REVISITING CROWDING-OUT EFFECT OF PERFORMANCE MANAGEMENT: ITS IMPACT ON EXTRINSIC AND INTRINSIC MOTIVATION.
Scholars of public administration have long debated on the motivational effect of performance-based human resource management in the public sector. Empirical studies on this issue have been conducted in a variety of settings to examine whether it has brought the motivational gains it has promised. Some scholars even argued that it will undermine, rather than increase, public employees' motivation (Lee, 2019b; Weibel, Rost and Osterloh, 2009). The argument against performance management points to a crowding out effect: the provision of extrinsic rewards only results in the gratification of extrinsic desires, and will hinder the gratification of intrinsic needs. However, the underlying assumption of this claim, namely, the dichotomization of human motivation, is too simplistic. Ryan and Deci (2000) suggested that there are three hybrid forms of motivation that have both intrinsic and extrinsic elements, the implication of which is that performance management in the public sector may increase both intrinsic and extrinsic motivation at the same time.
In fact, a comparable amount of counter evidence to the crowding out effect has appeared in the literature (Cameron, 2001; Cameron and Pierce, 1994; Fischer, Malycha and Schafmann, 2019; Greener, 2019; Stazyk, 2013; Wenzel, Krause and Vogel, 2019). Some of these studies found synergistic effect showing that extrinsic rewards actually increased intrinsic motivation. Despite substantial evidence, the literature does not provide sufficient explanation as to why such synergies occur. In this context, it is timely to provide a theoretical explanation of the mechanisms underlying the synergistic effect. Deci and Ryan's advanced models provide meaningful clues for doing so. They further divided the types of extrinsic motivation such that some of extrinsic motivation have varying degrees of intrinsic elements. Thus, this study fills this research gap with a mediation model demonstrating that performance-based human resource management enhances these hybrid types of motivation which, in turn, increase employee work effort and job satisfaction. This study will provide the evidence of a possible synergistic effect that performance management can enhance, rather than compromise, motivation of employees, even if they are oriented toward intrinsic motivation.
In the subsequent sections, the advanced model of intrinsic and extrinsic motivation by Ryan and Deci (2000) will be briefly explained. Then, based on a detailed description of the hybrid type of motivation suggested in the model, hypotheses will be presented on why the implementation of performance management can improve the hybrid motivation of that type. For comparison, the non-hybrid type, extrinsic motivation will also be included as mediating variable. If the total effects of performance management via the hybrid types of motivation are positive and greater than that via extrinsic motivation, it will support the claim that the implementation of performance management can increase the work motivation of those with intrinsically oriented motivational propensity.
Theory and hypotheses
2.1. Intrinsic and extrinsic motivation
In 1971, Deci argued that some activities provide their own inherent reward, so external rewards are not necessary for motivating those activities, to establish the dichotomy between intrinsic and extrinsic motivation. The initial distinction made in this dichotomy was clear-cut: the absence or presence of external rewards. Later in 1975, Deci explained how people can be intrinsically motivated even without extrinsic rewards. The central idea is that taking certain (intrinsically motivated) behaviors enhances their positive evaluation about themselves. Building on this argument, scholars have proposed that providing rewards for intrinsically motivated behaviors will hamper, rather than promote, such behaviors, because the act of providing rewards interferes with the positive self-evaluation of the actors as an independent being. However, this has caused confusions by blurring the conceptual distinction between intrinsic and extrinsic motivation (Dyer and Parker, 1975). The defining factor of the distinction has shifted from the presence (or absence) of external rewards to whether the actors' self-concepts are enhanced as a result of taking certain actions. Accordingly, the perceived autonomy has become the criteria for the distinction, because, as Deci and Ryan (1985) explained, the actors' cognition that their actions are attributable to their autonomy has become the key determinant of whether the rewards result in improvement of their self-evaluation.
