Low-performing employees, the ‘laggards’ of a team, are often looked down upon and receive little credit from their organizations compared to high-achieving employees. In this study, we focus on the role of laggards in an organizational context and shed light on their contributions to the team performance. Drawing on the literature from organization theory and behavioral economics, we propose that the improvement of a laggard performance can serve as a ‘nudge’ for enhancing the overall team’s output, because the laggard’s team members experience “last-place aversion”. We test our proposition using panel data from an industrial trading company spanning eight years, focusing on the interplay between the laggards and their team members. We identify our effects using fixed-effects estimators and instrumental variable approach, together with a control function method. Results confirm that a laggard performance affects the performance of the remaining team. This effect is stronger when the laggard performance approaches their penultimate colleague in the team as well as other team members. Our findings not only enrich organizational and strategy research but also offer practical insights for managers aiming to optimize team performance.
Keywords : low-performing employees, team performance, last-place aversion, behavioral strategy
(Preparing for sumbission. Job market paper. The manuscirpt will be uploaed here.)