Work Group Competition and Performance Dynamics

Besides consultants and practitioners, some contributions in the organizational economics literature have advocated substituting internal firms' bureaucracies with markets to regulate internal transactions. However, usually the effects of competition on performance are considered in terms of competition across firms or industries. By contrast, other contributions point out that competition is pervasive inside firms as well. In this paper, we assume that conflict is directly related to the level of competition and propose a model which analyze the dynamics of performance when the manager decides the level of competition observing the group performance. We study the stability of the equilibria and analyze the bifurcations. We show that the fixed point with null performance is a Milnor attractor, and this may suggests why any attempt to move from this unsatisfactory outcome is unsuccessful.