Letian Zhang (Harvard Business School)

Date: 

Wednesday, October 19, 2022, 4:00pm to 5:30pm

Location: 

WJH 1550

Why Micro-Management Plagues Low-Trust Societies

The role of managers varies across societies due to the different levels of social trust. In higher-trust societies, organizations allow front-line employees to have more autonomy and decision-making discretions. Managers’ primary role is to coordinate teamwork and support employees. But in lower-trust societies, organizations need managers to also play the role of a supervisor, monitoring employee performance and providing more direct guidance. Therefore, the higher the level of a society’s social trust, the more managers are expected to possess managerial skills and the less they are expected to possess technical skills. We test this theory using two million managerial and non-managerial job postings in 28 European Union countries. Our identification strategy uses bilateral trust measures to predict job requirements for multi-national firms, including instrumental variables and fixed effects on country, firm, and occupation. This study explains cross-country differences in managers by demonstrating how social trust shapes managerial roles.