I believe finding the right balance to keep a pulse on the competitive dynamics to incentivize the team to increase the quality of work and mitigate the anxiety and poor team morale is the key. Either way, according to the Harvard Business Review, the way the leader communicates about competition - making people feel anxiety or excitement - influences them to come up with creative solutions or sabotage one another. We all seek recognition, promotion, and bonuses, but the way we feel about what is proposed to us can cause different behaviours. Whatever we choose we must consider the behaviour we want to promote, creativity, or cut corners.
Cooperation instead of competition is my thing. The group above the individual, the team is greater than the sum of all members, all focused on the same goal, each one using their expertise/value. Fairness, balance, and well-defined roles and contributions promote the entire team each one a star within their circle of competencies and capacities. Like a soccer game!