Article | Administrative Science Quarterly | June 2012

The Transparency Paradox: A Role for Privacy in Organizational Learning and Operational Control

by Ethan S. Bernstein

Abstract

Using data from embedded participant-observers and a field experiment at the second largest mobile phone factory in the world, located in China, I theorize and test the implications of transparent organizational design on workers' productivity and organizational performance. Drawing from theory and research on learning and control, I introduce the notion of a transparency paradox, whereby maintaining observability of workers may counterintuitively reduce their performance by inducing those being observed to conceal their activities through codes and other costly means; conversely, creating zones of privacy may, under certain conditions, increase performance. Empirical evidence from the field shows that even a modest increase in group-level privacy sustainably and significantly improves line performance, while qualitative evidence suggests that privacy is important in supporting productive deviance, localized experimentation, distraction avoidance, and continuous improvement. I discuss implications of these results for theory on learning and control and suggest directions for future research.

Keywords: transparency; privacy; organizational learning; Operational Control; organizational performance; Chinese Manufacturing; field experiment; Performance Productivity; Theory; Boundaries; Interpersonal Communication; Collaborative Innovation and Invention; Innovation and Management; Job Design and Levels; Working Conditions; Leadership Style; Business or Company Management; Management Practices and Processes; Production; Organizational Design; Groups and Teams; Networks; Labor and Management Relations; Social and Collaborative Networks; Power and Influence; Adaptation; Manufacturing Industry; China;

Citation:

Bernstein, Ethan S. "The Transparency Paradox: A Role for Privacy in Organizational Learning and Operational Control." Administrative Science Quarterly 57, no. 2 (June 2012): 181–216.