Does Feedback Matter? The Impact of Incentive Type and Feedback on Creativity

Accounting research on the effects of incentives on creativity finds that paying for quantity of output yields the same level of high-creativity output as paying for only creativity or for both creativity and quantity (Kachelmeier et al. 2008). This finding is surprising and counter to economic theory, which suggest multi-dimensional performance measurement systems should lead to superior performance. However, research thus far has not examined whether the results hold up in the context of feedback. Feedback has the potential to change the effect of performance dependent incentives on creativity because it informs individuals about the success (or failure) of their prior task completion strategies. We use an experiment to investigate how feedback and incentive type influence creativity in a two-round setting. Our study examines the effect of feedback on output when incentives are fixed or incentivize either creativity-only, quantity-only, or quantity and creativity. We find that, after feedback, incentives with a quantity component (e.g., quantity-only and quantity and creativity incentives) result in superior production of high-creativity output compared to fixed or creativity-only incentives.