The effect of incentives on intrinsic motivation and employee attitudes: A multilevel study across nations and cultural clusters

• Published date: 01 July 2018
• Date: 01 July 2018
• Author: Matthew J. Monnot
• DOI: http://doi.org/10.1002/tie.21949

DIMENSIONS OF INTERNATIONAL BUSINESS

The effect of incentives on intrinsic motivation and employee

attitudes: A multilevel study across nations and cultural

clusters

Matthew J. Monnot

University of San Francisco, California

Correspondence

Matthew J. Monnot, School of Management,

University of San Francisco,

San Francisco, CA 94117

Email: mjmonnot@usfca.edu

In a study of employees across 29 nations and 9 of the 10 Global Leadership and Organizational

Effectiveness (GLOBE) cultural clusters, the association between economic and psychological

incentives and intrinsic motivation, job satisfaction, and organizational commitment were exam-

ined. Self-Determination Theory (SDT) is utilized to develop a theoretical model and then com-

pare structural relationships across nations and cultural clusters. Results confirm the positive

relationshipbetween basic psychological needsand intrinsic motivation acrossall nations and cul-

tures. However there is an effect of cultural cluster on the relationships between incentives and

motivation, wherein external incentives are intrinsically motivating in Southern and Confucian

Asian clusters.The implications for the designof incentive systems are discussed.

KEYWORDS

cross-cultural, international management, motivation, self-determination theory

1|INTRODUCTION

Organizations are connected through a vast network of trade rela-

tionships. These relationships involve strategic reliance on export and

import of merchandise, shared commercial services, and intermediate

goods that constitute global value chains—all of which have displayed

a growth trend in recent years. Trade is spread across many different

nations and cultures, with developing economies accounting for

42 and 35% of world trade in merchandise and services in 2012,

respectively (World Trade Organization [WTO], 2013). Trade relation-

ships necessitate coordination between organizations and across bor-

ders. Coordination hinges on successful interaction of a motivated

and committed international workforce. Most executives report that

working across borders (such as teams in different geographies) has

increased in recent years and that, likewise, international reporting

relationships have also become more common. The same executives

report that the primary focus of their Human Resource function has

been and will continue to be retaining a committed workforce

(KPMG International, 2012).

Additionally, shifting demographics and changing economies of

developing countries have created demands for more skilled labor.

Competitive differentials based on talent at the country level will con-

tinue to shift, necessitating relevant policy changes (e.g., education)

(Lanvin & Evans, 2013). However, if current trends continue, analysts

project a global shortfall of medium- and high-skilled labor in the com-

ing years (Dobbs, Lund, & Madgavkar, 2012). Therefore, for organiza-

tions to remain competitive in the global economy, an understanding

of individual, national, and cultural differences related to motivation

will be critical.

Establishing effective reward systems demands an understanding

of the effect of intrinsic and extrinsic motivators on employee atti-

tudes. Early theories of motivation viewed extrinsic and intrinsic

rewards as additive. It was recommended to design reward systems

that facilitated both intrinsic and extrinsic motivators, which would

lead to eventual greater satisfaction and performance (Porter & Law-

ler, 1968). Intrinsic motivation is of particular interest due to a greater

association with satisfaction and well-being as compared to extrinsic

incentives (Niemiec, Ryan, & Deci, 2009).

Unfortunately, studies of the effect of extrinsic versus intrinsic

rewards on intrinsic motivation often provide equivocal evidence.

Whereas a meta-analytic study suggests that tangible extrinsic

rewards have no effect on self-report intrinsic motivation

(Cameron & Pierce, 1994; Eisenberger & Cameron, 1996), a subse-

quent meta-analysis found that tangible rewards had a small negative

effect on self-reported intrinsic motivation (Deci, Koestner, & Ryan,

1999), and yet another found that the effect of tangible rewards on

intrinsic motivation ranged from null to slightly positive (Eisenberger,

Pierce, & Cameron, 1999). The current study empirically examines a

DOI: 10.1002/tie.21949

Thunderbird Int. Bus. Rev. 2018;60:675–689. wileyonlinelibrary.com/journal/tie © 2017 Wiley Periodicals, Inc. 675