Abstract

Although teamwork is necessary and often regarded as a crucial determinant in winning sales and building long-term relationships, the issue of how to design incentive pay for team selling has remains mostly because of #x201C;moral hazard#x201D; in team. We build an analytical model integrating behavioral motivation theory#x2014; in particular, expectancy theory#x2014;into an economic hazard model framework and proffer propositions pertaining to incentive pay for team selling. The analytical model suggests that a firm can induce the best efforts in a selling team. This potential increases as interaction intensity, peer pressure, membership stability, team size, and team uncertainty rise. The results suggest that the optimal team incentive rate inducing the best efforts increases when interaction intensity, team uncertainty, and team size decrease.