Recent research by Tom Taiyi Yan of University College London and Vijaya Venkataramani of the University of Maryland reveals that internal competition within companies may hinder innovation. While competition can increase team motivation and collaboration within groups, the study found that rivalries often lead to reduced information sharing across teams, negatively affecting the quality of the results. The researchers observed that competition decreased knowledge exchanges between teams by 42%, limiting creative and innovative outcomes. These findings emerged from experiments conducted on teams in the renewable energy and software industries, as well as other controlled business groups.
The study highlighted that only teams known as “bridge teams”—those that chose to collaborate with other groups—excelled in innovation. These teams, either through necessity or strategy, shared information with rivals, enhancing their access to diverse ideas and solutions. In contrast, non-bridge teams performed 49% worse in terms of innovation. To mitigate the negative impact of competition, Yan and Venkataramani suggest structuring contests around collective goals, such as outperforming external competitors, rather than fostering purely internal rivalries.
