Incentives for Creativity: Limits of Objective Performance Evaluation

21 Pages Posted: 2 Mar 2013 Last revised: 4 Dec 2013

See all articles by Alwine Mohnen

Alwine Mohnen

TUM School of Management; IZA Institute of Labor Economics

Andreas Ostermaier

University of Southern Denmark - Department of Business and Economics

Date Written: January 31, 2013

Abstract

Creativity is crucial for companies to remain innovative and competitive. While incentives for creativity have drawn much attention, its measurement, surprisingly, has not. In this paper, we investigate the effects of subjective versus objective performance measurement on creativity. We find that objective evaluation has both positive and negative effects. While it motivates more effort than subjective evaluation, it also misdirects effort: any objective measure is only a proxy for creativity, which is subjective, and therefore causes goal incongruence. To explore this trade-off, we conduct a laboratory experiment where a Scrabble-like real-effort task is solved under different incentive schemes, simulating subjective (jury ratings) and objective performance evaluation (Scrabble scores). We find that the positive effect of motivation counterbalances the negative effect of incongruence, so that objective evaluation results in the same level of creativity as subjective evaluation. We conclude that both effects have to be taken into account, since objective measurement can override but not avoid incongruence.

Keywords: Creativity; subjective performance evaluation; goal incongruence; surrogation

JEL Classification: C91, J33, M41, M52

Suggested Citation

Mohnen, Alwine and Ostermaier, Andreas, Incentives for Creativity: Limits of Objective Performance Evaluation (January 31, 2013). Available at SSRN: https://ssrn.com/abstract=2210321 or http://dx.doi.org/10.2139/ssrn.2210321

Alwine Mohnen

TUM School of Management ( email )

Arcisstrasse 21
Munich, DE 80333
Germany

IZA Institute of Labor Economics ( email )

P.O. Box 7240
Bonn, D-53072
Germany

Andreas Ostermaier (Contact Author)

University of Southern Denmark - Department of Business and Economics ( email )

DK-5230 Odense
Denmark

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