Our latest paper, "When Rivalry Backfires: How Individual Skill and Risk of Status Loss Moderate the Effects of Rivalry on Performance," co-authored with Christoph Riedl and Gavin Kilduff, is now available at Management Science!
We've all heard stories of how rivalry (think Jobs vs. Gates) can fuel motivation and performance. But does it always work, or can it sometimes backfire? We analyzed a dataset with over 4.6 million competitive encounters among 16,846 software developers. Random assignment of competitors to groups allows us to causally test how rivalry impacts performance. We find that:
- Rivalry can boost performance: On average, competing against a field of rivals does lead to higher performance, in line with prior research.
- BUT, it's a double-edged sword: This positive effect is not universal. We found two crucial conditions where rivalry backfires: 1) Individual Skill: Rivalry significantly benefits high-skilled individuals but can harm the performance of less-skilled individuals. 2) Risk of Status Loss: When individuals are on the verge of losing status (e.g., dropping a rank), the pressure of competing against a rival leads to a decrease in their performance.
- Our findings suggest that the effects of rivalry depend on the psychological state of the individual. Rivalry seems to create a "promotion focus" (striving for gains), which can clash with the "prevention focus" (avoiding losses) of those who are less skilled or at risk of losing status.
The takeaway for managers? Rivalry can be a powerful motivator, but it should be managed with caution. Fostering it without considering individual skill levels or situational pressures could inadvertently demotivate employees and widen performance gaps.
A huge thank you to my co-authors and everyone who provided valuable feedback on this project.