IDEAS home Printed from https://ideas.repec.org/a/inm/ororsc/v19y2008i6p876-890.html
   My bibliography  Save this article

Performance Implications of Peer Monitoring

Author

Listed:
  • Misty L. Loughry

    (Department of Management, Marketing, and Logistics, Georgia Southern University, Statesboro, Georgia 30460)

  • Henry L. Tosi

    (Department of Management, University of Florida, Gainesville, Florida 32611)

Abstract

Peer monitoring, which occurs when individuals notice and respond to their peers' behavior or performance results, is an informal organizational control that has not been extensively studied. Agency theory suggests that peer monitoring should be associated with higher performance because it allows workers whose interests are aligned with those of the organization to encourage their peers to perform well and deters inappropriate behavior by increasing the chances that it would be detected. This paper considers two research questions. The first is, “What is peer monitoring?” We found two types of peer monitoring. Direct peer monitoring occurs when workers notice their peers' behavior or results and respond in a forthright way, such as correcting coworkers who make mistakes. Indirect peer monitoring occurs when workers gossip about or avoid poorly performing peers. The second research question is, “Is peer monitoring associated with higher work-unit performance?” We examined the effects of both types of peer monitoring on the performance of 67 theme park work units. We considered supervisory monitoring, task interdependence, and cohesiveness as moderators. We measured performance as the degree to which the work unit is free of employee behavior problems and found a positive main effect of direct peer monitoring. The effect was stronger when supervisory monitoring was low or task interdependence was high. Indirect peer monitoring did not have a main effect on work-unit performance, but when supervisory monitoring or cohesiveness was high, indirect peer monitoring was associated with lower performance. We discuss these results and suggest areas for future research.

Suggested Citation

  • Misty L. Loughry & Henry L. Tosi, 2008. "Performance Implications of Peer Monitoring," Organization Science, INFORMS, vol. 19(6), pages 876-890, December.
    • Handle: RePEc:inm:ororsc:v:19:y:2008:i:6:p:876-890
    DOI: 10.1287/orsc.1080.0356
    as

