Is IT That You Can’t Learn, Or You Won’t Learn? Technology-Enabled Monitoring and Heterogeneity in Sales Performance

Abstract

Problem Definition: This work investigates the effect of technological monitoring on salesforce efficacy. While prior research has investigated the creation of incentive packages to resolve the principal-agent problem in sales, the efficacy of increasingly inexpensive and widely available technological monitoring has received less attention. We argue that the effect of such programs on salesperson performance is ambiguous. On the one hand, such programs may increase performance by increasing transparency between the principal and agent. On the other hand, such programs may create crowd out effects that erode performance.

Methodology/Results: We investigate these questions using a unique Chinese B2B platform specializing in products for infants. To identify the effect of monitoring on performance we exploit the rollout of a de novo cell phone GPS monitoring program using a first differences and a difference-in-differences approach. Results indicate that implementing a monitoring system significantly increases salesperson performance (~4%). However, results suggest considerable heterogeneity across salespersons, with underperformers experiencing significant improvements but negative effects accruing for extreme high performers. Empirical extensions suggest the beneficial effect for underperformers is primarily due to effort (as opposed to upskilling), while the deleterious effect for high performers results from the disruption of high performers’ established routines (as opposed to a changed relationship with the firm) leading to suboptimal effort allocation across their assigned store portfolio.

Managerial Implications: These findings provide evidence of both the benefits and drawbacks of monitoring programs and the need for managers to be cognizant of both the reasons their salesforce is underperforming (i.e., salesperson capability versus salesperson effort) and whom they are electing to monitor (high versus low performers). Further, these findings provide cautionary evidence against the wholesale implementation of monitoring, as it may disrupt well-established and successful routines. Theoretically, this work integrates the hitherto disparate concepts of compensation design and the effects of technology-enabled monitoring. Finally, by stratifying salespersons based on their past performance, we illustrate boundary conditions between transparency effects and crowd out effects and provide insights into the mechanisms behind performance changes.

Keywords: B2B platforms, sales, sales monitoring, performance heterogeneity