THE EFFECT OF REWARD STRUCTURES ON ALLOCATING SHARED STAFF RESOURCES AMONG INTERDEPENDENT SOFTWARE PROJECTS - AN EXPERIMENTAL INVESTIGATION

Organizational theorists have long proposed the use of organizational reward structures to enhance coordination between interdependent projects. In practice, however, the structuring of reward schemes has been problematic, leading in many cases to dysfunctional behavior. The purpose of the reported research is to investigate the impact of different reward structures on the allocation of shared staff resources among interdependent software projects. The research question was explored in the context of a role-playing project simulation game. Experimental dyads played the roles of managers on two concurrent software projects sharing a limited staff resource. Two reward structures were tested, one that rewarded subjects for maximizing their own outcome (an ''individualistic orientation''), and the other rewarded subjects for maximizing joint outcome (a ''cooperative orientation''). The results suggest that reward structures lead to greater interaction and to more effective strategies for utilizing the organization's staff resource, but they do not lead to less self-interested behavior. The findings of the current study extend the literature on reward structures beyond group performance on physical tasks to dynamic decision making.