ABSTRACT
Organizations are adopting team-based structures to promote cooperation and coordination of actions and, thus, enhance performance (Libby and Thorne 2009; Chenhall 2008). However, team-based structures do not automatically improve performance. The economics literature suggests that working in teams may impair performance because of the potential conflict between individual and group incentives. In contrast, the organizational behavior literature argues that working in teams may enhance performance via members' collectivist cognitive orientation. This paper analyzes how both the economic incentive system and the team's predominant (individualist or collectivist) cognitive orientation affect team performance. We conduct an experiment with postgraduate students. Our results show that enhanced team performance is positively related to both individual economic incentives and predominately collectivist orientation in the team, and that the effectiveness of any incentive system design seems to be related to the team's predominant cognitive orientation.