In response to this conceptual confusion, Ryan and Deci (2000) proposed a more sophisticated typology of human motivation. They placed six different forms of motivation on the continuum that has intrinsic and extrinsic motivation at the ends. The underlying dimensions for this continuum are twofold: the absence of external rewards and the degree of autonomy. According to their typology, intrinsic motivation refers to the state in which external stimulus is absent and complete autonomy is perceived. To the contrary, performing an action driven by external stimuli falls into the categories of extrinsic motivation. Ryan and Deci viewed that the degree of autonomy may vary and proposed four different forms of extrinsic motivation accordingly. 'External regulation' refers to the motivational state where the degree of autonomy is minimal. Under this type of motivational influence, people take certain actions with the feeling of outside pressure to get or avoid certain consequential situations. 'Introjection' refers to the situation where cations are made by the desire to gain approval from others and to attain ego-enhancement. 'Identification' is the state where motivation is driven by self-endorsement of the goal, meaning that actors accept the value of fulfilling it. Lastly, 'integration' refers to the situation in which the motivational driver is goal congruence, meaning that actors are fully assimilated into the action so that given goals have become their own. Except for 'external regulation,' the three types of extrinsic motivation are hybrid in nature because the perception of control is located internally. These concepts are summarized in Table 1.
It is important to note here that the critical conditions for the crowding out effect is whether an actor perceives his/her action as autonomous (Deci and Ryan, 2012), not whether the actions are externally rewarded. To the extent that an actor believes their actions are driven by their autonomous desires, providing rewards for such actions can be perceived by the actors as an indication of their contributions to these achievements. If so, synergistic effect, rather than crowding out effect, will happen.
The perceived locus of control underlying the actions is important for this attribution process: if the locus of control lies outside of themselves, the actors are likely to perceive such action as non-autonomous. To the contrary, if the locus of control is perceived as lying in themselves, people are likely to perceive certain actions as autonomous. Ryan and Deci (2000) proposed that the perceived locus of control is at least not entirely external for other motivational types than 'external regulation'. Thus, the crowding out effect is unlikely to occur for the following three types: integration, identification, and introjection. I would view these three types of motivational state as hybrid.
In fact, the arguments for the crowding out effect in the public sector are closely associated with these hybrid forms of motivation. The notion of public service motivation involves less sheer intrinsic motivation, than it is associated with the three hybrid types of motivation. For instance, Wright and Pandey (2008) argued that the value and goal congruence are the keys to understanding the nature of public employees' motivation. This is essentially 'integration' according to Ryan and Deci (2000). Also, given that public employees' motivational orientation toward intrinsic factors may be built through organizational socialization after entry into a career in public service (Perry, 1997), 'identification' explains public employees' motivation.
Given this, it can be reasonably argued that the provision of external rewards may promote, rather than hamper, the motivation of the public employees strongly affected by public service value achievements. In the subsequent section, we develop several hypotheses explicating the effects of performance management on the hybrid type satisfaction, namely, introjection, identification, and integration. To provide a reference against which the effects of these hybrid types of need satisfaction are compared, the effect of external regulation, a sheer form of extrinsic motivation, will also be tested.
Introjection refers to a type of extrinsic satisfaction in which people are motivated to take certain actions mainly because they anticipate that such actions will bring them the benefit of being approved, recognized, and respected by themselves and others (Ryan and Deci, 2000). This type of motivation is distinguished from sheer extrinsic motivation based on the nature of the rewards: the rewards bear intangible, rather than monetary, values. Although a motivation of this sort is extrinsic by definition, this notion is clearly in line with the concept of public service motivation. Numerous scholars define public service motivation broadly as something beyond monetary interest, embracing the emphasis on a sense of accomplishment and a feeling of self-worth. Houston (2000) found that public employees tend to put a higher priority on promotion than private sector employees. Admittedly, given promotion usually accompanies pay raise, this finding may imply that public employees appreciate the pay raise that comes with the promotion. However...
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