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Teamwork and Formal Rules in Public and Private Organizations:

Evidence that Formalization Enhances Teamwork

Abstract

Management experts and practitioners often promote teamwork as a way of improving

performance by integrating knowledge dispersed in organizations. The complexity of public

service delivery and the need for functional integration should create a particularly strong

imperative for public sector workers to organize in teams. On the other hand, however, classical

literature on organizations and management suggests that a bureaucratic structure impedes the

development of teamwork, and public sector organizations tend to be more bureaucratic in ways

that make teamwork more difficult to implement. Yet there is no empirical evidence on this

important question of whether public sector workers are more or less likely to be involved in

teamwork as compared to their private sector peers. Using variables in the NOS 2002 dataset,

we found that teamwork among core workers is more prevalent in the public than in the private

sector. In addition, results of our analysis are consistent with the conclusion that the public

sector’s formal regulations in workplace safety, personnel protection, training, promotion

channels, and employment records provide employees a sense of security so that public sector

workers are more likely to be involved in teamwork. Hence, “bureaucracy” in the public sector

does not impede teamwork. Rather, an element often associated with bureaucracy, formalization

of personnel procedures, can facilitate teamwork.

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Introduction

Teamwork is generally important in organizations. The literature on “public bureaucracy”

implies that teamwork will be more difficult and unlikely in public organizations. For example,

some observers point out that public organizations tend to have higher levels of information

intensity and thus create an invisible barrier for communication (Tullock, 1965), which is

detrimental to teamwork. Scholars have often claimed that government organizations have more

rules and formalization than other types of organizations, such as business firms (Rainey, 2009).

The rules impose constraints that should impede teamwork. There is an alternative theoretical

perspective, however, that would predict higher levels of teamwork in public organizations for

various reasons. Formal rules of certain kinds, such as personnel rules, rather than imposing

constraints on teamwork, can afford protections that facilitate teamwork. This study uses data

from the 2002 National Organization Survey, the only nationally representative sample of

organizations, to provide evidence supporting this latter interpretation. The findings show

evidence of more teamwork in public organizations than private organizations. Higher

formalization of personnel rules and procedures in public organizations relates positively to the

incidence of teamwork in those organizations. These findings weigh against the oversimplified

view, in much popular and academic discourse, of government organizations as uniformly

dysfunctional “bureaucracies.” We will more clearly elaborate our research interests in the

following sections.

Confronting complicated problems, modern organizations often need organizational

learning (Argyris & Schon, 1978; Senge, 1990) to generate organizational knowledge and solve

problems. Teamwork as a way to integrate individual knowledge is an indispensable human

resource (HR) practice for organizations to facilitate organizational learning, generate relevant

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knowledge, and create solutions (Goncalves, 2006; Nonaka & Takeuchi, 1995; Nonaka &

Toyama, 2003). Considering that tacit knowledge such as political issues, cultural issues, power,

and values are more prevalent in the public sector than in the private sector (McAdam & Reid,

2000), public service delivery often involves high levels of intricacy and thus requires public

sector workers to work in teams so as to brainstorm for solutions.

However, a traditional view of bureaucracy suggests that teamwork is more pervasive in

the private sector than in the public sector. Teamwork requires information flow and

communication (Beckhard, 1972; Pinto & Pinto, 1990; Smith, et al., 1994). A bureaucratic

structure in the public sector may impede these two processes. Two public bureaus within one

agency or two governmental agencies frequently pursue conflicting goals or have different

priorities for a program. Although cross-unit communication or a work team serves as a channel

to reconcile controversial views, a hierarchical structure in which top-down communication is

encouraged stifles the development of such lateral and “subformal” communication (Downs,

1967). In addition, government often involves power-sharing situations (Kettl, 1993) among

interest groups, political parties, legislators, and higher and lower level bureaucrats. Interacting

with so many actors in a political arena often imposes information overload on public sector

employees (Rainey, 2009). As a result, crucial information may leak out so that public officials

often absorb “disoriented” information (Tullock, 1965) and thus create an invisible barrier for

communication. In sum, information intensity together with goal conflicts suggest that lateral

communication is difficult in public organizations, and because of this reason, governmental

sector employees are less likely to work in teams as compared to their business sector peers.

Although a traditional view of bureaucracy appears to reduce the likelihood of teamwork

in the public sector, there is no empirical evidence suggesting that teamwork is indeed more

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prevalent in the private sector than in the public sector, as we explain below. The current study

raises another possibility concerning teamwork in the public sector: while public organizations

are generally structured in a more formalized manner (Marsden, Cook, & Kalleberg, 1994),

formalized protections with respect to work safety, job security, employment documents, dispute

resolution, sexual harassment complaints, and promotion assurance can generate the sense of

security for employees so that their willingness to be involved in teams increases.

We provide evidence of how formalized personnel protections in the public sector may

promote teamwork. For example, knowledge sharing may jeopardize one’s likelihood of

promotion, but it is an indispensible factor of teamwork. Employees’ propensity to be engaged

in teams could be compromised if organizations fail to provide adequate and formal procedures

for promotion. If governmental employees’ desire for promotion is as strong as that of

employees in business enterprises, as many empirical studies have suggested (Jurkiewicz,

Massey, & Brown, 1998; Khojasteh, 1993; Lyons, Duxbury, & Higgins, 2006), and a formalized

procedure of promotion is indeed more clearly established in the government than in the for-

profit sector, public sector workers should feel more secure about their prospects for

advancement and thus less hesitant to work in teams and share knowledge with each other.

In addition to a formalized promotion channel, formalization of job safety and job

training can help employees avoid potential risks taking place in teamwork. Formal personnel

protection such as equal employment opportunity and affirmative action (EEO/AA) ensures

fairness and a discrimination-free environment in teambuilding. Formalized procedures for

sexual harassment complaints bring mutual respect and harmony to interpersonal relationships in

teams, and formalized procedures for dispute resolution can reduce potential conflicts of interest

between team members. Finally, formal job documents provide information about adequate

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expertise, positions, skills, and backgrounds of employees, specifying the roles and duties for

team members.

