Production processes are often organised in teams, yet there is limited evidence on whether and how social connections and financial incentives affect workers’ and teams’ productivity in tasks that require coordination among co-workers. We conduct a lab-in-the-field experiment in India’s manufacturing industry in which workers exert real effort in a minimum-effort coordination game in teams whose members are either socially connected or unconnected, based on their caste, and are paid according to the group output. We find that workers are able to coordinate on higher output levels if they are socially connected with their co-workers. In addition, we find that increasing the power of financial incentives does not reduce the positive effect of social connections- to the contrary, we find that workers respond more to high powered incentives, such as a group based bonus when they work with co-workers with whom they are socially connected, relative to when when they are uinconnected and as opposed to bonus framed as a loss. Overall, our results underline the importance of social connections with co-workers in determining productivity in the work place.
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