Leader Effects in Competition Among Teams: Evidence from a Field Intervention

Abstract

This paper investigates whether leadership style moderates the effect of leader incentives on the performance of teams. In collaboration with a Latin-American bank, we engineered a field experiment by designing a series of contests among the bank branches with varying prize structures. We find evidence that providing explicit incentives to team leaders has a positive effect on team performance. However, the effect of incentives differs based on the manager's leadership style and team characteristics. Leader incentives are less effective for managers who inspire their team by appealing to higher values than for managers who motivate performance through rewards and penalties.