Abstract

http://ssrn.com/abstract=1658642
 
 

References (26)



 


 



Effects on Strategy Development of Including Relative Performance Information in Incentive Scheme


Timothy Charles Miller


Xavier University - Department of Accountancy

W. Timothy Mitchell


University of Waterloo

Sean A. Peffer


University of Kentucky - Gatton College of Business and Economics

January 11, 2012


Abstract:     
Strategy development is important in complex, multi-period tasks, as it likely improves long-term performance. Firms commonly either provide Relative Performance Information (RPI) or contract on RPI to improve performance. However, we know little about how the different uses of RPI affect strategy development. We investigate how providing RPI vs. contracting on RPI affects strategy development in complex, multi-period tasks with short-term incentives. The results of our experiment show that only providing RPI reduces strategy development, as participants direct more of their current-period effort toward the task. However, contracting on RPI mitigates this effect and increases strategy development compared to only providing RPI. Our results suggest a potential cost to providing RPI. They suggest that if employers want to provide RPI without discouraging strategy development in complex, multi-period tasks, they should contract on RPI instead of providing it as ex post information only.

Number of Pages in PDF File: 30

Keywords: Strategy development, learning, comparative feedback, goals, rank-order tournaments

JEL Classification: M40, M46

working papers series


Download This Paper

Date posted: August 14, 2010 ; Last revised: April 10, 2012

Suggested Citation

Miller, Timothy Charles and Mitchell, W. Timothy and Peffer, Sean A., Effects on Strategy Development of Including Relative Performance Information in Incentive Scheme (January 11, 2012). Available at SSRN: http://ssrn.com/abstract=1658642 or http://dx.doi.org/10.2139/ssrn.1658642

Contact Information

Timothy Charles Miller
Xavier University - Department of Accountancy ( email )
United States
William Timothy Mitchell (Contact Author)
University of Waterloo ( email )
Waterloo, Ontario N2L 3G1
Canada
5198884567 x38084 (Phone)
Sean Peffer
University of Kentucky - Gatton College of Business and Economics ( email )
Lexington, KY 40506
United States
606-257-3149 (Phone)
606-257-3654 (Fax)
Feedback to SSRN


Paper statistics
Abstract Views: 1,002
Downloads: 136
Download Rank: 123,204
References:  26

© 2014 Social Science Electronic Publishing, Inc. All Rights Reserved.  FAQ   Terms of Use   Privacy Policy   Copyright   Contact Us
This page was processed by apollo6 in 0.391 seconds