Strategic Shirking : A Theoretical Analysis of Multitasking and Specialization

We provide a new theory to explain why firms multitask workers rather than specializing them. Workers over-perform in tasks they like and under-perform in tasks they dislike, to favorably influence future job assignments. Anticipating this, firms may find it optimal to commit to future multitasking to induce workers to appropriately allocate effort early in the employment relationship. We show that when the product market is volatile, so that future product prices are uncertain, the firm's ability to credibly commit to a multitasking strategy diminishes. This generates a negative relationship between multitasking and product market volatility, consistent with recent empirical evidence