Competition, Group Identity, andSocial Networks in the Workplace:Evidence from a Chinese Textile Firm

Using data on team assignment and weekly output for all weavers in an urban Chinese textilefirm between April 2003 and March 2004, this paper studies a) how randomly assignedteammates affect an individual worker’s behavior under a tournament-style incentive scheme,and b) how such effects interact with exogenously formed social networks in themanufacturing workplace. First, we find that a worker’s performance improves when theaverage ability of her teammates increases. Second, we exploit the exogenous variations inworkers’ origins in the presence of the well-documented social divide between urban residentworkers and rural migrant workers in large urban Chinese firms, and show that the coworkereffects are only present if the teammates are of a different origin. In other words, workers donot act on pecuniary incentives to outperform teammates who are from the same socialnetwork. Our results point to the important role of group identities in overcoming self-interestsand facilitating altruistic behavior....