Contract Choice, Moral Hazard, and Performance Evaluation: Evidence from Online Labor Markets

2023 | HICSS | Citations: 0

Authors: Huang, Peng; Wang, Yifei

Abstract: Due to the spatial and temporal separations between clients and freelancers, onl ... Expand

Abstract: Due to the spatial and temporal separations between clients and freelancers, online labor markets (OLMs) are particularly susceptible to issues related to information asymmetry. Based on the economics of information, we hypothesize that the choice of contract type—i.e., between the fixed-priced (FP) contract and the time-and-materials (TM) contract—has important implications for curbing moral hazard during contract execution, and therefore will influence the client’s perceived contractual performance upon project completion. We test the predictions by assembling a dataset of data analytics projects completed by freelancers on Upwork, the largest online freelancing platform. We find that, consistent with our hypothesis, freelancers under a TM contract receive significantly lower performance ratings by their clients on average compared to those under an FP contract. Interestingly, we also find that the level of expertise required for a project moderates the effect of contract choice on client satisfaction; the negative impact of a TM contract is smaller (i.e., less negative) when a project requires intermediate-level or expert-level skills. Our study offers useful insights into an important institutional determinant of contractual performance evaluation, which has profound implications for freelancers’ reputations in OLMs. Collapse

Topics: moral hazard Upwork analytical information system programming language Elance

Methods: regression analysis method propensity score matching experimental group theory development longitudinal research

Theories: lemon market theory agency theory

Joining the crowd: The career anchors of information technology workers participating in crowdsourcing

2019 | Information Systems Journal | Citations: 50

Authors: Taylor, Joseph; Joshi, K.D.

Abstract: As technology platforms and online communities evolve, the nature of the relati ... Expand

Abstract: As technology platforms and online communities evolve, the nature of the relationship between workers and firms is changing. Crowdsourcing is an emerging phenomenon that exemplifies the changing relationship between workers and firms. Although significant research has been conducted on worker motivation within the traditional firm-worker relationship, relatively little work has examined motivation in crowdsourcing engagements. This study utilizes the revealed causal mapping methodology to conduct an exploratory analysis of the motivations and career outcomes of technology workers based in the United States who participate in compensation-based technology crowdsourcing platforms such as oDesk or Rent-a-coder. The findings reveal ways in which the career anchors of technology workers participating in crowdsourcing are evolving in the face of the emerging dynamics in the information technology (IT) employment marketplace Collapse

Topics: crowdsourcing IT career IT workforce IT job digital platform

Methods: survey theoretical contribution personal interview

Information Systems Research on Digital Platforms for Knowledge Work: A Scoping Review

2019 | International Conference on Information Systems | Citations: 5

Authors: Wagner, Gerit; Prester, Julian

Abstract: Digital platforms for knowledge work, such as Upwork, Freelancer.com and Amazon ... Expand

Abstract: Digital platforms for knowledge work, such as Upwork, Freelancer.com and Amazon Mechanical Turk connect clients with millions of workers for a range of tasks, including software development, virtual assistance, and micro-tasks. Information systems research on this emergent phenomenon has gained traction in recent years regarding publication volume and research diversity. To identify relevant papers, to distinguish them from related types of digital platforms, and to guide future research, we conducted a scoping review, focusing on the information systems literature. Results are structured according to a theoretical framework of the knowledge work process, covering three phases: Worker-client matching, committing for future action, and executing commitments. While the first phase has been analyzed extensively, we contend that the main phases of the knowledge work process have received scant attention. In this emergent stage of extant research, our review identifies promising research directions to guide prospective studies. Collapse

Topics: knowledge work digital platform database system interorganizational relationship Upwork

Methods: literature sample structured literature research synthesis design science literature study

Effect of Auction Design on Bidder Entry: Evidence from An Online Labor Market

2018 | HICSS | Citations: 0

Authors: Chen, Pei-yu; Shao, Benjamin; Shao, Benjamin; Liang, Chen

Abstract: We propose that auction duration and auction description are two important aucti ... Expand

Abstract: We propose that auction duration and auction description are two important auction design parameters that could serve as screening mechanisms for quality in online auctions. Using data from an online labor matching platform that connects buyers with IT service vendors, we examine the effects of auction duration and auction descriptions on auction outcomes (i.e., number of bids, bidder quality, bidding price) and project outcomes (i.e., project being contracted and being completed). Our empirical analyses show that, in buyer-determined reverse auctions of online labor matching, auctions with a longer duration and a longer description attract more bids, but they also attract more low quality bidders with less experience and lower completion rate, and hence result in a lower probability of successful contracting and completion of software service projects. Our research provides empirical evidence highlighting the strategic roles of auction design parameters like auction duration and descriptions as a potential screening mechanism for online labor matching platforms. Collapse

Topics: database system Elance word of mouth online reputation system online auction

Methods: econometric modeling nonparametric test Kolmogorov-Smirnov test descriptive statistic

Social Responsibility Messages and Worker Wage Requirements: Field Experimental Evidence from Online Labor Marketplaces

2016 | Organization Science | Citations: 31

Authors: Burbano, Vanessa C.

