The Dark Side of Socially Mediated Rewards: How Narcissism and Social Status Affect Managerial Reporting

Abstract

We use two experiments to examine the effects of relative performance information (RPI) on self-reported performance achieved by employees who exhibit varying degrees of narcissism. In experiment one, we find that high narcissists not only inflate self-reported performance more than low narcissists but also exert more costly effort to achieve higher performance. In experiment two, we find that while high narcissists tend to misreport more than low narcissists, this finding is conditioned on the importance the employee places on the task. Specifically, we find that high narcissists misreport less than low narcissists on tasks they view as less important. Experiment two also shows that RPI salience has a similar effect on both high and low narcissists with respect to misreporting. Our results contribute to a growing literature on management control by showing that RPI does not affect all employees equally, and to research on “toxic employees’ by showing that not all qualities linked to narcissism are harmful to the firm.