Relative Performance Information and Rule-Breaking: The Moderating Effect of Group Identity

Firms frequently provide relative performance information (RPI) in different environmental contexts. In this experimental study, we investigate how RPI (absent versus present) affects rule-breaking under different levels of group identity (lower versus higher). We refer to performance-improving rule-breaking that increases not only one’s own performance but also overall firm performance. We predict and find that RPI triggers a stronger increase in rule-breaking in cases of higher group identity than in cases of lower group identity. We argue that in the case of lower group identity, individuals mainly follow their own moral standards independently of RPI provision. In contrast, we reason that individuals with higher group identity generally want to impress their fellow group members when RPI is absent by following the rules, but when RPI is present by achieving a high rank through rule-breaking. Our results inform managers about the importance of considering RPI in conjunction with group identity. Data Availability: Data are available from Sandra Winkelmann. JEL Classifications: M40; M41.