ABSTRACT

When choosing to implement a tournament to improve employee performance, managers may choose between two horizons: a single tournament (grand tournament) or a series of consecutive shorter tournaments (repeated tournament). This study extends prior research by investigating whether the level of heterogeneity in ability among employees competing in a tournament affects their tournament performance. Heterogeneity in ability refers to the degree of task ability variation within a tournament group. We examine tournament groups where the task ability of tournament participants is homogeneous (similar) or heterogeneous (varied). We find when employees' ability is heterogeneous, repeated tournaments yield greater employee performance than in grand tournaments. However, when employees' ability is homogeneous, we find no difference in employee performance between repeated tournaments and grand tournaments. Our results extend the management accounting literature by documenting that the effect of tournament horizon on employee performance depends upon the degree of heterogeneity in ability among employees.

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