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Leadership with Individual Rewards and Punishments: Do Incentives Reinforce Leading by Example?

Gürerk, Özgür and Lauer, Thomas and Scheuermann, Martin (2015): Leadership with Individual Rewards and Punishments: Do Incentives Reinforce Leading by Example?

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Abstract

Leading by example is considered as an important means to influence followers and to increase team performance. In most organizations, however, leading by example does not come alone. To influence followers, leaders simultaneously use a variety of instruments. Most frequently, leaders possess power to administer positive and negative incentives to followers. Do these incentives reinforce the impact of leading by example on team performance? Because of confounding factors, it is difficult to investigate leading by example using field data. Here, we investigate the effects of leading by example and its interaction with incentives on team performance in controlled laboratory experiments. We find that incentives are more effective in fostering team performance than leading by example as such. Surprisingly, leading by example’s effect on team performance interacts negatively with incentives, interestingly more so with rewards than with punishments.

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