Economics Insights @ CBS

Organizing collective action to secure support from local communities provides a source of power for elites to protect their interests, but community structures constrain the ability of elites to use this power. Elites’ power is not static or self-perpetuating but changing and dynamic. There are situations in which elites are forced into movement-like struggles to mobilize support from their community.

The current research examines how power affects performance in pressure-filled contexts. We present low-power-threat and high-power-lift effects, whereby performance in high-stakes situations suffers or is enhanced depending on one's power; that is, the power inherent to a situational role can produce effects similar to stereotype threat and lift. Three negotiations experiments demonstrate that role-based power affects outcomes but only when the negotiation is diagnostic of ability and, therefore, pressure-filled.

Using personnel data from nine large firms in three industries (call centers, trucking, and high-tech), we empirically assess the benefit to firms of hiring through employee referrals. Compared to nonreferred applicants, referred applicants are more likely to be hired and more likely to accept offers, even though referrals and nonreferrals have similar skill characteristics. Referred workers tend to have similar productivity compared to nonreferred workers on most measures, but referred workers have lower accident rates in trucking and produce more patents in high-tech.