Spectator or Monitoring Effect? How Supervisor Presence Influences Peer Sabotage under Varying Incentive Schemes

Abstract

Firms implement peer evaluation systems (PES) to provide the supervisor, who is in a variety of organizational settings not or only limitedly able to observe and assess employee performance, with performance information. However, PES can induce peer sabotage. In this experimental study we investigate whether and how (1) supervisor presence (absent vs. present) and (2) a financial incentive (no vs. yes) linked to peer evaluations influence peer sabotage. We argue that according to theory, the effect of supervisor presence on peer sabotage depends on how employees perceive the situational decision frame and the present persons. In detail, we find that employees adopt a social mindset and rarely engage in peer sabotage when there is no financial incentive; independent of whether the supervisor is absent or present. Vice versa, when there is a financial incentive linked to PES, employees adopt an economic mindset. In this case we find, as predicted, that a present (compared to an absent) supervisor even increases peer sabotage which we trace back to the spectator effect.