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Open AccessArticle
Evaluating the Effectiveness of Standardized Sales Incentive Contracts Under Agent Heterogeneity
by
Ning Wang
Ning Wang 1,
Housheng Duan
Housheng Duan 2,*
and
Lang Ning
Lang Ning 3
1
School of Business, Macau University of Science and Technology, Macau SAR, China
2
School of Management, Guangzhou University, Guangzhou 510006, China
3
School of Business, Sun Yat-sen University, Guangzhou 510275, China
*
Author to whom correspondence should be addressed.
Mathematics 2025, 13(18), 2968; https://doi.org/10.3390/math13182968 (registering DOI)
Submission received: 5 August 2025
/
Revised: 10 September 2025
/
Accepted: 10 September 2025
/
Published: 13 September 2025
Abstract
Salespeople, as the core executors of product distribution, form a classical principal–agent relationship with the firm. A substantial body of academic research has focused on how firms can develop optimal sales incentive contracts in various scenarios to achieve precise and effective motivation of their salespeople. However, in sales management practice, firms face a tradeoff between management precision and control costs. Therefore, instead of tailoring contracts for each individual, they tend to adopt standardized incentive contracts for the broader range of salespeople. This practice has called the effectiveness of standardized incentive schemes into question. These questions have received limited attention in prior research, yet they hold significant theoretical and practical relevance for optimizing sales incentive mechanisms and improving managerial effectiveness. This study underscores the critical role of salesperson heterogeneity in shaping the effectiveness of standardized incentive contracts. By constructing game-theoretical models of standardized sales incentive contracts in two scenarios and analyzing how heterogeneous salespeople respond to these contracts, the study finds that heterogeneity weakens the incentive effectiveness of standardized contracts. To address this challenge, we propose two practical evaluation methods to help firms assess and adjust both the degree of salesperson heterogeneity and the actual effectiveness of standardized incentive contracts.
Share and Cite
MDPI and ACS Style
Wang, N.; Duan, H.; Ning, L.
Evaluating the Effectiveness of Standardized Sales Incentive Contracts Under Agent Heterogeneity. Mathematics 2025, 13, 2968.
https://doi.org/10.3390/math13182968
AMA Style
Wang N, Duan H, Ning L.
Evaluating the Effectiveness of Standardized Sales Incentive Contracts Under Agent Heterogeneity. Mathematics. 2025; 13(18):2968.
https://doi.org/10.3390/math13182968
Chicago/Turabian Style
Wang, Ning, Housheng Duan, and Lang Ning.
2025. "Evaluating the Effectiveness of Standardized Sales Incentive Contracts Under Agent Heterogeneity" Mathematics 13, no. 18: 2968.
https://doi.org/10.3390/math13182968
APA Style
Wang, N., Duan, H., & Ning, L.
(2025). Evaluating the Effectiveness of Standardized Sales Incentive Contracts Under Agent Heterogeneity. Mathematics, 13(18), 2968.
https://doi.org/10.3390/math13182968
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