Academic journal article Advances in Management

The Design of Incentive Systems for Improving Team Effectiveness: A Research Framework

Academic journal article Advances in Management

The Design of Incentive Systems for Improving Team Effectiveness: A Research Framework

Article excerpt


Incentives are keys to guide individual behavior in team settings but the effectiveness of an incentive system depends on the interaction with diverse team features. This paper reviews the management accounting literature focused on incentive systems and team effectiveness. We provide a comprehensive framework for organizing and for evaluating the relationship between incentive systems and team effectiveness. Based on the analysis of the input-mediator-outcome framework, we suggest future directions to improve management accounting research focused on the design of incentive systems in team-based settings.

Keywords: Incentive systems, team context, effectiveness, Input-Mediator-Output framework, management accounting.


Incentives are keys to guide individual behavior in team settings23,31. However, an incentive system must be aligned with other key elements for properly guiding team members' behavior. Among these elements we find the size of the team, the skill of team members, the type of information provided for decision-making and the management styles ' ' . Therefore, to analyze the effectiveness of an incentive system design is important to take into account how the incentive system interacts with other team features. Recently organizational behavior researchers have developed an input-mediator-outcome (IMO) framework at team level13,21. The IMO framework provides a suitable guide to analyze the team effectiveness, since it includes the different variables which affect teams. In this vein, this framework is a valuable tool to better understand the design of incentive as a system that can facilitate team effectiveness. The present study provides a more comprehensive view of the incentives systems at team level by analyzing the relationship between the design of incentive systems and different team features (inputs, mediators and outputs) included in the IMO framework.

The IMO framework describes inputs, mediators and outputs. Inputs are antecedent factors that enable and constrain members' interactions (e.g. task structure, organizational design features). Mediator factors intervene and transmit the influence of team inputs to outcomes (e.g. information sharing, conflict). Finally, outcomes are results of team activity and may include performance (e.g. quality and quantity) and members' affective reactions (e.g. satisfaction, cohesion)21.

Management accounting literature has already analyzed theses inputs, mediators and outcomes variables. On one hand, it has analyzed the effectiveness of incentive systems regarding personal characteristics of team members26,33, the team level characteristics9 or the production environment19. Furthermore, the interaction between other input variables, such as the organizational context and incentive systems have been analyzed too14,28. However, this last interaction has received scarce attention in the literature, thus further research is necessary in this line.

Several mediator factors have been related to team process such as communication, cooperation, information sharing ' . The IMO framework also shows the importance of emergent states as mediating processes. These emergent states represent motivational, cognitive and affective states that influence team members' behavior. For example, Rowe29 suggests that social control such as team identity, can act as mediating process between accounting controls and team outcomes. Guymon, Balakrishnan and Tubbs9 showed that commitment mediates the relation between group incentives and performance. Nevertheless, further research is needed for analyzing other emergent states such as team efficacy, team potency, climate or team empowerment. Finally, management accounting researchers mainly focus on team performance when analyzing the effects of an incentive system ' ' . Nevertheless, the IMO framework points to the importance of other team outcomes related to team members' affect, cohesion or satisfaction. …

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