Abstract: This paper examines the effects of employer social responsibility on the wages w ... Expand

Abstract: This paper examines the effects of employer social responsibility on the wages workers demand through randomized field experiments in two online labor marketplaces. Workers were recruited for short-term jobs and I manipulated whether or not they received information about the employer’s social responsibility. I then observed the payment workers were willing to accept for the job. In the first experiment, information about the employer’s social responsibility marginally reduced prospective workers’ wage requirements on average and had a significant effect on the highest performers, who were willing to give up the wage differential they would otherwise demand. In the second, prospective workers submitted 44% lower wage bids for the same job after learning about the employer’s social responsibility. This paper provides causal empirical evidence of a revealed preference for social responsibility in the workplace, and of a greater preference among the highest performers. More broadly, it provides evidence that workers value purpose and meaningfulness at work, and it demonstrates that workers are willing to give up pecuniary benefits for nonpecuniary benefits. It furthermore highlights heterogeneity in worker preferences for nonpecuniary benefits by worker performance type. Collapse

Topics: Elance strategic management Facebook online labor market electronic market

Methods: experiment experimental group survey field experiment self reported survey

RAGS TO RICHES - HOW SIGNALING BEHAVIOR CAUSES A POWER SHIFT IN CROWDSOURCING MARKETS -

2016 | European Conference On Information Systems | Citations: 0

Authors: Durward, David; Blohm, Ivo; Leimeister, Jan Marco

Abstract: Crowdsourcing has emerged as new form of digital work organization. This novel s ... Expand

Abstract: Crowdsourcing has emerged as new form of digital work organization. This novel socio-technical arrangement changes the organization of work as well as its general nature. In this paper, we focus on the crowdworkers – a perspective that has been largely neglected by crowdsourcing research. We report results from crowdworker-interviews on two different platforms. Our research shows that quality signals of crowdworkers increase the bargaining power towards their principals, i.e. the crowdsourcers. As a result, the crowdworkers can reach a turning point of critical bargaining power at which the distribution of power shifts in their favor. We contribute to the literature by unraveling signaling behavior as mechanism influencing bargaining power and thus success in crowdsourcing. Beyond, we develop a theoretical model that indicates a shift in bargaining power over time and improves our understanding of crowdsourcing as novel way of organizing digital work. For practice, our results provide guidelines for crowdworkers how to improve their position in bargaining in relation to the crowdsourcer. Collapse

Topics: crowdsourcing IT career software developer Elance IT work

Methods: qualitative interview theory development personal interview literature study archival research

Theories: lemon market theory signaling theory

Cognition-based Task Routing: Towards Highly-Effective Task-Assignments in Crowdsourcing Settings

2014 | International Conference on Information Systems | Citations: 0

Authors: Feldman, Michael; Bernstein, Abraham

Abstract: In recent years the rising popularity of outsourcing work to crowds has led to i ... Expand

Abstract: In recent years the rising popularity of outsourcing work to crowds has led to increasing importance to find an effective assignment of suitable workers with tasks. Even though attempts have been made in related areas such as expertise identification most crowdsocuring jobs today are assigned without any predefined policy. Whilst some have investigated assigning jobs based on availability or experience no dominant method has been identified so far. We propose an assignment of tasks to crowd-workers based on their cognitive capability, by conducting a set of cognitive tests and comparing them with performance on typical crowdtasks. Moreover, we examine different setups to predict task performance where a) cognitive abilities, b) performance on previous crowdtasks, or c) both of them, are partially known. Preliminary results show that cognition-based task assignment leads to an improvement in task performance prediction and may pave the way to more intelligent crowd-worker recruitment. Collapse

Topics: crowdsourcing task productivity collaborative filtering missing data Elance

Methods: experiment descriptive statistic data imputation multivariate imputation with chained equations singular value decomposition

Theories: cognitive load theory

Yield management of workforce for IT service providers

2012 | Decision Support Systems | Citations: 5

Authors: Kim, Joung Yeon; Altinkemer, Kemal; Bisi, Arnab

Abstract: Many IT service firms often suffer inadequate staffing and a possible subsequent ... Expand

Abstract: Many IT service firms often suffer inadequate staffing and a possible subsequent profit loss. This may happen for a number of reasons: the high cost of timely adjusting a firm's workforce capacity, the nature of IT projects, fluctuating market demand, etc. This paper proposes a strategic use of the emerging online market mechanism, known as e-lancing, for yield management of workforce for IT service providers. By dynamically controlling admissions of online and conventional orders, a service provider can reach customers in the online channel and increase profits. The proposed model considers an IT service firm, which receives IT project orders through two channels: a conventional procurement channel and an online spot market such as Elance Online. We employ Markov decision theory to obtain optimal admission control policies. The structures of the optimal policy, which is not of threshold type, are analyzed mathematically and examples are presented numerically. The base model and its extended models, which can serve as useful tools for demand control problems of IT service providers, capture the most important characteristic of IT projects, where if a project is admitted, it seizes a random number of workers simultaneously, then it releases the workers either individually or in a group. Collapse

Topics: electronic market IT project dynamic pricing price management online auction

Methods: computational algorithm simulation experiment Markov decision process knapsack problem

Theories: decision theory

Study of Business Strategies in the Digital Economy

2005 | Americas Conference on Information Systems | Citations: 0

Authors: Kim, Joung Yeon

Abstract: This dissertation considers two research problems that Information Technology (I ... Expand

Abstract: This dissertation considers two research problems that Information Technology (IT) service firms and IT-intensive products manufacturers face in the digital economy. Collapse

Topics: price management Elance innovation management online auction digital economy

Methods: mathematical model