Incentives that strengthen relationships can boost productivity and collaboration.
The article introduces relational incentives theory, which focuses on how different types of incentives can affect relationships. The researchers suggest that using the right type of incentive scheme can strengthen relationships and increase effort, while using the wrong type can harm relationships and decrease effort. They identify four common incentive schemes that work best in different types of relationships: participation for sharing, hierarchy for ranking, balancing for equality, and proportional for pricing. Matching the right incentive scheme to the relationship structure can lead to better outcomes in various contexts.