    Download full text from publisher

    File URL: http://dx.doi.org/10.1287/orsc.1080.0356
    Download Restriction: no
    File URL: https://libkey.io/10.1287/orsc.1080.0356?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. repec:bla:jfinan:v:43:y:1988:i:3:p:593-616 is not listed on IDEAS
    2. Fama, Eugene F & Jensen, Michael C, 1983. "Agency Problems and Residual Claims," Journal of Law and Economics, University of Chicago Press, vol. 26(2), pages 327-349, June.
    3. Stiglitz, Joseph E, 1990. "Peer Monitoring and Credit Markets," The World Bank Economic Review, World Bank, vol. 4(3), pages 351-366, September.
    4. Lin, Justin Yifu, 1991. "Supervision, peer pressure, and incentives in a labor-managed firm," China Economic Review, Elsevier, vol. 2(2), pages 215-229.
    5. Bengt Holmstrom, 1982. "Moral Hazard in Teams," Bell Journal of Economics, The RAND Corporation, vol. 13(2), pages 324-340, Autumn.
    6. Amy C. Edmondson, 2002. "The Local and Variegated Nature of Learning in Organizations: A Group-Level Perspective," Organization Science, INFORMS, vol. 13(2), pages 128-146, April.
    7. Ma, Ching-to & Moore, John & Turnbull, Stephen, 1988. "Stopping agents from "cheating"," Journal of Economic Theory, Elsevier, vol. 46(2), pages 355-372, December.
    8. Laura B. Cardinal, 2001. "Technological Innovation in the Pharmaceutical Industry: The Use of Organizational Control in Managing Research and Development," Organization Science, INFORMS, vol. 12(1), pages 19-36, February.
    9. Alchian, Armen A & Demsetz, Harold, 1972. "Production , Information Costs, and Economic Organization," American Economic Review, American Economic Association, vol. 62(5), pages 777-795, December.
    10. Baker, G.P. & Jensen, M.C. & Murphy, K.J., 1988. "Compensation And Incentives: Practice Vs. Theory," Papers 88-05, Rochester, Business - Managerial Economics Research Center.
    11. Gretchen Spreitzer & Kathleen Sutcliffe & Jane Dutton & Scott Sonenshein & Adam M. Grant, 2005. "A Socially Embedded Model of Thriving at Work," Organization Science, INFORMS, vol. 16(5), pages 537-549, October.
    12. Paul E. Fischer & John S. Hughes, 1997. "Mutual Monitoring and Best Agency Contracts," Journal of Institutional and Theoretical Economics (JITE), Mohr Siebeck, Tübingen, vol. 153(2), pages 334-334, June.
    13. Barron, John M & Gjerde, Kathy Paulson, 1997. "Peer Pressure in an Agency Relationship," Journal of Labor Economics, University of Chicago Press, vol. 15(2), pages 234-254, April.
    14. Arnott, Richard & Stiglitz, Joseph E, 1991. "Moral Hazard and Nonmarket Institutions: Dysfunctional Crowding Out or Peer Monitoring?," American Economic Review, American Economic Association, vol. 81(1), pages 179-190, March.
    15. Laura B. Cardinal & Sim B. Sitkin & Chris P. Long, 2004. "Balancing and Rebalancing in the Creation and Evolution of Organizational Control," Organization Science, INFORMS, vol. 15(4), pages 411-431, August.
    16. Fama, Eugene F & Jensen, Michael C, 1983. "Separation of Ownership and Control," Journal of Law and Economics, University of Chicago Press, vol. 26(2), pages 301-325, June.
    17. Knez, Marc & Simester, Duncan, 2001. "Firm-Wide Incentives and Mutual Monitoring at Continental Airlines," Journal of Labor Economics, University of Chicago Press, vol. 19(4), pages 743-772, October.
    18. Pfeffer, Jeffrey, 1997. "New Directions for Organization Theory: Problems and Prospects," OUP Catalogue, Oxford University Press, number 9780195114348.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Terhi Chakhovich, 2010. "The role of outcome focus within subject positions tied to shareholder value," Qualitative Research in Accounting & Management, Emerald Group Publishing Limited, vol. 7(4), pages 450-475, November.
    2. Mortenson, Kristian G. & Pitre, Terence J., 2018. "Who benefits from share contracts?," Advances in accounting, Elsevier, vol. 42(C), pages 125-135.
    3. Corgnet, Brice & Hernán-González, Roberto & Mateo, Ricardo, 2023. "Peer effects in an automated world," Labour Economics, Elsevier, vol. 85(C).
    4. Di Lorenzo, Francesco & Almeida, Paul, 2017. "The role of relative performance in inter-firm mobility of inventors," Research Policy, Elsevier, vol. 46(6), pages 1162-1174.
