Within-Firm Spillover Dilution Control

In Simple Words

Imagine testing a new internal recipe at one fast-food branch while attempting to keep a sister branch in the same city as an unexposed control group. Store managers routinely talk and share techniques, causing the new recipe to spread to the control store and ruining the experiment.

Research question

Randomizing individual branch locations of multi-establishment corporations risks information sharing and cross-branch treatment contamination that dilutes estimated intervention effects.

Participants

N = 8,232 initially randomized establishments pruned to N = 7,438 unique firms across mainland France.

Study Design

Ex-post experimental sample restriction excluding multi-branch corporate entities prior to treatment effect estimation.

Results

Removing multi-establishment corporate branches prevented internal information spillovers, maintaining orthogonal treatment variation across 7,438 independent establishments.

Takeaway

Exclude multi-branch corporate establishments from organizational field trials to prevent internal knowledge spillovers from contaminating control units.

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