Control in a teamwork environment--the impact of social ties on the effectiveness of mutual monitoring contracts.
Accounting Review, October, 2003 by Kristy L. Towry
ABSTRACT: This study examines control in a teamwork setting, experimentally investigating two financial incentive systems that have been proposed in the agency-theory-based analytic literature. Both systems rely on mutual monitoring--the ability of team members to observe each other's actions. However, the systems differ on whether team members report observations of their peers' efforts to management (vertical incentive system) or directly control the actions of each other (horizontal incentive system).
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Findings suggest that the effectiveness of these systems depends on the level of team identity. Specifically, a strong team identity leads to greater coordination. The result is that the effectiveness of ...