Is teamwork more or less prevalent in the public sector? Contradictory theories and

perspectives suggest different answers. Fortunately, the National Organization Survey (NOS)

2002 data provide us the opportunity to investigate whether public sector workers more often

work in teams than their private sector peers do. We hypothesize that the public sector’s higher

levels of formalization make organization members feel secure so that they demonstrate a higher

propensity to work in teams.

Two Sides of Bureaucratization: Formalization and Red Tape

The level of formalization reflects the extent to which an organization has formal rules

and procedures. Organizational formalization can be defined as “the extent to which as

organization’s structures and procedures are formally established in written rules and regulations”

(Rainey, 2009, p. 209). Aiken and Hage (1966) developed a measure of formalization that asks

respondents questions about how much they must follow established rules. Another approach

used to determine the levels of organizational formalization includes questions asking about the

extent to which an organization has explicitly formalized standard practices, job descriptions,

and policies (House & Rizzo, 1972; Organ & Greene, 1981). Our study focuses on the latter

approach.

Formalization and red tape often correlate (Bozeman & Scott, 1996), and researchers

have used formalization scales to measure red tape (Buchanan, 1975). However, a fundamental

difference between the two concepts exists. Formalization often includes a system of rules

covering a worker’s rights, duties, and work situations (Hall, 1968). In order to manage

environmental complexities and minimize uncertainties, organizations need bureaucratic

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elements to reduce risks. That is, formalization is often a response to the resource environment,

institutional environment, and political pressures (Meyer & Rowan, 1977; Meyer & Scott, 1983).

Positive consequences of formalization include decreased role ambiguity, enhanced

organizational commitment (Michaels, Cron, Dubinsky, & Joachimsthaler, 1988; Organ &

Greene, 1981), higher productivity (Hage & Dewar, 1973), and the elimination of alienation

(Michaels, et al., 1988). Labeled as “green tape” (DeHart-Davis, 2009a, 2009b), such formalized

rules are effective to organizational operation.

Bozeman (1993, 2000) views red tape as “good rules gone bad.” Red tape is typically

deemed pathology and is defined by Bozeman and Scott (1996) as “organizational rules,

regulations, and procedures that serve no appreciable social or organizational function but that

nonetheless remain in force and result in inefficiency, unnecessary delays, frustration, and

vexation” (Bozeman & Scott, p. 8)(Bozeman & Scott, p. 8)(Bozeman & Scott, p. 8)(p. 8). One

may also observe the emergence of red tape from the perspective of the organizational life cycle.

While formalization in the beginning may facilitate positive work attitudes and reduce alienation,

it can contribute to overall rigidity and decline of organizations in the long term due to

overemphasis on compliance (Walsh & Dewar, 1987). That is, red tape occurs when rules

become an end instead of a means. Recent literature and empirical studies also espouse the view

that red tape is conceptually different from formalization (Pandey & Kingsley, 2000; Pandey &

Scott, 2002; Pandey & Welch, 2005).

Theories and empirical studies have concluded that a bureaucratic structure is more

common in the public sector than in the private sector, including formalization (Frumkin &

Galaskiewicz, 2004) and red tape (Baldwin, 1990; Pandey & Kingsley, 2000; Rainey, Pandey, &

Bozeman, 1995). However, due to their conceptual discrepancies, implications for teamwork

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drawn from these two structural features could be different. In the next section, we will more

carefully examine the relationships between bureaucratization and teamwork from the

perspectives of both red tape and formalization.

Teamwork and Red Tape

In many ways for many years, people from the same work unit have organized in

functional teams. Modern teamwork includes many forms such as problem-solving teams and

self-directed teams. Successful practice of modern teamwork often relies on empowerment

(Dessler, 1999; Kirkman, Rosen, Tesluk, & Gibson, 2004; Lopez, Peon, & Ordas, 2004),

autonomy (Griffin, Patterson, & West, 2001; Rafferty, Ball, & Aiken, 2001; Van Mierlo, Rutte,

Seinen, & Kompier, 2001), and trust in leadership (Dirks, 2000; Korsgaard, Schweiger, &

Sapienza, 1995). However, the delegation-centered elements of teamwork such as empowerment,

autonomy, and trust in leadership can conflict sharply with red tape.

Red tape often coincides with the burgeoning of formal control and centralization. A

classical study of centralization by Hage and Aiken (1967) indicated that participation in

decision making, an inverse indicator of centralization, is negatively associated with both

hierarchy of authority and rule observation. Contemporary public administration research also

sheds light on our understanding of how centralization relates to red tape. According to Rainey

et al. (1995), public managers often issue red tape to control their subordinates because they feel

that their authority is weakened by civil service rules, administrative constraints, and political

interventions. This point of view has received rather strong empirical support (Scott & Pandey,

2005). That is, the existence of red tape is accompanied by centralization and formal control. It

also implies a manager’s fear of losing hierarchical power. Because factors of decentralization

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such as empowerment, leadership trust, and autonomy are prerequisites for teamwork, a high

level of red tape may imply a low likelihood of teamwork in the public sector.

Red tape and centralization also hinder communication between two agencies or two

units in one agency. Horizontal information flow and communication are two prerequisites of

teamwork (Beckhard, 1972; Pinto & Pinto, 1990; Smith, et al., 1994), but a centralized decision

making system strongly encourages a vertical flow of information. In addition, because of the

information overload resulting from frequent interactions with multiple actors in a political arena,

many governmental agencies may fail to accurately filter, deliver, exchange, and share

information. An invisible barrier to communication stemming from disoriented information

(Tullock, 1965) impedes teamwork.

Teamwork and Formalization

Formal rules and teamwork may be positively associated with each other if formal rules

and regulations provide employees protection against role ambiguity, safety threats, and security

threats so as to increase employees’ organizational commitment (Michaels, et al., 1988; Organ &

Greene, 1981).1 We elaborate eight possibilities which suggest positive relationships between

formalization and teamwork in organizations.

