Does surveillance destroy organizational value?

Purpose The study seeks to determine whether workplace surveillance reduces principal–agent problems and generates net organizational value, especially in public agencies where incentive pay is limited. Design/methodology/approach The study exploits the staggered rollout of a state-run vehicle monitoring system as a natural experiment using administrative data on fuel use, maintenance, accidents and driving behavior. Findings Increased monitoring significantly reduces fuel, maintenance and accident costs by improving driving behavior, including greater seat-belt use and reductions in speeding and unauthorized vehicle use. The first-year return on investment is approximately 32%, with no evidence of worse performance or absenteeism. Originality/value The paper provides real-world causal evidence that technology-based surveillance can reduce moral hazard and substitute for incentive contracts in public organizations.