As more firms empower autonomous teams to plan work and report results, a natural question arises: what happens to honesty when teammates start talking? This study explores whether, and through which mechanisms, team communication nudges budget reports toward truth-telling or toward misreporting. We draw on social norm theory to argue that communication between team members with different reporting preferences can shift what teammates believe others do and expect them to do. Because initially honest members are more likely to adjust their behavior based on these beliefs than initially dishonest members, collective reporting choices are at the risk of drifting toward misreporting.
This research uses three incentivized experiments that adapt classic participative budgeting games with a single responsible manager to an autonomous team setting with shared decision rights and shared economic stakes. In Experiment 1, two team members observe actual project costs, exchange nonbinding numerical recommendations for the team’s cost report, and then each provide a final input, with one input selected as the team’s report. Budget slack, if any, is shared equally. Experiment 2 adds freeform communication between the recommendation and decision stages. Experiment 3 keeps the same mechanics as Experiment 1 but makes the consequences for the firm’s owner more salient to the team by recruiting a third participant to bear the profit consequences of the team’s report.
Across the first two experiments, communication tends to create an asymmetric pull: Initially honest members are more likely to become more dishonest when a partner suggests misreporting, whereas initially dishonest members rarely change when a partner advocates honesty. In other words, communication can become a conduit through which misreporting spreads within autonomous teams.
Allowing free-form communication in Experiment 2 sheds light on the process. When teammates can explain and persuade, initially honest members are more prone to go along with a partner’s suggestion to misreport. Experiment 3, however, shows that making the owner’s losses more salient changes the picture because communication loses its asymmetric power to pull honest members toward creating budget slack.
These findings have important implications for practice. If your organization relies on autonomous teams, internal conversations around reporting can unintentionally drift toward slack creation even without explicit coercion. Designing communication and reporting routines that highlight the negative consequences of budgetary slack, for example, by making them salient in dashboards, reviews, or debriefs, can counteract that drift. At the same time, be mindful that transparency tools and mutual monitoring can cut both ways, sometimes easing coordination on misreporting; guardrails that elevate honesty cues without enabling collusion are essential.
The reference for this article can be found below:
Ressi, A., Schaupp, D., & van Pelt, V. (2025). What do you recommend? The effects of communication on misreporting in autonomous teams. European Accounting Review, 1–25. https://doi.org/10.1080/09638180.2025.2563512
