The Korean Journal of Economic Studies
Measuring Relative Productivity of Team Production: Evidence from Hospital Service Industry
Myung-Joong Kwon (Yonsei University Wonju Campus), Mikyung Yun (The Catholic University of Korea) and Sang-Hyuk Cho (Yonsei University)Year 2018Vol. 66No. 4
 This paper investigates the problem of measuring productivity of team production. A team production function is developed, and a new, relative productivity index that not only enables measuring but also comparing the productivity of each cooperating team, is devised. Utilizing this innovative method to measure relative productivity of 86 hospitals with more than 100 beds, the following empirical results are obtained. Estimation of the team production function shows that: ① coefficients for labor is significantly different from the ordinary production function; ② team production function displays sub additivity, confirming that there is synergy effect; and ③ demand constraint, technology, and hospital heterogeneity all affect productivity. Analysis of the relative productivity index shows that: ① it is possible to compare individual labor and team productivities of individual hospitals; ② O-ring effect is relatively low in nurses-laboratory staff team cooperation while it is high in doctor-nurse team cooperation; ③ synergy effect is similar across cooperation between various teams, except those between doctor-office staff and nurse-laboratory staff; ④ synergy effect is likely to be greater, the greater the productivity differences between participants in a team. These results show that for greater accuracy of measurement, the relative productivity method is essential and that such a method also widens the scope of productivity analysis. This study thus fills the gap in team production and team productivity measurement literature.