Abstract: Performance evaluation is one of the key issues of team incentives.This paper compares the incentive efficiency of relative performance evaluation and joint performance evaluation,and applies the results to the design of performance evaluation in virtual R&D organization.The main findings of this paper are as follows:relative performance evaluation is more efficient in the situation of one period;whereas joint performance evaluation is more advantageous in the situation of multi-period.Meanwhile,joint performance evaluation might be self enforcing,and could prevent collusion and enhance cooperating.This paper proposes a framework for evaluating performance of virtual R&D organization(VRO) based on these basic results.

Key words: relative performance evaluation, joint performance evaluation, virtual R&D organization(VRO)