An experimental investigation of the interactions among combinations of formal mechanisms and social norms

B. Dierynck and Filip Roodhooft

Vlerick Leuven Gent Management School Working Paper Series from Vlerick Leuven Gent Management School

Abstract: Employees often make decisions that involve a trade-off between improving the performance of the own business unit or department and improving overall firm performance. Previous research has shown that such decisions are shaped by formal mechanisms such as incentive and information systems as well as by the descriptive social norms of the firm. This study explicitly recognizes that employees are subject to multiple formal mechanisms and investigates a specific aspect of a combination of formal mechanisms, namely the extent to which each formal mechanism motivates employees to act in the firm’s best interest. Relying on theory from social psychology, we hypothesize that (1) combinations in which not all formal mechanisms motivate employees to act in the firm’s best interest (i.e. misaligned combinations) lead to a lower degree of employee decisions that are in line with the firm’s best interest than when all formal mechanisms motivate employees to act in the firm’s best interest (i.e. aligned combinations) and (2) descriptive social norms will drive employee decisions in case of misaligned combinations but not in case of aligned combinations. The results of our experiment are consistent with these hypotheses. Our results contribute to the stream of research that investigates interactions between formal mechanisms and social norms by explicitly taking into account that firms implement multiple formal mechanisms and by investigating the role of a typical characteristic of a combination of formal mechanisms

Pages: 37 pages
Date: 2011-09-09
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