How Employer Decisions on Work Location and Monitoring Shape Employee Behavior

Today’s working environment is shaped by two megatrends: telecommuting and surveillance. Although both are widespread in practice, research on how an employer’s decision to allow or deny telework affects employee behavior and interacts with monitoring remains scarce. In an experiment, we examine employees’ effort and misreporting as responses to employer-assigned work location. We focus on a setting that allows employees to reciprocate for the employer’s decision to allow telecommuting (or not) and to use monitoring (or not). Consistent with our predictions, employees assigned to telework exhibit greater effort and misreport less than those assigned to office work. A path analysis and results from a follow-up study reveal the role of reciprocity. Moreover, we find that monitoring leads to a greater reduction in effort and misreporting when employees are assigned to office work compared with telework. Our study provides important implications for the design and implementation of management control systems. Data Availability: Contact the authors. JEL Classifications: M41; M50; J81.