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

Posted: 28 Mar 2008

See all articles by Ronald N. Guymon

Ronald N. Guymon

University of Illinois at Urbana-Champaign

Ramji Balakrishnan

University of Iowa - Department of Accounting

Richard M. Tubbs

University of Iowa - Department of Accounting

Abstract

We extend Fisher, Peffer, and Sprinkle (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.

Keywords: incentive contract, task interdependence, group performance, goal commitment

JEL Classification: J33, M40, M46

Suggested Citation

Guymon, Ronald N. and Balakrishnan, Ramji and Tubbs, Richard M., The Effect of Task Interdependence and Type of Incentive Contract on Group Performance. Journal of Management Accounting Research, Forthcoming, Available at SSRN: https://ssrn.com/abstract=1113199

Ronald N. Guymon

University of Illinois at Urbana-Champaign ( email )

601 E John St
Champaign, IL 61820
United States
7703099523 (Phone)

HOME PAGE: http://https://business.illinois.edu/profile/ronald-guymon/

Ramji Balakrishnan (Contact Author)

University of Iowa - Department of Accounting ( email )

108 Pappajohn Business Building
Iowa City, IA 52242-1000
United States
319-335-0958 (Phone)
319-335-1956 (Fax)

Richard M. Tubbs

University of Iowa - Department of Accounting ( email )

108 Pappajohn Business Building
Iowa City, IA 52242-1000
United States
(319) 335-0848 (Phone)
(319) 335-1956 (Fax)

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