Background and Research Setting
A common key to the success of today’s organizations is the ability and willingness of their
employees to engage in outside-the-box thinking, which involves embracing ‘‘new ways of
conceptualizing old problems’’ (Magretta 2002, 90) and can result in productivity-enhancing
approaches to performing a task (Shalley 1991, 1995). Importantly, research often describes
outside-the-box thinking as occurring in settings in which well-defined constraints exist with
respect to the availability of resources or the amount of time available to identify solutions
(Magretta 2002; Matthews 2004). When allocating these scarce resources, an ongoing challenge is
motivating employees to move away from their relatively safe, conventional task approaches and
engage in a riskier search for new, better ways to perform the task. That is, outside-the-box thinking
often involves a number of cognitive processes that include monitoring the environment for
potential production efficiencies, generating hypotheses about potential efficiencies, testing these
hypotheses, and processing feedback about the tests’ results that may or may not lead to the
successful discovery of a more efficient task approach (Shalley 1995).
For the purposes of our study, a conventional approach to task performance is based on prior
experience or instruction (e.g., ‘‘the way we’ve always done things’’), which, while sensitive to
productive effort, imposes an effective upper limit on performance potential. Conversely,
3 Moreover, in the natural environment, it is unclear whether such incentive mechanisms facilitate the discovery of
new production efficiencies or simply motivate individuals to reveal already obvious production efficiencies that
they otherwise have an incentive to withhold, perhaps because management could use the information to set
higher targets or make reductions to the labor force (Sprinkle and Williamson 2004).
1436 Webb, Williamson, and Zhang
The Accounting Review
July 2013
production efficiencies, if discovered and successfully implemented, allow for greater productivity.
Importantly, once discovered, production efficiencies are also sensitive to effort. That is, simply
discovering the efficiencies will not necessarily lead to higher productivity; individuals must still
apply effort in using them.4
In sum, to enhance the study’s external validity, we develop our hypotheses in the context of a
setting that our literature review suggests should possess the following features: (1) individuals can
choose the extent to which they will perform a task using a conventional approach versus
attempting to identify production efficiencies; (2) exerting more effort using conventional
techniques will lead to productivity gains; (3) identifying and using production efficiencies will
result in greater productivity gains than the conventional approach, assuming effort is held constant;
and (4) constraints exist affecting the extent to which the identification of production efficiencies
can successfully occur (e.g., limited time, task complexity, limited feedback) (Thompson et al.
1997; Bailey and Bristow 2004; Matthews 2004). In all, we create an environment where, subject to
resource constraints, both identifying production efficiencies and working harder using either
conventional or more efficient production approaches (i.e., productive effort) can increase
productivity. Within this environment, we discuss how varying productivity-target difficulty and
the presence and absence of target-based pay can combine to influence the identification of
production efficiencies and productive effort.