Please use this form to submit your study for inclusion into our database. It will be checked by a member of the Innovation Growth Lab team, who may be in contact to ask for more information. Your email address * Your name * Title * The name of the study Short summary A brief description of the project's goals and its current state Abstract <p>It is well-established that the effectiveness of pay-for-performance (PfP) schemes depends on employee- and organization-specific factors. However, less is known about the role of external forces. Investigating the role of market competition on the effectiveness of PfP, we theorize that there are two counteracting effects – business stealing and competitor response – that jointly generate an inverted U-shape relationship between PfP effectiveness and competition. Weak competition discourages effort response to PfP because there is little extra market to gain, while strong competition creates low incentives because competitors are more likely to respond. PfP hence has the strongest effect under moderate competition. Field data from a bakery chain and its competitive environment confirm our theory, allow us to empirically separate the business stealing and competitor response effects, and refute alternative explanations.</p> The full abstract of the study, if available Links http://dx.doi.org/10.2139/ssrn.3065607 Links to any published papers and related discussions Authors * Affiliations Academic and other institutes that the authors of the study are members of Delivery partner Organisations involved in delivering the trial, if appropriate Year Year Year199419951996199719981999200020012002200320042005200620072008200920102011201220132014201520162017201820192020202120222023202420252026 Month MonthJanFebMarAprMayJunJulAugSepOctNovDec Day Day12345678910111213141516171819202122232425262728293031 Journal Journal publishing the study, if available Publication stage * Working Paper Published Ongoing Research Forthcoming Discussion Paper Research theme * Entrepreneurship Innovation Business Growth Country Country or countries where this study took place. Topics What sort of topics does the study cover? Sample attributes Hypotheses / research question How do payment by performance incentives influence sales? Sample Trial population and sample selection A network of bakery shops. Number of treatment groups Size of treatment groups Size of control group Unit of analysis Clustered? Yes No Cluster details Trial attributes Treatment description This research investigates the effect of market competition on the effectiveness of payment for performance. The experiment tests how cash incentives influence the discretionary effort of sales people in bakery shops and the amount of bread they sell. Shop staff were paid bonuses upon reaching monthly sales targets. Rounds of data collection Baseline data collection and method Business records Data collection method and data collected Evaluation Outcome variables <p>Sales of baked goods.</p> Results <p>The study found that the incentives are effective in increasing sales in areas with moderate competition, but not in areas with high or low competition from other bakery shops.</p> Intervention costs Cost benefit ratio Reference Khashabi, P., Heinz, M., Zubanov, N., Kretschmer, T., Friebel, G. (2017). 'Market competition and the effectiveness of incentive pay'. Working paper. Citation for use in academic references
