The Effects of Performance Information Distribution on Team Norms and Employee Preferences for Performance Targets

Organizations use performance targets to motivate and guide employee effort. Understanding antecedents and dynamics of employee target preferences is an important aspect in the design of a firm’s control system. We theorize that through performance information distribution, managers influence team norms that affect employee target preferences. Distributing team performance information promotes team cohesion, strengthening preferences for team targets, whereas distributing individual performance information enables social comparisons, promoting competition and increasing preferences for individual targets. We test our hypotheses using survey data collected in a field setting where management contemplated shifting from team to individual targets. We find that through performance information distribution, team leaders influence team norms, with employees in more cohesive (competitive) teams exhibiting a weaker (stronger) preference for individual targets over team targets. We add to the evolving literature on team norms in accounting and their role in target setting.Data Availability: The use of the data for research purposes is subject to a nondisclosure agreement between the academic researchers and the field organization.JEL Classifications: L23; M11; M14; M41; M54.