On the relationship between intrinsic and extrinsic work motivation1
Section snippets
A neglected aspect
The principal-agent paradigm and the closely related theory of contracts, property rights and organization theory, as well as modern institutional economics in general have without doubt provided major insights for industrial relations. These theories have, however, been exclusively concerned with extrinsic work motivation and disregard intrinsic work motivation. Agency theorists consider the latter to be irrelevant for their purposes. When people work for intrinsic reasons the supply curve of
Intrinsic and extrinsic work motivation in perspective
Persons are intrinsically motivated if `work is performed for work's sake'. Many different conceptualizations of intrinsic preferences exist (see Deci and Ryan, 1985) but the phenomenon corresponds well to everyday observation and experience. For our purpose intrinsic work motivation is identified with work morale or work ethic.
Extrinsic preferences are activated from outside the person concerned. External interventions inducing persons to perform may be positive (mainly financial work
Conditions for crowding out
There are two requirements for work morale to be crowded out by external interventions: (A) The agent must have a (sufficiently) high intrinsic work motivation at the outset; and (B) conditions for crowding out intrinsic work motivation must be present. These two requirements will now be discussed in turn.
Consequences for work performance
Economists might argue that for their purpose the crowding-out effect is irrelevant. Not being interested in cognitive processes as such, but only in their effect on human behaviour, there does not seem to be any problem when intrinsic work motivation is substituted by an extrinsic one. Hence it is concluded that what kind of motivation that induces people to work is quite irrelevant.
This view is too simple because (A) the performance induced by intrinsic motivation is not necessarily
Implications for economics
This paper suggests a particular link between economics and psychology which has so far been neglected. This disregard exists quite generally: “The research...in those two disciplines has proceeded independently; for the most part there has been little cross referencing involved and few attempts to provide a synthesis of the research findings” (Nalbantian, 1987, p. 8). A recent survey on “Labor economics and the psychology of organizations” by Lazear (1991)shows that this situation has not
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I am grateful for helpful comments to Iris Bohnet, Isabelle Busenhart, Reiner Eichenberger and Felix Oberholzer.