Simon Piest

Title of Dissertation:
Relative Performance Incentive Schemes in Organizations and their Negative Consequences

Supervisor: Prof. Dr. Philipp Schreck
University: Martin-Luther-University Halle-Wittenberg
Scholarship: KSG Scholarship
Cohort: 2. Cohort, 2015-2018

• Short Abstract

  Contests are widely used in business contexts because competition is believed to increase effort and performance. A downside of competition is that it also encourages unethical behavior, such as sabotage. Sabotage refers to costly activities that employees carry out in order to reduce the performance of competitors; for instance by spreading negative rumors about them (Chen, 2003; Lazear, 1989). Sabotage among employees is always undesired because it reduces overall output (Chen, 2003; Chowdhury & Gürtler, 2015).

  As a first step, we review the literature on competition and unethical behavior. We find a significant lack of terminological clarity: the same terms are often used to refer to different concepts, while different terms are used to refer to similar concepts. Stanne, Johnson, and Johnson (1999, p. 134) state that “competition has been defined as a situational variable, a cognitive variable, a trait, a motive, or an attitude.” We suggest that this confusion is not merely a matter of terminology but that it reflects a lack of conceptual clarity on a more fundamental level. In our view, this lack of clarity hinders the progress of research because it impedes the integration of existing knowledge on the behavioral consequences of competition and the development and use of appropriate measuring instruments.

  To tackle the problem, we develop a simple but comprehensive conceptual framework for studying the relationship between competition and unethical behavior. The framework offers a clear terminology and helps integrate diverse studies from various fields, including economics and psychology.

  Moreover, we use our framework for reviewing and classifying the empirical literature on competition and unethical behavior. So far, individual competitiveness has been conceptualized as a stable trait variable, i.e., a preference (Newby & Klein, 2014). However, an individual’s competitiveness in a given situation is also dependent on situational factors (e.g., rivalry with a competitor; Kilduff, Galinsky, Gallo, & Reade, 2016). Following the state – trait distinction in psychology, we introduce the concept state competitiveness to account for situational differences in individual competitiveness. According to our framework, the specific characteristics of a contest (e.g., group size), together with moderating influences of the actor’s characteristics (e.g., trait competitiveness) and the situation’s characteristics (e.g., corporate culture) determine someone’s current state competitiveness, which in turn is associated with unethical behavior. In order to empirically test the concept state competitiveness and its relations to contest characteristics and unethical behavior, an instrument to measure the concept is necessary. We develop this instrument and provide initial evidence of its construct validity. In a first study (N=199) we construct a questionnaire with 10 items using factor analysis. A subsequent study (N=90) shows that the scale is moderately correlated with three established scales of trait competitiveness, suggesting convergent validity of state competitiveness. To demonstrate discriminant validity, we conduct a lab experiment in which subjects compete in a simple math task. We manipulate the contest design by varying prize spread.

  As a last step, we want to demonstrate the effect of state competitiveness on sabotage in a lab experiment. This would give us valuable insights into how competition unfolds its effects, and how contests need to be designed in order to yield performance increments among contestants, but not increase unethical behavior, such as cheating or sabotage.

  References

  • Chen, K. P. (2003). Sabotage in promotion tournaments. Journal of Law, Economics, and Organization, 19(1), 119-140.
  • Chowdhury, S. M., & Gürtler, O. (2015). Sabotage in contests: a survey. Public Choice, 164(1-2), 135-155.
  • Kilduff, G. J., Galinsky, A. D., Gallo, E., & Reade, J. (2016). Whatever it Takes to Win: Rivalry Increases Unethical Behavior. Academy of Management Journal, 59(5), 1508–1534.
  • Lazear, E. P. (1989). Pay equality and industrial politics. Journal of political economy, 97(3), 561-580.
  • Newby, J. L., & Klein, R. G. (2014). Competitiveness reconceptualized: Psychometric development of the competitiveness orientation measure as a unified measure of trait competitiveness. The Psychological Record, 64(4), 879-895.
  • Stanne, M. B., Johnson, D. W., & Johnson, R. T. (1999). Does competition enhance or inhibit motor performance: A meta-analysis. Psychological Bulletin, 125(1), 133-154.

• PhD Related Publications

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