Wei Cai - Faculty & Research - Harvard Business School
Photo of Wei Cai

Wei Cai


Doctoral Student

Wei Cai received an M.S. in Finance from Vanderbilt University in 2011. Thereafter, she worked as a Senior Financial Consultant at Ernst & Young in New York. Her main interests are in the design of management control and incentive systems.
Working Papers
  1. Incentives and Employee-Initiated Innovation: Evidence from the Field

    Wei Cai, Susanna Gallani and Jee-Eun Shin

    Organizations often struggle with motivating employees to develop innovative ideas that may benefit the firm, especially when the standard tasks for which employees are measured and incentivized do not explicitly include innovation. Prior analytical research posits that low-powered incentives can motivate employees to generate creative ideas by diverting their attention away from fixating on performance measures associated with their standard tasks included in the incentive contract. Using data from a company that underwent an exogenous change in its employee incentive contract design towards low-powered incentives, we examine whether the design of incentive contracts for the standard tasks influences employee-initiated innovation activities. We find that employees under fixed-pay contracts are more likely to pursue innovation ideas that are valuable to the firm relative to employees under variable-pay contracts. Moreover, such efforts are concentrated on innovation ideas that are not specific to the standard task performed by the proposing employee but are applicable to issues of greater breadth for the firm and/or with a long-term view. Our findings contribute to the literature on incentives for innovation by showing how contract structure can motivate unplanned employee-initiated innovation activities that are difficult to contract upon ex ante.

    Keywords: employee driven innovation; innovation appropriability; Contract Design; creativity; low-powered incentives; Employees; Innovation and Invention; Motivation and Incentives; Creativity;

    Citation:

    Cai, Wei, Susanna Gallani, and Jee-Eun Shin. "Incentives and Employee-Initiated Innovation: Evidence from the Field." Harvard Business School Working Paper, No. 19-015, August 2018.  View Details
  2. Subjectivity in Tournaments: Implicit Rewards and Penalties and Subsequent Performance

    Wei Cai and Susanna Gallani

    This study extends the literature on the tradeoffs associated with subjectivity in tournament incentive systems by describing the effects of implicit penalties (rewards), whereby workers ranked at the top (bottom) of objective performance rankings fail to receive the reward (penalty) due to management’s subjective performance evaluations. Using data from a field setting where incentive contracts are structured as repeated tournaments, we find that workers respond differently to subjective versus objective awards of rewards and penalties. Additionally, workers subject to implicit rewards (penalties) exhibit performance reactions that counterbalance those of workers receiving subjective penalties (rewards), with net effects indistinguishable from zero. However, while the effects of subjective rewards and penalties reverse in the subsequent period, the performance effects of implicit rewards and penalties persist. Our study documents consequences of subjectivity that might alter the effectiveness of tournament incentives, and is relevant for the practice of incentive design.

    Keywords: tournaments; subjectivity; Relative performance evaluation; implicit rewards and penalties; reciprocity; Performance Evaluation; Motivation and Incentives;

    Citation:

    Cai, Wei, and Susanna Gallani. "Subjectivity in Tournaments: Implicit Rewards and Penalties and Subsequent Performance." Harvard Business School Working Paper, No. 18-070, January 2018. (Revised March 2018.)  View Details