Reward System Design and Group Creativity: An Experimental Investigation

We report the results of an experiment where three-person groups develop a creative solution to an important problem. In this environment, we investigate how the following two dimensions of reward system design affect the efficacy of creativity-based incentives: (1) whether creativity is measured at the individual or group level, and (2) whether incentives on this measure take the form of a linear piece-rate or tournament. Relative to our piece-rate pay conditions, group-based (intergroup) tournament pay had a positive effect and individual-based (intragroup) tournament pay had no effect on the creativity of the group solution. We also find support for our theory-based process model suggesting that intergroup tournament pay leads to greater group cohesion and collaboration, which lead group members to identify to a greater extent with group objectives, which ultimately leads to a more creative group solution. Further validating this model, individual-based (intragroup) tournaments motivate group members to independently work harder on their individual inputs, but these efforts do not lead to greater creativity. Collectively, our results suggest that considering the interactive effects of the level and form of reward system design helps overcome obstacles identified by prior research that limit the effectiveness of creativity-contingent incentives.