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Reward System Design and Group Creativity: An Experimental Investigation

Posted: 9 Apr 2010 Last revised: 21 Sep 2012

Clara Xiaoling Chen

University of Illinois at Urbana-Champaign - Department of Accountancy

Michael G. Williamson

University of Illinois at Urbana-Champaign - Department of Accountancy

Flora H. Zhou

Georgia State University

Date Written: 2012

Abstract

In an environment where three-person groups develop a creative solution to an important problem, we examine whether the efficacy of either individual or group-based creativity-contingent incentives depends on whether they take the piece-rate or tournament form. We predict and find that group (intergroup) tournament pay increases group cohesion and collaborative efforts, which ultimately lead to a more creative group solution relative to group piece-rate pay. While individual (intragroup) tournament pay increases individual efforts, we find that it does not enhance the creativity of group solutions relative to individual piece-rate pay. Our results advance the burgeoning management accounting literature on creativity-contingent incentives by demonstrating that reward systems are more likely to promote group creativity through collaborative efforts rather than independent individual efforts. We also provide important insights into when and why tournament pay can boost group creativity in organizations. In doing so, we contribute to a better understanding of observations from practice suggesting that organizations valuing creativity often induce intergroup competition.

Keywords: Reward System Design, Incentives, Creativity, Groups, Tournaments

JEL Classification: M41, M52

Suggested Citation

Chen, Clara Xiaoling and Williamson, Michael G. and Zhou, Flora H., Reward System Design and Group Creativity: An Experimental Investigation (2012). Accounting Review, Vol. 87, No. 6, 2012. Available at SSRN: https://ssrn.com/abstract=1586924 or http://dx.doi.org/10.2139/ssrn.1586924

Clara Xiaoling Chen (Contact Author)

University of Illinois at Urbana-Champaign - Department of Accountancy ( email )

1206 South Sixth Street
Champaign, IL 61820
United States

Michael G. Williamson

University of Illinois at Urbana-Champaign - Department of Accountancy ( email )

1206 South Sixth Street
Champaign, IL 61820
United States

Flora H. Zhou

Georgia State University ( email )

P.O. Box 4050
Atlanta, GA 30302-4050
United States

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