The Effect of Task Interdependence and Type of Incentive Contract on Group Performance

We extend Fisher et al. (2003) to investigate the effectiveness of a budget-based incentive contract to settings with alternate task characteristics.We first replicate their finding: when groups perform a task with an additive production function, a budget-based contract leads to higher levels of pe...

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Bibliographic Details
Published inJournal of management accounting research Vol. 20; no. s1; pp. 1 - 18
Main Authors Guymon, Ronald N., Balakrishnan, Ramji, Tubbs, Richard M.
Format Journal Article
LanguageEnglish
Published Sarasota American Accounting Association 01.01.2008
Subjects
Effectiveness studies
Equilibrium
Expected utility
Hypotheses
Incentive plans
Motivation
Production functions
Studies
United States > US
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Summary:We extend Fisher et al. (2003) to investigate the effectiveness of a budget-based incentive contract to settings with alternate task characteristics.We first replicate their finding: when groups perform a task with an additive production function, a budget-based contract leads to higher levels of performance than a piece-rate contract. However, we do not find higher performance when we modify the task to be interdependent, arguably a key feature of group tasks. We also show that goal commitment mediates the incentive contract-performance relation for tasks with an additive production function. Collectively, these results suggest that variations in production technology influence the relative motivational effectiveness of different incentive plans.
ISSN:1049-2127
1558-8033
DOI:10.2308/jmar.2008.20.s-1.1