Formalization of work safety

The first dimension is formalized work safety. Scholars have called attention to the

importance of workplace safety and have suggested ways in which this topic can be woven into

research agendas. As Brown (1996) proposed, workplace safety as a social responsibility should

be included in the priorities of a “competitive work construct” because the cost of workplace

injuries in the US has been increasing in the past decades. In the same article, she contended that

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technological changes, operational practices (multi-skilling), workforce diversity, and cultural

and language differences exacerbate the problem of work safety.

Brown’s claim illuminates our understanding about how formalization of work safety

may contribute to teamwork. Teams frequently include people with highly varied backgrounds.

An independent department for work safety and formal documents about it can reduce potential

risks stemming from cultural and language barriers and other variations in a team. In addition,

people in cross-functional teams need formal safety documents to increase their knowledge of

technologies unfamiliar to them. Although large sample empirical studies regarding possible

linkages between formalized work safety and teamwork do not exist, Vassie (1998) indicated in

her case study that long-term implementation of work safety improvement programs is able to

promote teamwork, although it may be accompanied by work delays and cost increases.

Formalization/departmentalization of personnel protection

Formalized personnel protection usually includes independent departments responsible

for equal employment opportunity and affirmative action (EEO/AA) and labor relations.

Organizations can benefit from personnel protection in the process of teambuilding. Team

formation is, for social psychologists, an adaptive psychological process of self categorization,

and the psychological response to teambuilding can lead to behaviors such as cohesion and

cooperation (Lembke & Wilson, 1998). Discrimination is detrimental to a teambuilding process

(Kneale, 1994; Recknagel, 1953), but practices of EEO/AA can effectively reduce discrimination,

if not eradicate it. These practices also ensure workplace fairness (Crosby, Iyer, & Sincharoen,

1994), a critical factor associated with teamwork effectiveness.

Formalization of dispute resolution procedures

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To attract and retain employees, organizations will need to protect different employee

rights. Dispute resolution has long been one of the most important employee protection policies

and a central issue in the study of labor relations. In general, unionized organizations are more

likely to implement this policy by creating a management grievance committee and hiring

impartial arbitrators (Schwoerer, May, & Rosen, 1995). However, in an earlier survey, many

public sector employees in a unionized setting expected that the use of dispute resolution

techniques “will grow and become much more important” as compared to the nonunion set of

respondents who thought dispute resolution “is important now and will remain so” (Hays &

Kearney, 2001). Indeed, organizations emphasizing dispute resolution generally have lower

costs, less scrap, and higher productivity because of fewer grievances (Huselid, 1995). To the

extent that teamwork often involves disputes and disagreements originating from interest

conflicts, we anticipate that formalized dispute resolution procedures will reduce workers’ sense

of insecurity so as to enhance teamwork.

Formalized procedures for sexual harassment complaints

Sexual harassment is a form of sex discrimination. It involves both sexual threats used as

the basis for employment decisions and hostile environment harassment such as sexual jokes,

comments, and touching that interfere with an individual’s ability to do her/his job (Welsh, 1999).

Typical negative consequences of sexual harassment include lowered morale, absenteeism,

damaged perception of equal opportunity, and compromised interpersonal work relationships

(Gutek, 1985; Newell, Rosenfeld, & Culbertson, 1995; Welsh, 1999). Sexual harassment is

usually underreported because victims are often afraid of retaliation, feel the fear of losing jobs,

and see no necessity to “make the situation worse” (Fitzgerald, Swan, & Fischer, 1995),

especially when the harassers have formal or informal power accompanied by a position (e.g.

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manager). However, assertive response can increase when policies and procedures are in place

to combat sexual harassment (Gruber & Smith, 1995). Results from these previous studies hint

that organizations having formalized procedures to deal with sexual harassment complaints are

more likely to have a harmonious interpersonal work relationship, a benign precondition for

members to work in teams.

Formalization of job training

Job training has been a core issue of human resource management (HRM). It enables a

new recruit to become productive as quickly as possible. New recruits can avoid making costly

mistakes by knowing the procedures or techniques of their new jobs. For example, professional

skill training helps employees quickly integrate professional knowledge; team skill training helps

enhance collaborative learning (Prichard, Stratford, & Bizo, 2006); job safety training prevents

employees from being injured (Hale, 1984; Lippin, Eckman, Calkin, & McQuiston, 2000);

diversity training promotes an atmosphere of mutual respect (Rynes & Rosen, 1995). Based on

our earlier analyses, clear rules and regulations of these training contents will lay a solid basis for

prospective teamwork.

Formalization of job documents

A healthy HRM system should have formal/written job documents such as written job

descriptions (and classifications) and records of employees’ job performance (and compensation).

These written documents can support teambuilding by assuring that employees have adequate

expertise, positions, skills, training background, and experience. They can also provide basic

mutual understanding of skills and roles for those brought together into a team.

Teams can raise possibilities of risk and uncertainty for team members such as receiving

due credit for one’s work, getting along with others, sharing responsibilities with free riders, and

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many other matters. Formal job descriptions, performance records, and other documents may in

some ways hinder the formalization of teams, but can also support teamwork by providing clarity

and confidence about roles, duties, responsibilities, evaluation, and other processes (Nigro, Nigro,

& Kellough, 2007).

Formalization of employment contracts

Since collective bargaining has become widespread in most modern and industrialized

countries including the United Sates (Katz, 1993), the role of written employment contracts

appears to play a strong role in labor relations (W. Brown, Deakin, Nash, & Oxenbridge, 2000).

Because forming teams can impose risks and uncertainties on team members, employment

contracts with explicit statements about payment, work hours, grievance procedures, training

opportunities, and sick leave for employees will protect a worker’s rights and enhance a worker’s

willingness to work with unfamiliar people.