    5. Bart A. De Jong & Katinka M. Bijlsma-Frankema & Laura B. Cardinal, 2014. "Stronger Than the Sum of Its Parts? The Performance Implications of Peer Control Combinations in Teams," Organization Science, INFORMS, vol. 25(6), pages 1703-1721, December.
    6. Markus Kreutzer & Laura B. Cardinal & Jorge Walter & Christoph Lechner, 2016. "Formal and Informal Control as Complement or Substitute? The Role of the Task Environment," Strategy Science, INFORMS, vol. 1(4), pages 235-255, December.
    7. Claire Heffernan & Lena Azbel-Jackson & Joe Brownlie & George Gunn, 2016. "Farmer Attitudes and Livestock Disease: Exploring Citizenship Behaviour and Peer Monitoring across Two BVD Control Schemes in the UK," PLOS ONE, Public Library of Science, vol. 11(3), pages 1-14, March.
    8. Christian N. Thoroughgood & Kiyoung Lee & Katina B. Sawyer & Thomas J. Zagenczyk, 2022. "Change is Coming, Time to Undermine? Examining the Countervailing Effects of Anticipated Organizational Change and Coworker Exchange Quality on the Relationship Between Machiavellianism and Social Und," Journal of Business Ethics, Springer, vol. 181(3), pages 701-720, December.
    9. Rozz Albon & Tony Jewels, 2014. "Mutual Performance Monitoring: Elaborating the Development of a Team Learning Theory," Group Decision and Negotiation, Springer, vol. 23(1), pages 149-164, January.
    10. Jiaxin Wang & Shaohan Cai & Qinghong Xie & Lili Chen, 2022. "The influence of community engagement on seller opportunistic behaviors in e-commerce platform," Electronic Commerce Research, Springer, vol. 22(4), pages 1377-1405, December.
    11. Fernanda Odilla, 2020. "Oversee and Punish: Understanding the Fight Against Corruption Involving Government Workers in Brazil," Politics and Governance, Cogitatio Press, vol. 8(2), pages 140-152.
    12. Radtke, Robin R. & Speklé, Roland F. & Widener, Sally K., 2023. "Flourish or flounder: Do trust-centric management controls encourage knowledge sharing and team performance?," Accounting, Organizations and Society, Elsevier, vol. 107(C).
    13. Jorge Walter & Markus Kreutzer & Karin Kreutzer, 2021. "Setting the Tone for the Team: A Multi‐Level Analysis of Managerial Control, Peer Control, and their Consequences for Job Satisfaction and Team Performance," Journal of Management Studies, Wiley Blackwell, vol. 58(3), pages 849-878, May.
    14. Tuba Bakici & Esteve Almirall & Jonathan Wareham, 2011. "Motives for Participation in On-Line Open Innovation Platforms," DRUID Working Papers 11-14, DRUID, Copenhagen Business School, Department of Industrial Economics and Strategy/Aalborg University, Department of Business Studies.
    15. Paul Varella & Mansour Javidan & David A. Waldman, 2012. "A Model of Instrumental Networks: The Roles of Socialized Charismatic Leadership and Group Behavior," Organization Science, INFORMS, vol. 23(2), pages 582-595, April.
    16. Jacobo Gomez‐Conde & Ernesto Lopez‐Valeiras & Ricardo Malagueño & José Carlos Tiomatsu Oyadomari, 2022. "Quality of performance metrics, informal peer monitoring and goal commitment," Accounting and Finance, Accounting and Finance Association of Australia and New Zealand, vol. 62(3), pages 4041-4077, September.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Román, Francisco J., 2009. "An analysis of changes to a team-based incentive plan and its effects on productivity, product quality, and absenteeism," Accounting, Organizations and Society, Elsevier, vol. 34(5), pages 589-618, July.
    2. repec:eee:labchp:v:3:y:1999:i:pb:p:2373-2437 is not listed on IDEAS
    3. Madanmohan Ghosh & Carlo Perroni & John Whalley, 1999. "The Value of MFN Treatment to Developing Countries," University of Western Ontario, Departmental Research Report Series 9916, University of Western Ontario, Department of Economics.
    4. Alexander Brink, 2010. "Enlightened Corporate Governance: Specific Investments by Employees as Legitimation for Residual Claims," Journal of Business Ethics, Springer, vol. 93(4), pages 641-651, June.
    5. Gérard Charreaux, 2004. "Michael Jensen-la théorie positive de l’agence et ses applications à l’architecture et à la gouvernance des organisations," Working Papers CREGO 1041203, Université de Bourgogne - CREGO EA7317 Centre de recherches en gestion des organisations.
