Preventing and Recovering from Cooperation Breakdowns: Prosociality and Organizational Design

The recent rapid proliferation of flatter and more flexible forms of organization has led to a renewed interest in cooperation and its motivational underpinnings. It is often argued that these organizational forms better allow prosocial motivations to flourish, but little is known about this. Thus, while much attention has been paid across different literatures to how the motivation of organizational members influences outcomes (e.g., productivity, innovativeness) at the levels of workgroups and organizations, there has been less interest in motivational heterogeneity and change, and little interest in linking employee motivation explicitly to more structural features of organizations. This study seeks to fill these gaps. Using a multi-agent simulation, we examine how organizational design choices—specifically, cooperative task allocation and cooperation incentives—affect value creation and capture in the presence of motivational heterogeneity. The latter includes self-interest, conditional prosociality, and unconditional prosociality. Our model allows employees to switch their motivation, depending on the incentives they face and the behaviors of others. In this rich environment, we uncover novel threats to cooperation. Specifically, cooperation breakdowns arise when prosocial individuals overexert themselves to compensate for self-interested members. We also uncover a substitution effect: strong incentives reduce the need to assign multiple cooperative tasks to unconditionally prosocial individuals. In open networks where organizational members have asymmetric task portfolios, placing unconditionally prosocial individuals in central positions enhances the diffusion of prosociality and cooperation. In closed networks with symmetric task portfolios, prosocial individuals primarily act as compensators for free riding. This research extends organizational design theory by integrating motivational microfoundations and highlighting the joint role of incentives, task allocation, and motivation in sustaining cooperation, leading to several practically relevant new findings.