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The Incentive Effects of Tournament Compensation Systems

Brian E. Becker and Mark A. Huselid
Administrative Science Quarterly
Vol. 37, No. 2, Special Issue: Process and Outcome: Perspectives on the Distribution of Rewards in Organizations (Jun., 1992), pp. 336-350
DOI: 10.2307/2393228
Stable URL: http://www.jstor.org/stable/2393228
Page Count: 15
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Since scans are not currently available to screen readers, please contact JSTOR User Support for access. We'll provide a PDF copy for your screen reader.
The Incentive Effects of Tournament Compensation Systems
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Abstract

Tournament models have developed into an important component of the theoretical literature on organizational reward systems. However, with one exception there have been no empirical tests of the incentive effects of tournament models in a field setting. Drawing on a panel data set from auto racing, we show that the tournament spread (prize differential) does have incentive effects on both individual performance and driver safety, that these effects peak at higher spreads, and that controlling for the dollar value of the tournament spread, the prize distribution has little influence on individual performance.

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