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Measuring the impact factor of agents within an organization using communication patterns

Palacios-Huerta, Ignacio and Prat, Andrea (2010) Measuring the impact factor of agents within an organization using communication patterns. Discussion Paper, 8040. Centre for Economic Policy Research, London, UK.

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Abstract

Organizational economics predicts that communication patterns within an organization should reflect the relative value of their members to the organization. We propose to measure the impact factor of an agent by applying the Invariant Method – also known as Google’s PageRank algorithm – to electronic communication data. To explore the validity of this measure, we analyze email exchanges among the top executives of a large retail company. We construct their individual impact factors based only on email patterns and we compare them to standard economic measures of organizational importance. We find that: (i) The impact-factor ranking of executives mirrors perfectly their hierarchical ranking; (ii) Impact factor variability is significantly correlated with salary differences; (iii) Subsequent promotions (dismissals) affect executives with unusually high (low) impact factors. We conclude that simple communication-based impact factors may be a useful tool to measure the relative importance of agents in organizations.

Item Type: Monograph (Discussion Paper)
Official URL: http://www.cepr.org/pubs/dps/DP8040.asp
Additional Information: © 2010 The Authors
Library of Congress subject classification: H Social Sciences > HB Economic Theory
H Social Sciences > HD Industries. Land use. Labor
Journal of Economic Literature Classification System: D - Microeconomics > D2 - Production and Organizations > D20 - General
Sets: Departments > Economics
Research centres and groups > Suntory and Toyota International Centres for Economics and Related Disciplines (STICERD)
Collections > Economists Online
Rights: http://www.lse.ac.uk/library/usingTheLibrary/academicSupport/OA/depositYourResearch.aspx
Identification Number: 8040
Date Deposited: 15 Apr 2011 15:44
URL: http://eprints.lse.ac.uk/35054/

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