Formalization of promotion channels

The power of knowledge sharing serves as a bridge in linking concepts of teamwork and

formalized promotion channels. Knowledge sharing is essential to teamwork, and to knowledge

creation and productivity (Chen, 2008; Fong, 2003). However, knowledge sharing can conflict

with extrinsic rewards such as promotion and salary. Team members may be reluctant to share

unique knowledge with other team members because knowledge sharing can represent a type of

knowledge “leaking” that may jeopardize a person’s opportunities to obtain extrinsic rewards.

According to several empirical studies, government employees’ need for extrinsic rewards is as

strong as that of those working in business enterprises (Jurkiewicz, et al., 1998; Khojasteh, 1993;

Lyons, et al., 2006). That is, people may not exhibit strong desire to be engaged in teamwork

unless they perceive that knowledge sharing is not harmful to their advancement opportunities.

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Formalized procedures for promotion may mitigate one’s fear of knowledge leaking due

to knowledge sharing. When the promotion rules are ambiguous, knowledge sharing may

increase risks. However, when promotion rules are clear, employees can be informed by

transparent criteria. In this situation, knowledge sharing and teamwork have a more positive

implication. This positive connotation can be magnified if promotion standards also embrace

team performance.

Hypotheses

While Bozeman and Rainey (1998) found that public managers, as compared to their

private counterparts, tend to express a desire for fewer formal rules, evidence also indicates that

public organizations tend to have more formalized structures than business enterprises (Frumkin

& Galaskiewicz, 2004; Marsden, et al., 1994) especially in personnel rules and procedures.

Since we have argued that formalization can provide protections that facilitate teamwork, we

hypothesize that employees are more likely to work in teams in the public sector than in the

private sector:

Hypothesis 1a: As compared to their private counterparts, public organizations

have higher levels of formalization with respect to work safety, personnel

protection, training, employment documents, and promotion channels.

Hypothesis 1b: Formalization with respect to work safety, personnel protection,

training, employment documents, and promotion channels is positively associated

with the occurrence of teamwork in an organization.

Hypothesis 1c (Mediation hypothesis): Based on H1 and H2, teamwork is more

prevalent in the public sector than in the private sector, and this relationship is

mediated by the level of organizational formalization.

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We also consider different types of teams. Although there are a variety of typologies of

teams, we specifically focus on the following generic categories: decision-oriented teams and

self-directed teams. This taxonomy is simple yet covers many types of teams (Dyer, Dyer, and

Dyer 2007). A decision-oriented team is a typical form of manager-led team. In such a team,

members meet regularly to make decisions concerning their goals, assignments, resources, and

deadlines. In a self-directed team, however, autonomy becomes the most distinctive

characteristic. Team members usually choose their own leaders or rotate leadership, and formal

leaders will be asked to relinquish their power (Dyer, Dyer, and Dyer 2007). To the extent that

public sector managers often contend with political interference and legal constraints and may

therefore feel reluctant to share their power, we anticipate that public managers should prefer

decision-oriented teams to self-directed teams. Accordingly, we hypothesize:

Hypothesis 2: Public sector workers, as compared to their private sector peers,

are more likely to work in decision-oriented teams but not self-directed teams.

Methodology

Data

We use the National Organizational Survey (NOS) 2002 dataset to examine our research

questions and test hypotheses developed in this study. NOS surveyed organizations (including

both public and private organizations) across the United States, using a probability sampling

technique. The unit of analysis is the workplace. The survey was conducted from October 24,

2002, to May 15, 2003, by the National Opinion Research Center (NORC). NORC used

respondents’ information about their places of employment from the General Social Survey

(GSS) of 2002 to construct the NOS sample of organizations. Since the GSS sample is a

probability sample, this makes the NOS sample a probability sample. The final sample for the

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NOS 2002 consisted of 874 physical locations in organizations. The respondents were human

resource managers or those who did the hiring for the establishment. NOS 2002 is so far the

most representative organization survey on the national level.

A sample of 516 cases is available in the NOS 2002 dataset. The survey had a

completion rate of 59%. Among the 516 cases, 384 were completed by pen-and-paper survey;

70 were completed by computer-aided telephone interviewing; 53 were completed by self-

administered questionnaire; 9 were partially completed.2 In all, 403 of the organizations are

private, including private nonprofits (78.1%) and 112 are public (21.7%).3

Variables

There are several sections in the NOS 2002 dataset. Questions in section B are concerned

with demographic characteristics, work arrangements, teamwork, training, monetary rewards,

and work shifts for “core function” workers (COREs) in the organization. In the current study,

we extract teamwork-related questions from section B and integrate them with other general

items such as organizational formalization and sector affiliation. That is, this study aims at

teamwork of “core function” workers.

Concerning the dependent variables, we include three dummy variables which represent

general teamwork, decision-oriented teamwork, and self-directed teamwork respectively. The

main independent variable (IV) is GOV, a dummy variable (public = 1; private = 0). As we

mentioned, 112 out of 516 respondents in the NOS 2002 are from the public sector.

Organizational formalization is used as mediation variables (mediators or MVs) in this study.

Eight dimensions of formalization are measured by fourteen questions with a dichotomous scale.

Work safety is measured by one item about safety department and three items related to work

safety documents. Formalization/departmentalization of personnel protection involves questions

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asking respondents whether their current organizations have an independent department

responsible for labor relations and EEO/AA. NOS dataset has only one item to measure

formalized dispute resolution procedures, formalized sexual harassment procedures, and job

training respectively. Written documents consist of both an item asking job description and an

item asking written record of job performance. Formalization of promotion has two items asking

respondents whether their current organizations have formal procedures for promoting COREs to

either a higher level job or a job above the CORE. Finally, there is one item in the NOS asking

whether documented employment contract exists in the respondents’ current organizations.

In addition to formalization, we also identify two essential mediators: organizational age

and size. We consider them as MVs due to the following two reasons. First, they generally do

not distribute evenly between public and private organizations. As Kaufman (1976) argued,

government organizations tend to be immortal because they face little threat of death originating

from market competition and governmental policies generally have a high degree of continuity.

The theory of public choice also suggests that public sector managers are more likely than

business sector managers to pursue “side payments” such as resistance to staffing cutbacks when

they perceive that substantive rewards are not accessible (Bozeman, 1987; Niskanen, 1971).

