Crowding Out Intrinsic Motivation to be Honest in Participative Budgeting: A Study on Norm Sensitivity and Choice of an Information System

• In Event: 3.04 Data Analytics and Norm Sensitivity

Abstract

Recent experimental research documents that an information system is capable of increasing honesty in participative budgeting by simply reducing information asymmetry between the subordinate and the superior regarding the level of honesty in the budget (Abdel-Rahim and Stevens, 2018). We extend this research by examining the effects of the subordinate’s norm sensitivity and the superior’s choice of an information system. We find that the positive effect of an information system on subordinate honesty is stronger for subordinates with high norm sensitivity than low norm sensitivity. This confirms the ability of an information system to activate an honesty norm and the role of norm sensitivity in that activation. When the information system is endogenously chosen by the superior, however, we find that the positive effect of the information system is significantly weakened. We also find evidence that this interactive effect is due to the superior’s choice crowding out the subordinate’s intrinsic motivation to be honest. In particular, while all subordinates viewed the superior’s choice of an information system as a signal of distrust, subordinates with high norm sensitivity no longer felt obligated to report honestly as a result. We discuss the implications of our results for theory and practice.

Authors

• Jing L. Davis, Chapman University

• Heba Yousef M. Abdel-Rahim, University of Toledo

• Douglas E Stevens, Georgia State University