How Does Goal Setting Incentivize Workers in the Tournament Reward Scheme with Sabotage? Theory and Evidence

2019 Fiscal Year Final Research Report

• Project/Area Number: 18K12862
• Research Category: Grant-in-Aid for Early-Career Scientists
• Allocation Type: Multi-year Fund
• Review Section: Basic Section 07080:Business administration-related
• Research Institution: International University of Japan
• Principal Investigator: Tang Cheng-Tao 国際大学, 国際関係学研究科, 講師(移行) (00799330)
• Project Period (FY): 2018-04-01 – 2020-03-31
• Keywords: Tournament / Goal setting / Sabotage

Outline of Final Research Achievements

This paper investigates the effects of goal setting in the tournament-like reward scheme where agents have two-dimension activities: productive effort and sabotage activities. Our theoretical model predicts that goal setting (within an appropriate range) in tournament can play a positive role: both increase productive effort and decrease sabotage activities. Consistent with theory, the results from our laboratory experiment confirm the positive effects of goal setting in tournament. However, contrary to the theory, we find the effect of goal setting diminishes as the financial incentives (bonus) increases. Financial incentives become dysfunctional when high goals are implemented. Overall, high goals increase performances more than higher financial incentives.

Free Research Field

Organizational Economics

Academic Significance and Societal Importance of the Research Achievements

The theoretical analyses in this project help to explain the commonly observed coexistence of goal setting and tournament schemes. The empirical results provides empirical evidence that, implementing goal setting in the tournament can be effective if organizations suffer from sabotage behavior.