Abstract
Employees may work hard for one of two reasons: because they are interested in the work itself (intrinsic motivation) or because they are being paid (extrinsic motivation). These two forms of motivation are interlinked and, as such, companies cannot opt for one or the other in isolation. Under certain circumstances, an extrinsic incentive in the form of variable performance-related pay will undermine intrinsic motivation. This “crowding-out effect” can be clearly illustrated by means of examples. It is also a well-documented phenomenon in economic research, proven in laboratory experiments, field studies and econometric analyses. The crowding out of intrinsic motivation in a work context can be explained by the reduction in self-determination that often accompanies variable performance-related pay and the breaking of a “psychological contract” based on mutual trust.
Access this chapter
Tax calculation will be finalised at checkout
Purchases are for personal use only
Preview
Unable to display preview. Download preview PDF.
Further Reading
Nonaka, I./Takeuchi, H. (1995): The Knowledge-Creating Company, New York/Oxford.
Osterloh, M./Frost, J. (1998): Prozessmanagement als Kernkompetenz. Wie Sie Business Reengineering strategisch nutzen können, 2nd edn, Wiesbaden. Osterloh, M./Wübker, S. ( 1999 ): Wettbewerbsfähiger durch Prozess-und Wissensmanagement. Mit Chancengleichheit auf Erfolgskurs, Wiesbaden.
Becker, G. (1976): The Economic Approach to Human Behavior, Chicago.
Frey, B. S. (1999): Economics as a Science of Human Behavior. Extended Second Edition, Boston.
Csikszentmihalyi, M. (1975): Beyond Boredom and Anxiety, San Francisco.
Heckhausen, H. (1989): Motivation und Handeln, 2nd edn, Berlin.
Kruglanski, A. W. (1975): The Endogenous-Exogenous Partition in Attribution Theory, in: Psychological Review 82, pp 387–406.
Loewenstein, G. (1999): Because It Is There: The Challenge of Mountaineering… for Utility Theory, in: Kyklos 52, pp 315–343.
Oelz, O. (1999): Mit Eispickel und Stethoskop, Zurich.
Kliemt, H. (1993): Ökonomische Analyse der Moral, in: Ramb, B.-T./Tietzel, M.
Ökonomische Verhaltenstheorie, Munich, pp 281–310.
Osterloh, M./Löhr, A. (1994): Ökonomik oder Ethik als Grundlage der sozialen Ordnung?, in: Wirtschaftswissenschaftliches Studium, p 406.
Baurmann, M. (1996): Der Markt der Tugend, Tübingen.
Deci, E. L./Flaste, R. (1995): Why We Do What We Do: The Dynamics of Personal Autonomy, New York.
Sprenger, R. K. (2000a): Mythos Motivation (anniversary edition). Wege aus einer Sackgasse, Frankfurt.
Sprenger, R. K. (2000b): Das Prinzip Selbstverantwortung (anniversary edition). Wege zur Motivation, Frankfurt.
Kohn, A. (1993): Punished by Reward: The Trouble With Gold Stars, Incentive Plans, A’s, Praise, and Other Bribes, Boston.
Kohn, A. (1993): Why Incentive Plans Cannot Work, in: Harvard Business Review 5, pp 54–63.
Deci, E. L./Koestner, R./Ryan, R. M. (1999): A Meta-Analytic Review of Experiments Examining the Effects of Extrinsic Rewards on Intrinsic Motivation, in: Psychological Bulletin 125 (3), pp 627–668.
Frey, B. S. (1997a): Not Just for the Money. An Economic Theory of Personal Motivation. Cheltenham/Northampton.
Schein, E. (1965): Organization Psychology, Englewood Cliffs, NJ.
Rousseau, D. M. (1995): Psychological Contracts in Organizations: Understanding Written and Unwritten Agreements, Thousand Oaks/London/New Delhi.
Rousseau, D. M./McLean Parks, J. (1993): The Contracts of Individuals and Organizations, in: Research in Organizational Behavior 15, pp 1–43.
Fehr, E./Gächter, S. (1998): Reciprocity and Economics: The Economic Implications of “Homo Reciprocans,” in: European Economic Review 42, pp. 845–859.
Bierhoff, H. W./Herner, M. J. (1999): Arbeitsengagement aus freien Stücken: Zur Rolle der Führung, in: Schreyögg, G./Sydow, J. (eds): Managementforschung 9. Führung–neu gesehen, Berlin/New York, pp 55–87.
Pearce, J. L. (1987): Why Merit Pay Doesn’t Work: Implications From Organizational Theory, in: Balkin, D. B./Gomez-Mejia, L. R. ( eds ): New Perspectives on Compensation, pp 169–178.
Holmström, B./Milgrom, P. (1991): Multi-Task Principal Agent Analyses: Incentive Contracts, Asset Ownership and Job Design, in: Journal of Law, Economics and Organizations 7, pp 24–52.
Prendergast, C. (1999): The Provision of Incentives in Firms, in: Journal of Economic Literature 37, pp 7–63.
Amabile, T. (1996): Creativity in Context: Update to the Social Psychology of Creativity, Boulder, CO.
Amabile, T. (1998): How to Kill Creativity, in: Harvard Business Review, September/October, pp 77–87.
Schwartz, B. (1990): The Creation and Destruction of Value, in: American Psychologist 45, pp 7–15.
Shapira, Z. (1976): Expectancy Determinants of Intrinsically Motivated Behavior, in: Journal of Personality and Social Psychology 34, pp 1235–1244.
Editor information
Editors and Affiliations
Rights and permissions
Copyright information
© 2002 Springer-Verlag Berlin Heidelberg
About this chapter
Cite this chapter
Frey, B.S., Osterloh, M. (2002). Motivation — A Dual-Edged Factor of Production. In: Frey, B.S., Osterloh, M. (eds) Successful Management by Motivation. Organization and Management Innovation. Springer, Berlin, Heidelberg. https://doi.org/10.1007/978-3-662-10132-2_1
Download citation
DOI: https://doi.org/10.1007/978-3-662-10132-2_1
Publisher Name: Springer, Berlin, Heidelberg
Print ISBN: 978-3-642-07623-7
Online ISBN: 978-3-662-10132-2
eBook Packages: Springer Book Archive