“How Managing Failure Perceptions Affects Performance: Evidence from a Field Experiment” – by Dr. David Erkens
Accounting & Law Seminar
Dr. David Hendrik Erkens
McDonough School of Business
We conducted a clustered randomized field experiment with 20 Brazilian distributorships of a multi-national direct sales organization to examine whether organizations can increase performance by managing how workers interpret and respond to their failures. We used four weekly sales rallies to deliver a video-based message from the regional head that either communicates failure is a normal part of business that is embraced by the organization (treatment condition) or simply summarizes the organization’s history (control condition). Consistent with our experimental treatment helping inexperienced workers cope with failure, we find that those who were assigned to the treatment condition were more likely to heighten and sustain their effort in response to economic adversity that coincided with our experiment. Additional analyses suggest that our experimental treatment accomplished this by making these workers more confident in their ability to successfully perform job-specific tasks. Overall, our findings highlight the benefits of managing how failure is perceived within the organization.