The effect of relative performance feedback on individual performance in team settings under group-based incentives

Fecha: 07 de enero, 15:30 horas, sala P 30, Facultad de Economía y Negocios

Expositor: David Naranjo-Gil, Catedrático de Economía Financiera y Contabilidad en la Universidad Pablo de Olavide

Abstract. Psychology and accounting research argue that relative performance feedback is a source of social comparison information, and it will affect individual performance even in the absence of monetary incentives. This study combines both research fields to analyse whether the effect of relative performance feedback (RPF) on individual performance depends on the focus on comparison when individuals are compensated by a group incentive system. We argue that the lower usefulness of within-group RPF under a group-based incentive scheme mitigates the motivation effect inherent in RPF. We predict a negative effect of RPF on individual performance when comparison is focused on other members within the team (within-group RPF). We also predict that comparison focused on other teams (between-group RPF) moderates that negative effect, since it encourages individuals to focus on group goals rather than individual goals. To test our predictions, we conducted a lab experiment with 90 participants. Consistent with our predictions, results show that the negative effect of within-group RPF on individual performance is mitigated by between-group RPF. Our results can help accountants to better understand how the effects of relative performance feedback differ according to the predominant comparison target