The Effect of Outcome Feedback on Creativity: How Incentive Design Influences Future Creative Effort

Abstract

Prior research in accounting on creativity and how to motivate it has not considered the effect of

outcome feedback. We examine the effect of outcome-based feedback about the effectiveness of

various incentive schemes (i.e., quantity-based, creativity-based, and weighted incentives) on the

production of creative output. Using relative performance information (a form of outcome-based

feedback) allows us to separately examine any differential impact of feedback for higher and

lower performers on the effect of incentives on creativity. We find that lower performers who are

compensated with quantity-based incentives react to outcome feedback for round 1 performance

by adopting a quantity-first strategy and behave more like higher performers (from round 1) in

round 2, which leads to performance improvements in the production of high-creativity and most

creative output. We do not find similar reactions by lower performers in response to feedback for

creativity-based and weighted incentives.