Management Accounting Section Midyear Meeting

Influence Activities and Favoritism in Firms

• In Event: Team Incentives

Abstract

Both employees’ influence activities and their personal identities can trigger managers’ favoritism in organizations. We experimentally study how managers allocate a bonus pool among employees who can contribute to a team pool but can also try to directly influence their manager. Results suggest that managers more likely reward influence activities from their employees than their contributions to the team pool. We find that managers reward employees’ influence activities even more when contributions to the team pool are transparent, suggesting that transparency increases managers’ concerns to appear reciprocal more than their concerns to appear fair. Further, when the manager shares an identity tie with some employees but not the others, transparency seems to reduce managers’ ingroup favoritism but not influence-induced favoritism. Firms with homogeneous employees may thus prefer opaque environments to reduce the effect of influence activities, while firms with heterogeneous employees may find more transparent work environments beneficial.

Authors

• Fabien Ize, Tilburg University

• Eddy Cardinaels, Tilburg University

• Lucas Mahieux, Tilburg University