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

Doing Business with Strangers: Reputation in Online Service Marketplaces

2014 | Information Systems Research | Citations: 110

Authors: Moreno, Antonio; Terwiesch, Christian

Abstract: Online service marketplaces allow service buyers to post their project requests ... Expand

Abstract: Online service marketplaces allow service buyers to post their project requests and service providers to bid for them. To reduce the transactional risks, marketplaces typically track and publish previous seller performance. By analyzing a detailed transactional data set with more than 1,800,000 bids corresponding to 270,000 projects posted between 2001 and 2010 in a leading online intermediary for software development services, we empirically study the effects of the reputation system on market outcomes. We consider both a structured measure summarized in a numerical reputation score and an unstructured measure based on the verbal praise left by previous buyers, which we encode using text mining techniques. We find that buyers trade off reputation (both structured and unstructured) and price and are willing to accept higher bids posted by more reputable bidders. Sellers also respond to changes in their own reputation through three different channels. They increase their bids with their reputation score (price effect) but primarily use a superior reputation to increase their probability of being selected (volume effect) as opposed to increasing their bid prices. Negative shocks in seller reputation are associated to an increase in the probability of seller exit (exit effect), but this effect is moderated by the investment that the seller has made in the site. We conclude that participants in this market are very responsive to the numerical reputation score and also to the unstructured reputational information, which behaves in a similar way to the structured numerical reputation score but provides complementary information. Collapse

Topics: oDesk online reputation system word of mouth systems development procurement management

Methods: statistical hypothesis test natural language processing descriptive statistic experiment NLTK

Theories: behavioral theory