Second, organization theorists (e.g. Daft, 2006), especially organizational ecology theorists

(Hannan & Freeman, 1984, 1989), suggest that organizational complexity increases with age and

size. Teamwork, which is designed to cope with change and complexity, may receive more

emphasis in older and larger organizations. Identifying these two MVs will help us avoid a false

inference that the different use of teamwork between public and private organizations is solely a

result of size and age to the extent that old and large organizations are usually more formalized.

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Several control variables (CVs) which predict teamwork are included in this study. We

first control for the levels of perceived autonomy and supervision of COREs. We expect that

these two variables are closely related to different teamwork types: while decision-oriented

teamwork aims for teamwork with supervision, self-directed teamwork emphasizes individual

autonomy. Second, group-based monetary rewards should also be taken into account. When

workers perceive the existence of group incentives, have opportunities to receive pay for learning

new things from others, and are allowed to participate in profit-sharing, they will be more willing

to organize in teams. Third, the percentage of COREs working at home should decrease the

likelihood of teamwork because regular meetings are less possible in this situation.4 Finally, we

control for cross-unit work experience. Cross-unit work experience can be obtained via job

rotation and cross-unit training. An ex facto mutual understanding between two work units is an

important cornerstone for teamwork. Please refer to Appendix A for variable measurement.

The logic of mediation tests

A mediation test is employed to examine whether the difference in the frequency of

teamwork between the public and private sectors (if there is any) can be explained by distinctive

levels of formalization in these two respective sectors. Variables may be deemed mediating

variables (mediators) when they carry the influence of the independent variable (IV) to the

dependent variable (DV) (Baron & Kenny, 1986; Mackinnon & Dwyer, 1993; Shrout & Bolger,

2002). Mediation occurs when the following conditions are met (Preacher & Leonardelli, 2006):

1. The relationships between the main IV and mediators are statistically significant.

2. The relationships between mediators and the DV are statistically significant.

3. A statistically significant relationship between the main IV and the DV exists in the

absence of mediators.

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4. The impact of the IV on the DV shrinks with the appearance of mediators. The effect of

mediation equals the decreased percentage of the coefficient of the main IV.

Mediators include eight different facets of formalization. In the current study, the first

step of the mediation test is to examine whether teamwork and formalization differ between

public and private organizations. Testing whether formalization impacts teamwork is the second

step. If these two conditions are met, then teamwork is regressed on the main independent

variable (i.e. public sector or GOV) with and without mediators in different models, thereby

comparing the coefficients of GOV in these models.

Analyses

The first step of our analyses was to compare whether public organizations are structured

more formally than private organizations, and in addition, whether public sector workers are

more likely to work in teams than private sector workers. Because both teamwork and

formalization are measured by several dummy variables, it is inappropriate to use either mean

comparison tests (T-tests) or nonparametric tests (Mann-Whitney and Kruskal-Wallis tests).

Instead, we presented the percentage of each item in the full sample, public sample, and private

sample. We also employed phi coefficients to examine whether public-private distinction is

significantly related to each teamwork and formalization item.5 The results in Table 1 show that

public sector workers are more likely than their private sector peers to work in teams. The

difference for the use of teamwork in general is 84.4% – 62.9% = 21.5%. The difference for the

use of decision-oriented teamwork is 76.1% – 49.5% = 26.6%, higher than the use of self-

directed teamwork 36.2% – 18.9% = 17.3%. This provides evidence supporting Hypothesis 2.6

The results also indicate that the levels of formalization are consistently higher in the public

sector than in the private sector, and this difference is statistically significant according to the phi

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coefficients. That is, our Hypothesis 1a received solid support as well. Results in Table 2 show

that public organizations are generally older than larger than business enterprises.

[Insert Table 1 and Table 2 Here]

The second step of our analyses was to explore whether formalization positively predicts

the occurrence of teamwork (i.e. Hypothesis 1b). The dichotomous nature of the DVs (i.e.

general teamwork and self-directed teamwork) required us to test our hypothesis 1b with logit

regression. Due to the concern of regression parsimony, we combined the items falling into the

same formalization category. For example, we summed up four items used to measure work

safety. The internal reliability of each construct reaches an acceptable level.7 The results of

bivariate (i.e. one IV plus one DV) logit regression Table 3 show that almost each formalization

variable (with the exception of departmentalization of personnel protection in predicting self-

directed teamwork), is positively associated with both general teamwork, decision-oriented

teamwork, and self-directed teamwork, thus providing support for Hypothesis 1b. In addition,

both organizational age and size are also positively related to different types of teamwork,

evidence suggesting that age and size are essential MVs.

[Insert Table 3 Here]

The last step of out analyses was to examine whether different levels of formalization

between public and private organizations are main reasons leading to their different use of

teamwork (i.e. Hypothesis 1c). To conduct the analysis, we entered both the main IV (i.e. GOV)

and CVs in the logit regression model with and without mediators then examined the change of

the coefficient of GOV. Table 4 shows that results when we used general teamwork as the DV.

The coefficient of GOV is statistically significant at the 99% confidence level with a marginal

effect of .244 (B = 1.53, z = 4.43) after controlling for several teamwork-related variables, as

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Model 1 shows. It means that the probability for public sector core workers to work in teams is

24.4% higher than the probability for private sector core workers to be involved in teamwork

(holding other variables at their means). This percentage is slightly higher than the result

obtained in Table 1 (21.5%). After entering eight formalization variables in Model 2, we found

that (1) the statistical significance disappeared (B = 0.60, z = 1.48), (2) the marginal effect

dropped from .244 to .103 (approximately 58% decrease). This test indicates that different levels

of formalization between public and private organizations account for 58% different use of

general teamwork between these two respective sectors. By using size and age as mediators as

Model 3 show, we found that 43% of the different use of general teamwork results from the gaps

of size and age between public and private organizations. After we entered all MVs into the

model, as Model 4 shows, the marginal effect dropped from .244 to .021 (approximately 91%

decrease), a very sharp change. This finding informs us that formalization, age, and size all

together explain 91% of the different use of general teamwork between governmental

organizations and business enterprises.


