We investigate the effects of tangible versus cash rewards in a repeated tournament setting. Firms frequently use tangible rewards to motivate employees, but minimal research has examined their effects relative to cash rewards. We conducted a field experiment at a rug wholesaler that held two consecutive sales tournaments for its retailers. The top three retailers in each tournament received either cash rewards or tangible rewards (gift cards) to be distributed to sales staff. We do not find significant effects of reward type in the first tournament. However, in the second tournament, retailers eligible for tangible rewards significantly outperformed those eligible for cash rewards, and this effect is driven by Tournament One losers. Our results are consistent with the theory that Tournament One losers competing for tangible rewards increased sales effort in the second tournament significantly more than their counterparts competing for cash rewards. Our results have practical and theoretical implications.

Firms commonly employ leaderboards within their peer-to-peer recognition programs. We experimentally investigate how ranking basis—variation in the measure firms use to determine leaderboard rankings—affects employees’ proactive helping behavior. We find that leaderboards ranking employees based on the number of times peer-to-peer recognition is received decrease proactive helping compared with when no leaderboard is provided. Conversely, leaderboards ranking employees based on the number of times peer-to-peer recognition is given increase proactive helping compared with when no leaderboard is provided. These findings underscore the influence of ranking basis on shaping motives linked to proactive helping behavior. Furthermore, these findings highlight for firms the importance of judiciously selecting a ranking basis when utilizing peer-to-peer recognition leaderboards.

Performance-contingent cash and tangible rewards are commonly used to motivate employees, and the taxation of such rewards is unavoidable. We use two experiments to examine how the effect of reward taxation on employee effort varies by reward type. In Experiment 1, we find reward taxation decreases positive affect, increases negative affect, and decreases reward attractiveness for employees when rewards are tangible, but not when rewards are cash. In Experiment 2, we find reward taxation reduces employee effort when rewards are tangible, but not when rewards are cash. Collectively, this evidence advances knowledge at the intersection of tax and management accounting by explaining why reward type alters the effect of reward taxation on employee effort. Moreover, our experimental results inform managers of a potential downside to using tangible rewards to motivate employees. Data Availability: Authors will make data available on request.