Revving Up or Backing Down? Cross-Level Effects of Firm-Level Tournaments on Employees’ Competitive Actions

The tournament literature has typically traced employees’ competitive actions to characteristics of individual-level career tournaments. Yet, such individual-level tournaments usually transcend firms that themselves compete in a firm-level tournament. We study the cross-level implications of a firm-level tournament for the competitive actions that constituent employees undertake against other individuals internal and external to their firm. We propose a theory of individual reputational incentives, which predicts that a firm’s competitive threats decrease its employees’ internal competitive actions yet increase their external competitive actions, while a firm’s competitive opportunities increase employees’ internal and external competitive actions. The theory also predicts that these effects are largest when a firm faces potential unexpected losses or gains in its standing, such as when the firm experiences competitive threats from resource-disadvantaged firms, or competitive opportunities against resource-advantaged firms. In panel data on the population of motorcycle riders competing in MotoGP from 2004 to 2020, we examine these hypotheses using overtakes to measure riders’ internal and external competitive actions. Our findings reveal how riders adjust their internal and external overtakes based on their team’s competitive threats and opportunities, and on the relative resource endowments of the teams supplying such threats or opportunities.