We repeated the same procedures to test how much formalization, age, and size can

explain the different use of decision-oriented teamwork and self-directed teamwork between

public and private organizations. We reported the results in Table 5 and Table 6. Statistical

findings show that 54% different use of decision-oriented teamwork between public and private

organizations can be explained by their different levels of formalization, but only 39% is a result

of the size gap and age gap. However, the mediation effect of formalization is almost as strong

as the effect of size and age when self-directed teamwork was used as the DV (approximately

61% ~ 62%), as Table 6 shows. These two sets of MVs jointly explain 80% different use of

21

decision-oriented teamwork and 98% different use of self-directed teamwork between public and

private organizations. Findings in Table 4, Table 5, and Table 6 also imply that the mediation

effect led by formalization is independent from the effect originating from age and size.

[Insert Table 5 and Table 6 Here]

As to control variables, profit-sharing and job rotation were more influential variables as

compared to group incentives and home worker percentage. We also hypothesized that

supervision is an important predictor for general teamwork and decision-oriented teamwork

whereas autonomy is more critical in predicting self-directed teamwork. This also received

considerable support.

We encourage readers to use caution in interpreting statistical significance of mediators

including formalization, age, and size in Table 4, Table 5, and Table 6. Statistically insignificant

coefficients may be a consequence of multicollinearity. In the last model (Model 4) of these

tables, we found one uncentered variance inflation factor (uncentered VIF) over 10, several over

6, and the average equals 4.4 in Table 7. That is, the regression results do not justify an

interpretation of statistically insignificant coefficients of formalization as “zero impact” in a

model with multiple formalization variables. The true impacts of formalization on teamwork

appear in Table 3.8


Conclusion

The present research attends to an important issue in the field of management that does

not receive a lot of attention specific to public sector settings: teamwork. Given the prevalence

of information intensity and the necessity of tacit knowledge exchange, teamwork may well play

a more critical role in the public than in the private sector. The theory of bureaucratization, on

22

the other hand, may suggest that public sector workers are less likely than private sector workers

to work in teams. There was little or no empirical evidence prior to this study.

Fortunately, variables indicating formalized protection in the NOS 2002 dataset provide a

means for us to look more deeply into this problem. After reviewing relevant literature

concerning organizational structure and human resource management, we anticipated that

formalization in several personnel dimensions enhances organization members’ sense of security

so that they may demonstrate stronger willingness to work in teams. Given that public

organizations are more formally structured especially in personnel rules and procedures,

governmental employees tend to work under stronger protections so that they would be more

willing to organize in teams than do their peers in business enterprises. This hypothesis received

strong support from our statistical analyses. Our mediation-embedded models showed that

approximately 55% ~ 60% of the different presence of teamwork between governments and

business enterprises can be explained by formalization. The rest 40% ~ 45% differences,

however, can be mostly explained by organizational age and size. In addition, we also found that

public sector employees are more likely to be engaged in decision-oriented than self-directed

teamwork. This preference may be associated with the need for empowerment in self-directed

teams, a need in conflict with bureaucratic control.

In sum, we contend that our findings have provided strong evidence on an old-fashioned,

but still intriguing question: does sector matter? After controlling for various teamwork-related

variables, we found that sector affiliation still significantly predicts the occurrence of teamwork,

especially decision-oriented teamwork. A strong teamwork propensity for individuals in the

public sector stems from a solid foundation of formalized personnel protection, work safety,

procedures for dispute resolution, procedures for sexual harassment complaints, job documents,

23

employment contracts, formal training, and promotion channels. The findings also suggest that

public management scholars should conceptually differentiate “good” and “bad” formalized rules

given that they have quite different implications to organizational behavior such as teamwork.

Finally, we urge scholars to keep exploring relevant topics of public sector teamwork. As an

effective practice that facilitates organizational learning and problem solving, teamwork has

received relatively little attention in the field of public management. More research effort is

required to help us understand teamwork dynamics in public organizations.

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Tables and Figures

Table 1 Public-Private Comparison on Teamwork and Formalization

Full Public Private Phi N % N % N % Teamwork (DVs) General teamwork 504 67.7% 109 84.4% 394 62.9% .19*** Decision-oriented teamwork 502 55.4% 109 76.1% 392 49.5% .22*** Self-directed teamwork 492 22.6% 105 36.2% 386 18.9% .17***

Formalization (Mediators or MVs) 1. Work safety Work safety department 501 39.9% 108 62.0% 392 33.7% .24*** Safety & hygiene documents 505 70.7% 109 85.3% 395 66.6% .17*** Workplace violence documents 505 60.4% 108 88.9% 396 52.5% .31*** Weapon rules and policies 505 62.0% 107 85.0% 397 55.7% .25***

2. Personnel protection Labor relations department 503 40.0% 109 55.0% 393 35.9% .16*** EEO/AA department 502 22.5% 108 42.6% 393 17.0% .25***

3. Dispute resolution Dispute resolution procedures 500 62.6% 108 90.7% 391 54.7% .31***

4. Sexual harassment complaints Complaints procedures 504 63.3% 109 88.1% 394 56.3% .27***

5. Job documents Written job description 508 74.0% 110 90.0% 397 69.5% .19*** Written job performance 508 67.1% 110 87.3% 397 61.5% .23***

6. Promotion channels Formal promotion to higher COREs 500 33.2% 110 56.4% 389 26.7% .26*** Formal promotion above COREs 498 48.0% 109 77.1% 388 39.7% .31***

7. Training Formal job training 510 67.3% 112 83.9% 397 62.5% .19***

8. Employment contracts Formal employment contracts 505 38.6% 110 66.4% 394 30.7% .30***

Phi coefficient shows whether the distribution of DVs and MVs is different between public and private samples *p < .10; **p < .05; ***p < .01

