Resource title

Status competition and performance in work groups (RV of 98/97/TM/OB)

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We study the dynamics of a work group whose members value having a high status relative to their peers while being paid a bonus based on group performance. Status is determined both by contributing to group output and by non-productive, social activities that lead to its enhancement. Group members allocate their time between working and non-productive status enhancement, trying to maximize the combined utility from compensation and status rank. We show that status competition based on merit can push group members to work hard. However, if status can also be achieved through political maneuvering, it can lead to lower overall performance. Moreover, group performance may fluctuate and be unstable over time if the results of effort are either noisy or the group does not share in its ranks. These results clarify the question of whether status competition enhances group performance by pushing group members to work harder, or retards it by causing unproductive behavior. They also suggest ways through which a firm can influence the effects of status competition on overall performance.

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Resource language

en

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application/pdf

Resource resource URL

http://flora.insead.edu/fichiersti_wp/inseadwp1999/99-25.pdf

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Copyright INSEAD. All rights reserved