Is There a Business Case for Verbal Abuse? An In-Depth Investigation of Incentive Interplay and Profitability in Garment-Producing Factories.
Rourke, Emily L.
2014
- Abstract: This paper explores the economic determinants and outcomes of verbal abuse in developing country garment factories. The first question addressed is if and how verbal abuse derives from firm incentive structures. The second question is whether abuse is profitable. The purpose is to understand the hypothesized existence of a business case for verbal abuse. A model is developed to incorporate ... read moreverbal abuse as an integral component of firm motivational structure wherein supervisors employ verbal exhortation to encourage higher production levels from the workforce. The proposed theory contends that, in the absence of an incentivizing piece-rate wage, workers will be subject to increased levels of verbal abuse to deter shirking behavior. If it is demonstrated that verbal exhortation leads to high levels of productivity from a worker, then it could possibly be the case that firms are profit-maximizing in their decision to pay workers hourly and take a tolerant stance toward verbal abuse (contingent on the degree of presumed disutility workers suffer from being abused). Alternately, if verbal abuse is found to have negative profitability implications, firms would be acting sub-optimally and would have an incentive to better monitor the abuse. Results from analysis of firm incentive structures confirm that supervisors do use verbal abuse as a supplementary motivational tool. However, results also refute the possibility for a business case, demonstrating that verbal abuse has detrimental implications for firm profits, both by negatively impacting worker productivity and generating a costly compensating differential.read less
- ID:
- cj82kk507
- Component ID:
- tufts:sd.0000103
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