Table 2 T-tests: Public-Private Comparison on Size and Age Full sample Public sample Private sample Difference Sig Organization size 427.3 1104.3 240.1 864.2 ***

Organization age 40.2 69.4 33.5 35.9 *** *p < .10; **p < .05; ***p < .01

29

Table 3 The Impacts of Mediators on Teamwork: Bivariate Logit Regression General teamwork Decision-oriented

teamwork Self-directed teamwork

Coef. (p) N Pseudo R square



Formalization

Work safety 0.51*** (0.00)

484 0.10 0.37*** (0.00)

482 0.06 0.24*** (0.00)

476 0.02

Personnel protection 0.65*** (0.00)

499 0.05 0.63*** (0.00)

489 0.04 0.15 (0.27)

482 0.01

Dispute resolution procedures 2.09*** (0.00)

499 0.10 1.24*** (0.00)

490 0.06 0.95*** (0.00)

483 0.03

Harassment complaint procedures

1.74*** (0.00)

503 0.08 1.30*** (0.00)

491 0.07 0.82*** (0.00)

483 0.02

Job documents 0.77*** (0.00)

501 0.05 0.68*** (0.00)

495 0.05 0.28** (0.05)

486 0.01

Promotional channels 0.92*** (0.00)

490 0.09 0.92*** (0.00)

488 0.10 0.49*** (0.00)

480 0.03

Formal training 1.09*** (0.00)

501 0.05 1.16*** (0.00)

499 0.05 0.62** (0.01)

490 0.01

Employment contracts 0.64*** (0.00)

495 0.02 0.69*** (0.00)

493 0.02 0.77*** (0.00)

484 0.02

Size and age

Organization age/100 1.29*** (0.00)

460 0.03 1.05*** (0.00)

459 0.02 0.77** (0.01)

450 0.01

Organization size (log) 0.34*** (0.00)

488 0.10 0.29*** (0.00)

486 0.08 0.15*** (0.00)

477 0.02

*p < .10; **p < .05; ***p < .01

30

Table 4 Logit Regression Model for Mediation Tests: General Teamwork as DV Model 1 Model 2 Model 3 Model 4

Coef. Coef. Coef. Coef. Main independent variable GOV (public sector = 1; private sector = 0; z values in parentheses)

1.53*** (4.43)

0.60 (1.48)

0.81* (1.92)

0.12 (0.25)

Controls Autonomy -0.12 0.01 0.07 0.13 Supervision 0.46*** 0.42*** 0.42*** 0.44*** Group incentives 0.37 0.20 0.19 0.16 Pay for learning new skills 0.57** 0.26 0.68 0.45 Profit sharing 0.65** 0.43 0.36** 0.32 Home worker percentage -0.32 -0.36 -0.11 -0.48 Cross training 0.15 0.14 0.13 0.12 Job rotation 0.87*** 0.82*** 0.70** 0.75**

Formalization Work safety -- 0.01 -- -0.05 Personnel protection -- 0.16 -- -0.09 Dispute resolution procedures -- 0.75** -- 0.80** Sexual harassment complaint channels -- -0.23 -- -0.42 Job documents -- 0.02 -- -0.02 Promotional channels -- 0.46** -- 0.41* Training -- 0.14 -- 0.14 Employment contracts -- 0.20 -- 0.32

Size and age Organization age/100 -- -- 0.26 0.32 Organization size (log) -- -- 0.29*** 0.21**

Constant -1.16*** -1.96*** -2.33*** -2.61*** N 455 425 411 385 Pseudo R square 0.16 0.20 0.21 0.22

Calculation of mediation effects Marginal effects of GOV 0.244 0.103 0.139 0.021 Decreased marginal effect (%) -- 58% 43% 91%

*p < .10; **p < .05; ***p < .01

31

Table 5 Logit Regression Model for Mediation Tests: Decision-Oriented Teamwork as DV Model 1 Model 2 Model 3 Model 4


1.44*** (4.98)

0.62* (1.83)

0.82** (2.36)

0.26 (0.68)

Controls Autonomy 0.12 0.28** 0.28** 0.34** Supervision 0.26** 0.25** 0.26** 0.30** Group incentives 0.36 0.29 0.23 0.26 Pay for learning new skills 0.53** 0.17 0.56** 0.28 Profit sharing 0.59** 0.40 0.36 0.36 Home worker percentage -0.66 -0.47 -0.46 -0.61 Cross training 0.06 0.02 0.04 -0.03 Job rotation 0.71*** 0.70** 0.56** 0.67

Formalization Work safety -- -0.23 -- -0.32 Personnel protection -- 0.17 -- 0.01 Dispute resolution procedures -- 0.61* -- 0.69* Sexual harassment complaint channels -- 0.20 -- 0.10 Job documents -- 0.06 -- -0.01 Promotional channels -- 0.58*** -- 0.57*** Training -- 0.32 -- 0.36 Employment contracts -- 0.35 -- 0.46*

Size and age Organization age/100 -- -- 0.13 0.11 Organization size (log) -- -- 0.25*** 0.16*



*p < .10; **p < .05; ***p < .01

32

Table 6 Logit Regression Model for Mediation Tests: Self-Directed Teamwork as DV Model 1 Model 2 Model 3 Model 4


1.04*** (3.63)

0.45 (1.36)

0.45 (1.31)

0.03 (0.08)

Controls Autonomy 0.49*** 0.59*** 0.60*** 0.63*** Supervision 0.00 -0.02 0.00 -0.02 Group incentives -0.05 -0.04 -0.20 -0.10 Pay for learning new skills 0.27 -0.18 0.31 -0.10 Profit sharing 0.72** 0.64** 0.72** 0.70** Home worker percentage -1.25* -1.15 -1.18 -1.36 Cross training -0.16 -0.07 -0.32 -0.23 Job rotation 0.60** 0.64** 0.67** 0.70**

