Working Paper: CEPR ID: DP8040
Authors: Ignacio Palacios-Huerta; Andrea Prat
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.
Keywords: impact factor; organizational economics; pagerank
JEL Codes: D20
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Higher communication-based impact factors (L96) | Higher organizational rank (L22) |
| Higher communication-based impact factors (L96) | Higher salary (J31) |
| Higher communication-based impact factors (L96) | Higher likelihood of promotion (J62) |
| Lower communication-based impact factors (L96) | Higher likelihood of dismissal (J63) |
| Higher communication-based impact factors (L96) | Higher impact factor ranking (A14) |