The Effects of Incentive Scheme and Task Difficulty on Employees’ Altruistic Behavior Outside the Firm

48 Pages Posted: 7 Sep 2019

See all articles by Andrew H. Newman

Andrew H. Newman

University of South Carolina

Ivo Tafkov

Georgia State University

Flora H. Zhou

Bentley University

Multiple version iconThere are 2 versions of this paper

Date Written: September 4, 2019

Abstract

Employer-sponsored opportunities for altruism outside the workplace can improve employee engagement and passion within the firm, enhance the firm’s corporate visibility, and improve its recruitment. There is limited understanding of whether and how a firm’s management control system on employees’ daily tasks can influence employee willingness to engage in altruism outside the workplace. In this study, we investigate via an experiment how the incentive scheme (tournament vs. piece-rate) on employees’ daily tasks interacts with the difficulty level of these tasks (low vs. high) to affect employees’ altruistic behavior outside the firm. Our results indicate that, compared to a piece-rate scheme, a tournament scheme leads to a greater decrease in non-winning participants’ altruistic behavior outside the firm when the original, incentivized task is more difficult compared to when it is less difficult. Consistent with our theory, participants’ feelings of excessive entitlement partially mediate the interaction effect of incentive scheme and task difficulty on participants’ altruistic behavior outside the firm. This study informs firms about how the design of its incentive scheme on employees’ daily task inside the firm and the nature of that task can influence employee willingness to act altruistically outside the firm.

Keywords: altruistic behavior; excessive entitlement; tournaments; incentives; task difficulty

JEL Classification: M14, M41

Suggested Citation

Newman, Andrew H. and Tafkov, Ivo and Zhou, Flora H., The Effects of Incentive Scheme and Task Difficulty on Employees’ Altruistic Behavior Outside the Firm (September 4, 2019). Available at SSRN: https://ssrn.com/abstract=3447962 or http://dx.doi.org/10.2139/ssrn.3447962

Andrew H. Newman

University of South Carolina ( email )

Columbia, SC
United States

Ivo Tafkov

Georgia State University ( email )

35 Broad Street
Atlanta, GA 30303-3083
United States

Flora H. Zhou (Contact Author)

Bentley University ( email )

175 Forest Street
Waltham, MA 02145
United States

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