University and MIT
  • 58. The Introduction The Data Existence of PPDs Identification Strategy IV IV ConclusionIV: Variation in branch attitudes Table: IV Estimates (1) (2) (3) (4) (5) (6) Total Performance OLS IV OLS IV OLS IV Number Documents -0.00123 0.0197** -0.00138 0.0225*** -0.00347 0.0194** (0.003) (0.008) (0.003) (0.008) (0.003) (0.008) Number Questions -0.0306*** -0.133** -0.0287*** -0.104*** -0.0169** -0.0908*** (0.008) (0.061) (0.008) (0.034) (0.008) (0.033) Number Answers 0.0175*** 0.112 0.0148** 0.0727** 0.0114* 0.0674** (0.007) (0.080) (0.007) (0.036) (0.007) (0.034) Tenure 0.387** 0.871** 0.385** 0.689*** 0.603*** 0.819*** (0.172) (0.382) (0.174) (0.242) (0.183) (0.223) College -3.736 -7.538 -3.714 -6.748 -3.414 -6.015 (4.809) (6.436) (4.806) (5.74) (4.839) (5.544) Time Fixed Effects YES YES YES YES Group Fixed Effects YES YES Observations 618 618 618 618 618 618 OLS estimates of document access n.s. but IV estimates are significant. Most conservative Model (6) implies causal performance effect of ≥ 5%.Knowledge and Performance MIT Economics Dept. & Boston University and MIT
  • 59. The Introduction The Data Existence of PPDs Identification Strategy IV IV ConclusionLarge Branches Table: IV Estimates: Large Branches (> 50) (1) (2) (3) (4) (5) (6) Total Performance OLS IV OLS IV OLS IV Number Documents 0.007 0.026 0.006 0.0129* 0.004 0.0156** (0.005) (0.042) (0.005) (0.007) (0.005) (0.007) Number Questions -0.0455*** 0.224 -0.0384*** -0.0422** -0.0199** -0.0377* (0.009) (0.683) (0.009) (0.019) (0.010) (0.021) Number Answers 0.0316*** -0.387 0.019 0.020 0.011 0.0392* (0.011) (1.049) (0.013) (0.025) (0.013) (0.021) Tenure 0.243 -0.039 0.211 0.269 0.603** 0.695** (0.272) (1.100) (0.278) (0.269) (0.282) (0.286) College -25.25*** -13.650 -22.65*** -24.11*** -19.94*** -23.44*** (7.129) (33.150) (6.421) (6.669) (7.420) (8.608) Time Fixed Effects YES YES YES YES Group Fixed Effects YES YES Observations 240 240 240 240 240 240 A standard deviation increase in Documents ⇒ increases output by 10%; Questions ⇒ decreases output by 21%; Answers ⇒ increases output by 20%.Knowledge and Performance MIT Economics Dept. & Boston University and MIT
  • 60. The Introduction The Data Existence of PPDs Identification Strategy IV IV ConclusionInterpretation There exists substitution between individual ability and access to others’ knowledge. Local Average Treatment Effect: loan officers very susceptible to the branch environment.Knowledge and Performance MIT Economics Dept. & Boston University and MIT
  • 61. The Introduction The Data Existence of PPDs Identification Strategy IV IV ConclusionResults 1. We document the existence of PPDs within and across branches of a major Japanese bank. Shared information might explain a significant portion of this heterogeneity. 2. Access to information appears to substitute for officers’ ability. Low skilled workers benefit the most from access to others’ information. 3. The likelihood of being promoted is negatively correlated with the number of questions asked (screening effect) and positively correlated with the number of answers provided (signaling effect). 4. Anti-corruption law job rotation reduces loan officers’ performance, explained by destruction of specialized human capital. 5. Controlling for unobserved heterogeneity over time, branches, and officers, a standard deviation increase in information access increases performance by ≈ 10%. Output falls in questions and rises in answers. Findings are robust to exogenous cultural variation.Knowledge and Performance MIT Economics Dept. & Boston University and MIT
  • 62. The Introduction The Data Existence of PPDs Identification Strategy IV IV Conclusion Thank YouKnowledge and Performance MIT Economics Dept. & Boston University and MIT
  • 63. The Introduction The Data Existence of PPDs Identification Strategy IV IV Conclusion Appendices: Further ResultsKnowledge and Performance MIT Economics Dept. & Boston University and MIT
  • 64. The Introduction The Data Existence of PPDs Identification Strategy IV IV ConclusionOfficer Assignment is Weakly Correlated with BranchPerformanceKnowledge and Performance MIT Economics Dept. & Boston University and MIT
  • 65. The Introduction The Data Existence of PPDs Identification Strategy IV IV ConclusionRelative Measure of Information Access We constructed the following relative measures rankij − 1 scoreij = 100 − × 100 number of officersj − 1 For information access, gathering and production, where higher in the rank means more information usage.Knowledge and Performance MIT Economics Dept. & Boston University and MIT
  • 66. The Introduction The Data Existence of PPDs Identification Strategy IV IV ConclusionRelative Measure Table: Panel Model IV - Relative Information Access Total Performance (1) (2) (3) (4) Information Access 0.0158 0.0376*** (0.011) (0.0125) Information Gathering -0.0264** -0.0446 (0.0108) (0.0275) Information Production -0.0246** 0.000149 (0.0113) (0.0284) Tenure 0.483*** 0.474*** 0.475*** 0.460*** (0.0514) (0.0515) (0.0516) (0.0517) College 4.635*** 4.840*** 4.827*** 4.788*** (1.261) (1.26) (1.26) (1.26) Time Fixed Effects YES YES YES YES Group Fixed Effects YES YES YES YES Branch Fixed Effects YES YES YES YES Time * Branch F. E. YES YES YES YES Observations 10,045 10,045 10,045 10,045Knowledge and Performance MIT Economics Dept. & Boston University and MIT

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