Formalization Work safety -- 0.00 -- -0.04 Personnel protection -- -0.28 -- -0.22 Dispute resolution procedures -- 0.90* -- 0.97* Sexual harassment complaint channels -- 0.11 -- -0.01 Job documents -- -0.35 -- -0.30 Promotional channels -- 0.37** -- 0.41** Training -- 0.09 -- 0.05 Employment contracts -- 0.80*** -- 0.77**

Size and age Organization age/100 -- -- 0.46 0.37 Organization size (log) -- -- 0.11* 0.01



*p < .10; **p < .05; ***p < .01

33

Table 7 Uncentered VIFs Variable VIF Formalized work safety 10.38 Written job documents 8.72 Organization size 7.76 Supervision 7.36 Sex harassment compliant procedures 7.08 Dispute resolution procedures 7.02 Autonomy 6.61 Formal training 4.20 Cross trained (in skills for more than one job)

3.41

Formalized promotion channels 3.25 Organization age 3.11 Formalized personnel protection 2.85 Documented contracts 1.95 Profit sharing 1.90 Job rotation 1.84 Pay for learning new skills 1.84 GOV (main IV) 1.77 Group incentives 1.35 Core workers at home 1.26 Mean VIF 4.40

34

Appendix A: Variable Measurement

Dependent variables Teamwork: All variables are measured by a dummy scale question; 1 = yes, 0 = no. General teamwork: When Cores do their job, are they involved in teams? Decision-oriented teamwork: Do these teams make decisions about task assignments or work

methods? Self-directed teamwork: Do these teams choose their own leaders?

Control variables (1) Organization Age (in years) (2) Organization Size (log): Number of full time employees (3) Autonomy: One variable measured by a 1-5 ordinal scale question; 5 denotes the highest. How much choice do your Cores have concerning the best way to accomplish their

assignments…no choice, a small choice, a moderate amount, a large amount, or complete choice?

(4) Supervision: One variable measured by a 1-5 ordinal scale question; 5 denotes the highest. Which best describe how closely Cores are supervised as they do their work…no supervision,

a small amount, a moderate amount, a large mount, a large amount, or complete supervision? (5) Group-based monetary rewards: All variables are measured by a dummy scale question; 1 =

yes, 0 = no. Are any COREs paid using group incentives, such as gain sharing? Do any COREs receive pay for learning new skills? Do any COREs participate in a profit-sharing or bonus program? (6) Percentage of workers working at home (7) Cross-unit work experience: Both variables are measured by a dummy scale question; 1 =

yes, 0 = no. Are any COREs cross-trained? Are COREs involved in job rotation?

35

Formalization variables (mediators)

(1) Formalization of work safety: All variables are measured by a dummy scale question; 1 =

yes, 0 = no. We sum up the four variables. (KR-20 = .81) Is a separate department, section, or officer responsible for worker safety at the establishment? Does each of the following documents exist in your organization?

1. Documents describing safety and hygiene practices 2. Documents describing policy about workplace violence 3. Documents addressing rules and policy about weapons on the premises

(2) Formalization/departmentalization of personnel protection: All variables are measured by a

dummy scale question; 1 = yes, 0 = no. We sum up the three variables. (KR-20 = .72) Is there a separate department or section for personnel or labor relations? Is there a separate department or section responsible for Equal Employment Opportunity or

Affirmative Action matters? (3) Formalization of a dispute resolution procedure: A single variable measured by a dummy

scale question; 1 = yes, 0 = no. Are there formal procedures for resolving disputes between employees and their supervisors

or coworkers? (4) Formalized procedures for sexual harassment complaints: A single variable measured by a

dummy scale question; 1 = yes, 0 = no. Is there a formal procedure by which employees may make complaints about sexual

harassment by co-workers or supervisors? (5) Formalization of job training: A single variable measured by a dummy scale question; 1 =

yes, 0 = no. In the past two years, did your establishment provide any COREs with formal job training? (6) Formalization of written documents: All variables are measured by a dummy scale question:

Do each of the following documents exist in your organization? 1 = yes, 0 = no. We sum up the three variables. (KR-20 = .78)

Written job description Written record of nearly everyone’s job performance

(7) Formalization of employment contracts: A single variable measured by a dummy scale

question; 1 = yes, 0 = no.

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Does (documented) employment contract exist in your organization? (8) Formalization of promotion channels: Both variables are measured by a dummy scale

question; 1 = yes, 0 = no. We sum up the two variables. (KR-20 = .70) Are the procedures for promoting COREs to a higher level formal or informal? Are the procedures for a CORE to be promoted to a job above CORE formal or informal?

Endnotes

1 A factor contributing to reduced role ambiguity notwithstanding, formalization may increase one’s role stress (Agarwal, 1993) and role conflict (Organ & Greene, 1981). 2 The unit of analysis in the NOS 2002 dataset is the organization. The NOS 2002 study took elaborate measures to identify establishments and respondents. According to the codebook for the study, the intended respondent is “the Human Resource manager or the person who does the hiring for the establishment.” 3 Nonprofits are included in the category of private organizations. 4 Indeed, virtual teams are available for people working at home. Considering that internet connection was less popular and the speed was slower in 2002, we believe that the percentage of home workers is an influential element in predicting teamwork. 5 The phi correlation coefficient is used when both variables are dichotomies. The phi coefficient is equal to SQRT (chi-square/N). The command of “phi” in the State packet allows us to obtain phi coefficients. 6 We also conducted bivariate logit regression by using three types of teamwork as DVs and public-private distinction as the main IV. The marginal effects obtained from these two regression models resemble the results of public-private differences in Table 1. 7 Variables in each category of formalization have a high level of internal reliability. Because variables used to measure formalization in NOS 2002 are dichotomous, we measure the internal reliability by employing the Kuder-Richardson Formula 20 (KR-20) instead of Cronbach's α. KR-20 is analogous to Cronbach's α, except Cronbach's α is used for continuous measures. The command of “KR20” in the State packet allows us to obtain KR-20 values. 8 We also found that correlations between any two formalization variables are statistically significant at the 95% confidence level. Many of them are approaching .70 and some are higher than .70. Correlation matrix is available upon request.