The Effect of Past Performance and Task Type on Managers’ Target Setting Decisions: An Experimental Investigation

Arnold, Markus C.; Artz, Martin; Tafkov, Ivo (January 2021). The Effect of Past Performance and Task Type on Managers’ Target Setting Decisions: An Experimental Investigation (Unpublished). In: AAA Management Accounting Section Mid-Year Meeting. 5.-9.01.2021.

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This study investigates how performance-to-target (exceeding vs. missing prior target) and task type (ability-driven vs. effort-driven) affect manager’s target setting decisions in a setting in which a manager sets targets for multiple employees. We predict that target adjustments are greater when the prior target is exceeded than when it is missed, especially when the task is ability-driven rather than effort-driven. Additionally, we predict that target difference, i.e., the difference in target levels between stronger and weaker performer within the firm, is larger when task is ability-driven than when it is effort-driven and that this effect is attenuated when prior targets are missed compared to when they are exceeded. Our findings, from an experiment using executives from an EMBA alumni program with, on average, more than 16 years of professional work experience as participants, support our hypotheses as well as the underlying theoretical process. As prior empirical findings are inconclusive in this area of reseach, we contribute to the literature by providing controlled experimental evidence about the asymmetric nature of target adjustments when prior targets are exceeded vs. missed. Additionally, we identify an important factor that affects managers’ target setting decisions — task type — that has been neglected in prior work.

Item Type:	Conference or Workshop Item (Paper)
Division/Institute:	03 Faculty of Business, Economics and Social Sciences > Department of Business Management > Institute for Accounting and Controlling > Managerial Accounting
UniBE Contributor:	Arnold, Markus Christopher
Subjects:	300 Social sciences, sociology & anthropology > 330 Economics
Language:	English
Submitter:	Lynn Carole Selhofer
Date Deposited:	22 Apr 2021 14:04
Last Modified:	05 Dec 2022 15:49
URI:	https://boris.unibe.ch/id/eprint/153687