Date of Award

Fall 11-17-2018

Document Type

Dissertation

Degree Name

Doctor of Business Administration (DBA)

Department

School of Accountancy

First Advisor

Andrea Drake

Abstract

Mixed incentive compensation structures have been widely studied in the accounting literature (e.g., Tian et al. 2017; Dekker et al. 2012, Rothenberg 2011; Hwang et al. 2009). However, the findings in the literature as to the effectiveness of mixed incentives are not consistent. The inconsistency in the mixed incentives literature may be due to the various levels of social dilemma embedded in the research setting of the studies. Therefore, I experimentally investigated two factors that may reduce the embedded social dilemma issue and improve the effectiveness of mixed incentive compensation. In this study, student participants were assigned to pairs to complete a computerized letter-decoding task in which I manipulated (1) pair budget goal difficulty (easy vs. difficult) and (2) pair identity (strong vs. weak). I found that when given a difficult pair budget goal, pair members cooperated more and sabotaged less than when given an easy pair budget goal. Furthermore, I found that assigned a difficult goal, participants in highly identified pairs sabotaged less than those in weakly identified pairs. However, this difference was not found in the easy goal condition. Also, I found that when the goal was easy, strong pair identity enhanced productivity through inducing additional participant effort. When the goal was difficult, strong pair identity enhanced productivity through the suppression of sabotage. The results have implications for understanding individuals’ strategic behaviors when they face conflicts of interest and provide practical insights for the design of mixed incentive compensation systems.

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