Abstract
This paper uses survey data from a questionnaire for brokers given to Kaohsiung realtors in order to explore the effect of the threat of peer competition on an individual’s performance. In the empirical model, the branch “average performance of other agents” is used as the proxy variable for peer competition, and the hierarchical linear modeling (HLM) model is applied for estimation. The empirical results suggest that the average performance by other agents has a significant negative effect on an individual’s performance. In branches that have more “agents” or have a “team compensation scheme”, the effect of other agents’ average performance on an individual’s performance is significantly higher than that for the branches with fewer “agents” or without a “team compensation scheme”. These findings are consistent with theoretical expectations.
Highlights
Organizational management literature often uses human capital models to verify the impact of education and work experience on an individual’s income
The housing brokerage industry emphasizes individual performance, implying the existence of a peer competition threat, which has been confirmed in this study
With real estate agents as the object of analysis, this paper examines whether the average performance by others has a negative impact on individual performance; whether more agents or a team compensation scheme lead to lower individual performances; and, in a branch with more agents or a team compensation scheme, whether the individual’s performance will be greater owing to the marginal effect of the average performance by others
Summary
Organizational management literature often uses human capital models to verify the impact of education and work experience on an individual’s income. Benjamin, Jud and Sirmans (2000) provided a comprehensive review of these works and summarized them in tabular form.1 In addition to these discussions on labor capital’s effect on job performance, the impact of incentives has become an important labor economics topic in recent years (Baron & Kreps, 1999; Lazear, 1998). The main purposes of this study are as follows: (1) to discuss whether the average performance of others (representing a peer competition threat) has any negative impact on an individual’s performance; (2) to discuss whether more agents or a team compensation scheme lead to lower individual performances; and (3) to discuss whether the marginal effect of the average performance by others on individual performance increases with a greater number of agents or with a team compensation scheme. This paper is organized into the following six sections: Section 1 is the introduction; Section 2 presents the literature review; Section 3 describes the research method and empirical model structure; Section 4 explains the data source and variable setting; Section 5 contains the empirical results and analysis; and Section 6 presents conclusions and suggestions
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