The previous research findings on competitive incentives for performance are mixed. Scholars have found positive, negative and no effects of competition on creative performance. The competitive incentives were more often found to be conducive for routine tasks. However, the differences in how people respond to competition on two different tasks have not been systematically studied. The majority of the work in this direction considered either routine, well de- fined tasks or creative, relatively uncertain tasks.12 This paper analyses the
performance on both types of tasks simultaneously. Moreover, the tasks were done by the same individuals, therefore it is legitimate to compare competition effects across the task types.
The first result shows that low competition enhances routine, but not cre- ative performance. This result is in line with previous findings on creative performance (Eckartz et al., 2012, Erat and Gneezy, 2015), that competition is not supportive for creative output. This is probably caused by the main feature of creativity: it requires abstract thinking and usually is intrinsically motivating. People get engaged in such tasks not only for monetary incentives or hoping to get reward, but also because it is interesting and enjoyable to work on such tasks. This is different for the routine tasks. These types of tasks do not generate additional utility and the main motivating factor to do the task is monetary reward.13 Moreover, the performance on routine task is directly
linked to effort. When a worker increases effort it is directly reflected in im- proved performance. This is different for the creative tasks, because creative tasks are uncertain and require specific set of skills. Therefore, the increased effort is not always linked to higher performance.
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The exceptions are recent contributions by Eckartz et al. (2012) and Bradler et al. (2016).
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Eckartz et al. (2012) found that competition did not increase even a routine performance. The reason could be that they used Raven’s matrices and number adding tasks, which are not totally mundane tasks and unlike the task used in this experiment, they could still be intrinsically motivating.
The second result suggests that high competition did not have an effect on the routine or the creative performance. For the creative tasks this finding can be explained with the same argument as for the low competition treatment. Competition, regardless of it’s intensity, cannot be a supportive instrument for the creative task performance. In case of the routine task, high competition had a very small positive effect. However, the effect was also not significantly different from zero.
The third result concerns the effects of the fourth treatment - high compe- tition with feedback. In comparison to the flat payment there was no difference in performance, however when comparing to the low competition performance, high competition with provision of detailed feedback on ranking and position of the leading competitor had a detrimental effect on average performance. The adverse effect is driven by individuals who either quit as they see that there is a very low chance of winning or get anxious as they are losing the game and under-perform.
There is one interesting behavioural pattern when looking at competition and performance: Namely, in the low competition conditions competitors are more likely to have approximately equal points. It is more reasonable if the subjects assume that performance spread is not too large and is rather nar- row. Therefore, it is worth to keep exerting maximum effort. However, in high powered tournaments with more competitors, it is more likely that there is a distinct leader who has substantially more points. That is why in low com- petition conditions the best creative performers exert very high effort. When feedback is provided, leader competitors, able to outperform others easily, keep exerting just enough effort to beat the second best. This observation is somewhat related to the findings of Cantner et al. (2009) and Aghion et al. (2014), who show that in R&D competition, laggard firms are more prone to quitting, whereas those who are in neck-and-neck competition increase R&D investments.
The fourth result on differences in how different genders react to high com- petition suggests that males respond to high competition more positively. As other scholars have documented (see e.g. Gneezy et al. 2003), I find evidence that males respond by increasing effort when they face high competition. This pattern was especially revealed in the routine task, where, on average, male participants outperformed female ones.
The above discussed results provide some interesting implications for orga- nizational management: 1) When deciding whether to introduce tournament
incentives in a company, managers should distinguish between a routine and a creative task. Those tasks, that are mundane and at the same time can be completed with simple repeated actions14 can be incetivized by competi-
tion. However, the competition should not be too intense, i.e. optimally, few competitors should be assigned to a task and relatively low prize should be provided. In line with previous research, the evidence from this experiment suggests that competitive incentives do not work for creative tasks. Therefore, employers should rather come up with a different reward scheme. 2) If opting for a competition incentives with high prize and a high number of competi- tors, managers should expect decreased average performance if they provide full feedback on ranking and position of the leading competitor before the end of the tournament. Disclosure of information on status quo of the competition de-motivates laggard competitors decreasing performance. Thus, if a firm is interested in increasing average performance by setting up a high prize tour- nament, it is better not to disclose information on performance until everyone completes the task. 3) Managers should also consider that there is a difference in how males and females respond to competition. It is more likely that males will be encouraged by high competitive incentives, whereas females are more negatively affected by the intensity of a competition.
Finally, it has to be mentioned that a tournament size and competition in- tensity has to be adapted with the company size. While in a lab, behavioural scientists are limited with the available space and funds to run experiments, in the real world, companies have much higher number of employees and larger re- sources to fund tournaments. Nevertheless, authorities in organizations should not ignore the behavioural patterns observed in the laboratory. Although external validity of experimental results are limited, experiments represent the only instrument to control the environment and investigate pure treat- ment effects. Thus, business practitioners should learn from scientific findings and maybe test the effects with actual employees. Ideally, they can select a representative sample of employees and investigate how competitive incentive change their productivity.
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