Advances in Management and Applied Economics

Social comparison in deterrence policy

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  • Abstract

    Management meted out punishment to enforce rules and encourage adherence. However, the effectiveness depended on how the employees perceive and interpret the policy. This study tested the effect of reducing individual lateness in a plastic factory. Field experiment was conducted to test the behavioral reaction of employees to fines in two different conditions. In the first condition, employees paid fines to employer and in the second condition employees paid fines to co-worker. While the two conditions relied on cost and benefit to reduce misconduct, employees in condition two could also compare the difference of fines received/paid by him and his co-worker. The results showed that the attendance only improved in the second condition and not in the first condition. The result suggested the importance of social norm (e.g. distributive fairness) in the enforcement policy.