Abstract
This article illustrates how the legitimacy of pay and evaluation processes in teams affect the effectiveness of team-based incentive designs in organizational work teams. We present a theoretical model of the development of legitimacy in team-based incentive designs and propose that the development of legitimacy for both pay dispersion in teams (i.e., difference in allocations of incentives among team members) and for the use of interdependent evaluations of performance promote team effectiveness. Our model introduces a new perspective to theorize about the conditions under which team rewards are an effective incentive design.
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