“I take care of my own”: A field study on how leadership handles conflict between individual and collective incentives

From the early literature on the role of firm managers (Alchian and Demsetz 1972) to the industrial organisation on contracts and mechanism design (Laffont and Martimort 2009), economists have given a lot of attention to find solutions to the imperfect alignment between individuals’ incentives and an organisation’s collective goals (Prendergast 1999). In that literature a key role of managers is to monitor individuals to reward behaviour aligned with the collective goals and reduce suboptimal behaviour, such as shirking. However, another strand of literature, since Akerlof (1982), has put forward a vision of reciprociprocal behaviour between an organisation’s leadership and its members: gifts (high wages, recognition) from the organisation are reciprocated by high effort from the members of the organisation. By rewarding individual members (rather than strictly monitoring them), organisations may benefit from greater effort and cohesion. Experimental research in organizational economics has provided mixed results suggesting that agents do react to personal incentives but also that reciprocal behaviour can play a substantial role (Camerer and Weber 2012). This study contributes to the empirical literature investigating how the existence of individual specific incentives affects individuals’ behaviour in organisations, and how leadership deals with such incentives. We use cricket matches as the setting of a naturally occurring quasi-experiment where variations in individual-specific incentives and individual and team strategies are observable. Namely, we use an existing dis-