Is generosity good for you?

Dave Snowden once commented that a knowledge economy is a gift economy. That is, we share what we know in anticipation of eventual reciprocation, rather than on a direct barter basis.

A brief article in the April 7th, 2004 issue of the The Economist details a study reported in the Academy of Management Journal that demonstrates how knowledge workers who do favors for their colleagues are more productive than those who focus only on their own tasks.

Francis Flynn, of Columbia University's business school, studied 161 engineers working for a telecoms firm near San Francisco. They work in eight teams, but each individually sorts out detailed engineering problems sent in from around the country. Mr Flynn asked each employee to report how often they swapped help with each member of the team—help such as technical advice or taking a second look at a recommended solution—and who, in each case, had given relatively more in their exchanges. Thus, he looked separately at the frequency with which individual workers made such swaps and at how one-sidedly generous they were. He also asked employees to rate how highly they regarded one another.

Mr Flynn correlated the answers he got with information from the firm on employees' productivity. He found that generous employees who get little in exchange are well-regarded by colleagues. Employees who helped colleagues generously but did not receive help in exchange were less productive. Those who receive as well as give were relatively more productive, particularly those who helped each other most often. A pattern of frequent giving and receiving boosted both productivity and social standing.

Why should productivity rise when employees frequently swap help? Mr Flynn has two explanations. First, as employees learn more about the resources they can offer each other, they develop a more efficient pattern of requesting and giving help. Second, helpful employees learn to trust each other more, and so become willing to do bigger favours because they feel more sure about the likelihood of reciprocation. And, of course, it is nicer to work with helpful people than with the other sort.

Read "The Gift Relationship" for more (subscription required for Economist archive access.)