In a now published paper in Games and Economic Behavior, Jonathan Newton, Andrew Wait and Simon Angus show how collective choices made by employees around a watercooler can have profound effects on behavior within a firm.
Modeling firms as networks of employees, occasional collaborative decision making around the office watercooler changes long run employee behavior (corporate culture). The culture that emerges in a given team of employees depends on team size and on how the team is connected to the wider firm. The implications of the model for organizational structure are explored and related to trends in the design of hierarchies.