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More competition leads to increased cooperation

by Cynthia Macdonald
Oct 26 / 18
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Companies facing stiff competition from other firms have the most cooperative employees

A scan of Forbes Magazine’s annual list of Top 100 Companies to Work For reveals something interesting: not one firm in the top 10 enjoys a monopoly in its industry. In fact, they’re all competing against others — sometimes many others — who provide much the same service that they do.

According to new research, outside competition can actually lead to a healthier workplace. Specifically, one in which workers are more likely to trust each other and work cooperatively.

University of British Columbia economist Patrick Francois is a senior fellow in the Institutions, Organizations & Growth program at CIFAR. For years now, he’s been probing the mystery of workplace trust along with two colleagues of his own – Princeton’s Thomas Fujiwara (himself an IOG associate fellow) and Tanguy van Ypersele of Aix-Marseille University.

The resulting study, titled “The origins of human prosociality: cultural group selection in the workplace and laboratory,” was published in Science Advances on September 19.

Human cooperation is a mystery, says Francois, since it isn’t widely found in the animal kingdom. “There’s a high level of prosociality among insects, for example, but that’s usually through highly related individuals or kin groups,” he says. “We extend our interactions way beyond kin.” This has nothing to do with species propagation - “so the question is, why do we do it?

The researchers began by poring over reams of survey data from the U.S. and Germany, which showed that external competitiveness fostered internal trust. This is why supposedly “cut-throat” industries such as law, finance and sales can sometimes make for more collegial office environments than, say, not-for-profits that don’t have many competitors. But the researchers lacked a causal explanation for why this might be.

Thanks to a fortuitous meeting with CIFAR fellow Joseph Henrich, they were able to establish one. Last year, the Harvard-based anthropologist published The Secret of Our Success, a seminal look at how human groups, rather than individuals, have historically attained success by fostering mutually cooperative behaviour.

“Joe does a lot of experimental work,” Francois says. “He was in the audience at one of our meetings, and said, “Why don’t you put it in a lab and see if you can replicate these results there?” And that’s what we did.”  

In the lab, the economists had subjects play a version of the well-known Public Goods game, where players make voluntary contributions to a collective pool. Previous studies have shown that when put together in a group, players don’t necessarily trust each other and tend to withhold contributions as a result. But when faced with competition from outside groups, their level of mutual trust goes way up, and so do their contributions. “Their feeling is, we’ve got to pull together to make this thing work,” Francois says.

Competition selects for the norm that’s cooperative: the more intense the group competition, the harder it is for workplaces that don’t have these group norms to survive. It comes from our primordial past.

Even more remarkably, the participants began trusting people more in general – not only their own colleagues. “We saw an immediate effect in response to that question,” Francois says. “And we thought it was pretty striking that we were able to induce that, after an hour of putting people in competitive and non-competitive groups.”

With a causal explanation for their findings, Francois and his colleagues were able to offer a counterargument to Adam Smith’s famous idea that self-interest is the prime engine of economic success.

Rather, “there’s evidence that we’re hard-wired to be norm followers,” Francois says. “We’re very good at picking up on what other individuals are doing or what they think is appropriate. Competition selects for the norm that’s cooperative: the more intense the group competition, the harder it is for workplaces that don’t have these group norms to survive. It comes from our primordial past.”

The study provides powerful support for the idea that ground-breaking insights can result from interdisciplinary work. “I really don’t think this study would have happened without CIFAR,” Francois says. “People in the IOG group are interested not just in traditional market issues, but in the cultural underpinnings of how social orders are sustained. Just being around those conversations really inspired me to keep working on this.”