How Controlling Failure Perceptions Affects Performance: Evidence from a Field Experiment

Abstract

ABSTRACT We conducted a clustered randomized field experiment with 20 Brazilian distributorships of a multinational direct sales organization to examine whether controlling failure perceptions through formal communications increases performance. We used the organization's weekly sales meetings to deliver a video-based message from the regional head that either communicates workers should view failure as a natural part of learning rather than an indictment of their ability (treatment condition) or simply summarizes the organization's history (control condition). We find that those who were assigned to the treatment condition were more likely to sustain their effort in response to the economic adversity that coincided with our experiment. Additional analyses suggest that our treatment accomplished this by increasing job-specific confidence and by reinforcing social norms that encourage workers to persevere after failure. Overall, our findings highlight that formal communications from senior management are a viable control mechanism for sustaining effort in the face of failure.