Skip to Main Content
HBS Home
  • About
  • Academic Programs
  • Alumni
  • Faculty & Research
  • Baker Library
  • Giving
  • Harvard Business Review
  • Initiatives
  • News
  • Recruit
  • Map / Directions
Working Knowledge
Business Research for Business Leaders
  • Browse All Articles
  • Popular Articles
  • Cold Call Podcast
  • Managing the Future of Work Podcast
  • About Us
  • Book
  • Leadership
  • Marketing
  • Finance
  • Management
  • Entrepreneurship
  • All Topics...
  • Topics
    • COVID-19
    • Entrepreneurship
    • Finance
    • Gender
    • Globalization
    • Leadership
    • Management
    • Negotiation
    • Social Enterprise
    • Strategy
  • Sections
    • Book
    • Podcasts
    • HBS Case
    • In Practice
    • Lessons from the Classroom
    • Op-Ed
    • Research & Ideas
    • Research Event
    • Sharpening Your Skills
    • What Do You Think?
    • Working Paper Summaries
  • Browse All
    Incentives versus Reciprocity: Insights from a Field Experiment
    21 May 2015Working Paper Summaries

    Incentives versus Reciprocity: Insights from a Field Experiment

    by Doug J. Chung and Das Narayandas
    Sales force compensation is a key instrument available to firms for motivating and enhancing sales performance. What are the most effective forms of compensation? In a field experiment involving four regional sales forces of a prominent firm in India, the authors examined the impact of conditional and unconditional bonus schemes. Findings from this study provide guidance to firms on how to use conditional and unconditional compensation to enhance sales rep productivity and better manage the achievement of sales forecasts.
    LinkedIn
    Email

    Author Abstract

    We conduct a field experiment in which we vary the sales force compensation scheme at an Asian enterprise that sells consumer durable goods. With variation generated by the experimental treatments, we model salesforce performance to identify the effectiveness of various forms of conditional and unconditional compensation. We account for salesperson heterogeneity by using a hierarchical Bayesian framework to estimate our model. We find conditional compensation in the form of quota-bonus incentives to improve performance. We find no evidence that effectiveness differs between a quota-bonus plan and punitive-bonus plan framed as a penalty for not achieving quota. We find unconditional compensation in the form of reciprocity to be effective at improving sales force performance only when given as a delayed reward; when immediate, sales force performance decreases. We also find heterogeneity in the impact of compensation on performance across salespeople; unconditional compensation is more effective for salespeople with high intrinsic ability, whereas conditional compensation is equally effective across all types of salespeople. Lastly, we find seasonality to significantly influence sales volumes for low ability, but not so much for high ability, salespeople.

    Paper Information

    • Full Working Paper Text
    • Working Paper Publication Date: April 2015
    • HBS Working Paper Number: 15-084
    • Faculty Unit(s): Marketing
      Trending
        • 16 Mar 2023
        • Research & Ideas

        Why Business Travel Still Matters in a Zoom World

        • 01 Mar 2023
        • What Do You Think?

        How Much Does 'Deep Purpose' Matter to the Bottom Line?

        • 14 Mar 2023
        • In Practice

        What Does the Failure of Silicon Valley Bank Say About the State of Finance?

        • 13 Mar 2023
        • Op-Ed

        How Leaders Should Leave

        • 25 Jan 2022
        • Research & Ideas

        More Proof That Money Can Buy Happiness (or a Life with Less Stress)

    Das Narayandas
    Das Narayandas
    Edsel Bryant Ford Professor of Business Administration
    Senior Associate Dean for HBS Publishing
    Contact
    Send an email
    → More Articles
    Find Related Articles
    • Motivation and Incentives
    • Distribution Channels
    • India

    Sign up for our weekly newsletter

    Interested in improving your business? Learn about fresh research and ideas from Harvard Business School faculty.
    This site is protected by reCAPTCHA and the Google Privacy Policy and Terms of Service apply.
    ǁ
    Campus Map
    Harvard Business School Working Knowledge
    Baker Library | Bloomberg Center
    Soldiers Field
    Boston, MA 02163
    Email: Editor-in-Chief
    →Map & Directions
    →More Contact Information
    • Make a Gift
    • Site Map
    • Jobs
    • Harvard University
    • Trademarks
    • Policies
    • Accessibility
    • Digital Accessibility
    Copyright © President & Fellows of Harvard College