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A Fistful of Dollars: Are Financial Rewards a Suitable Management Practice for Distributed Models of Innovation?
Author(s) -
ALEXY OLIVER,
LEITNER MARTIN
Publication year - 2011
Publication title -
european management review
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.784
H-Index - 32
eISSN - 1740-4762
pISSN - 1740-4754
DOI - 10.1111/j.1740-4762.2011.01017.x
Subject(s) - moderation , payment , extant taxon , intrinsic motivation , business , crowding out , collateral , microeconomics , economics , finance , psychology , social psychology , monetary economics , evolutionary biology , biology
How can firms engaged in distributed innovation attract external volunteers and direct their efforts efficiently and effectively? Extant research proposes financial rewards as suitable management practice, maintaining that extrinsic financial rewards and intrinsic motivation have a unidimensionally positive effect on volunteers' motivation. In contrast, using the same theory underlying these studies, we argue that the effect of payment is far more complex. To do so, we introduce the concept of payment norms as a moderator of the effect of payment on motivation. Conducting a scenario experiment with open source software developers, we find that intrinsic motivation decreases for individuals with norms against payment, and that self‐determination mediates this effect. Furthermore, payment has a direct positive effect on total motivation, but not for individuals with strong norms for payment. Our findings help explain conflicting earlier results on motivation crowding and contribute to the debate on how to manage external volunteers in distributed innovation settings.