    6. David J. Storey & Robert Watson & Pooran Wynarczyk, 1994. "Regional Labour Market Influences on Managerial Remuneration in Small and Medium-sized Enterprises in England: An Empirical Analysis," Urban Studies, Urban Studies Journal Limited, vol. 31(8), pages 1407-1418, October.
    7. Barkema, H.G., 1989. "An empirical test of Holmstroem's principal-agent model that takes tax and signally hypotheses explicitly into account," Other publications TiSEM 3473b3e9-a1c8-47b1-a938-b, Tilburg University, School of Economics and Management.
    8. Carpenter, Jeffrey P. & Bowles, Samuel & Gintis, Herbert, 2006. "Mutual Monitoring in Teams: Theory and Experimental Evidence on the Importance of Reciprocity," IZA Discussion Papers 2106, Institute of Labor Economics (IZA).
    9. Luc Laeven & Christopher Woodruff, 2007. "The Quality of the Legal System, Firm Ownership, and Firm Size," The Review of Economics and Statistics, MIT Press, vol. 89(4), pages 601-614, November.
    10. González-Díaz, Manuel & Montoro-Sánchez, Ángeles, 2011. "Some lessons from incentive theory: Promoting quality in bus transport," Transport Policy, Elsevier, vol. 18(2), pages 299-306, March.
    11. Hubert Tchakoute Tchuigoua, 2011. "Contrat de crédit, décentralisation décisionnelle et performance des institutions de microfinance," Revue Finance Contrôle Stratégie, revues.org, vol. 14(2), pages 143-173, June.
    12. Marco Zanobio, 2012. "Aspetti teorici della Corporate Governance," DISEIS - Quaderni del Dipartimento di Economia internazionale, delle istituzioni e dello sviluppo dis1202, Università Cattolica del Sacro Cuore, Dipartimento di Economia internazionale, delle istituzioni e dello sviluppo (DISEIS).
    13. Evans, Lewis T & Quigley, Neil C, 1995. "Shareholder Liability Regimes, Principal-Agent Relationships, and Banking Industry Performance," Journal of Law and Economics, University of Chicago Press, vol. 38(2), pages 497-520, October.
    14. Alwine Mohnen & Kathrin Pokorny & Dirk Sliwka, 2008. "Transparency, Inequity Aversion, and the Dynamics of Peer Pressure in Teams: Theory and Evidence," Journal of Labor Economics, University of Chicago Press, vol. 26(4), pages 693-720, October.
    15. Beck, John C. & Larsen, Alan B. & Pinegar, J. Michael, 1996. "The wealth effects of non-equity alliances The U.S.-Japanese licensing experience," Pacific-Basin Finance Journal, Elsevier, vol. 4(4), pages 393-408, December.
    16. Guidi, Marco G.D. & Hillier, Joe & Tarbert, Heather, 2010. "Successfully reshaping the ownership relationship by reducing ‘moral debt’ and justly distributing residual claims: The cases from Scott Bader Commonwealth and the John Lewis Partnership," CRITICAL PERSPECTIVES ON ACCOUNTING, Elsevier, vol. 21(4), pages 318-328.
    17. David Gindis, 0. "On the origins, meaning and influence of Jensen and Meckling’s definition of the firm," Oxford Economic Papers, Oxford University Press, vol. 72(4), pages 966-984.
    18. Bushman, Robert M. & Smith, Abbie J., 2001. "Financial accounting information and corporate governance," Journal of Accounting and Economics, Elsevier, vol. 32(1-3), pages 237-333, December.
    19. An, Suwei, 2023. "Essays on incentive contracts, M&As, and firm risk," Other publications TiSEM dd97d2f5-1c9d-47c5-ba62-f, Tilburg University, School of Economics and Management.
    20. Uwe Jirjahn & Erik Poutsma, 2013. "The Use of Performance Appraisal Systems: Evidence from Dutch Establishment Data," Industrial Relations: A Journal of Economy and Society, Wiley Blackwell, vol. 52(4), pages 801-828, October.
    21. James J. Chrisman & Kristen Madison & Taewoo Kim, 2021. "A Dynamic Framework of Noneconomic Goals and Inter-Family Agency Complexities in Multi-Family Firms," Entrepreneurship Theory and Practice, , vol. 45(4), pages 906-930, July.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:inm:ororsc:v:19:y:2008:i:6:p:876-890. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Chris Asher (email available below). General contact details of provider: https://edirc.repec.org/data/inforea.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.