IDEAS home Printed from https://ideas.repec.org/p/zbw/rwirep/917.html
   My bibliography  Save this paper

The effects of incentives, social norms, and employees' values on work performance

Author

Listed:
  • Roos, Michael W. M.
  • Reale, Jessica
  • Banning, Frederik

Abstract

This agent-based model contributes to a theory of corporate culture in which company performance and employees' behaviour result from the interaction between financial incentives, motivational factors and endogenous social norms. Employees' personal values are the main drivers of behaviour. They shape agents' decisions about how much of their working time to devote to individual tasks, cooperative, and shirking activities. The model incorporates two aspects of the management style, analysed both in isolation and combination: (i) monitoring efforts affecting intrinsic motivation, i.e. the firm is either trusting or controlling, and (ii) remuneration schemes affecting extrinsic motivation, i.e. individual or group rewards. The simulations show that financial incentives can (i) lead to inefficient levels of cooperation, and (ii) reinforce value-driven behaviours, amplified by emergent social norms. The company achieves the highest output with a flat wage and a trusting management. Employees that value self-direction highly are pivotal, since they are strongly (de-)motivated by the management style.

Suggested Citation

  • Roos, Michael W. M. & Reale, Jessica & Banning, Frederik, 2021. "The effects of incentives, social norms, and employees' values on work performance," Ruhr Economic Papers 917, RWI - Leibniz-Institut für Wirtschaftsforschung, Ruhr-University Bochum, TU Dortmund University, University of Duisburg-Essen.
    • Handle: RePEc:zbw:rwirep:917
    DOI: 10.4419/96973063
    as

    Download full text from publisher

    File URL: https://www.econstor.eu/bitstream/10419/240202/1/176801566X.pdf
    Download Restriction: no
    File URL: https://libkey.io/10.4419/96973063?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. Sunkee Lee & Phanish Puranam, 2017. "Incentive Redesign and Collaboration in Organizations: Evidence from a Natural Experiment," Strategic Management Journal, Wiley Blackwell, vol. 38(12), pages 2333-2352, December.
    2. Burks, Stephen & Carpenter, Jeffrey & Goette, Lorenz, 2009. "Performance pay and worker cooperation: Evidence from an artefactual field experiment," Journal of Economic Behavior & Organization, Elsevier, vol. 70(3), pages 458-469, June.
    3. Daniele Nosenzo & Theo Offerman & Martin Sefton & Ailko van der Veen, 2014. "Encouraging Compliance: Bonuses Versus Fines in Inspection Games," The Journal of Law, Economics, and Organization, Oxford University Press, vol. 30(3), pages 623-648.
    4. Huck, Steffen & Kübler, Dorothea & Weibull, Jörgen, 2012. "Social norms and economic incentives in firms," Journal of Economic Behavior & Organization, Elsevier, vol. 83(2), pages 173-185.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Michael Roos & Jessica Reale & Frederik Banning, 2021. "The effects of incentives, social norms, and employees' values on work performance," Papers 2107.01139, arXiv.org, revised Jul 2021.
    2. Michael Roos & Jessica Reale & Frederik Banning, 2022. "A value-based model of job performance," PLOS ONE, Public Library of Science, vol. 17(1), pages 1-26, January.
    3. Dirk Sliwka, 2007. "Trust as a Signal of a Social Norm and the Hidden Costs of Incentive Schemes," American Economic Review, American Economic Association, vol. 97(3), pages 999-1012, June.
    4. Jon Anderson & Stephen Burks & Jeffrey Carpenter & Lorenz Götte & Karsten Maurer & Daniele Nosenzo & Ruth Potter & Kim Rocha & Aldo Rustichini, 2013. "Self-selection and variations in the laboratory measurement of other-regarding preferences across subject pools: evidence from one college student and two adult samples," Experimental Economics, Springer;Economic Science Association, vol. 16(2), pages 170-189, June.
    5. Barmettler, Franziska & Fehr, Ernst & Zehnder, Christian, 2012. "Big experimenter is watching you! Anonymity and prosocial behavior in the laboratory," Games and Economic Behavior, Elsevier, vol. 75(1), pages 17-34.
    6. Werner, Peter, 2024. "On common evaluation standards and the acceptance of wage inequality," Games and Economic Behavior, Elsevier, vol. 145(C), pages 137-156.
    7. Christian Grund & Kirsten Thommes, 2017. "The Role of Contract Types for Employees’ Public Service Motivation," Schmalenbach Business Review, Springer;Schmalenbach-Gesellschaft, vol. 18(4), pages 377-398, October.
    8. Timur Kuran & William H. Sandholm, 2008. "Cultural Integration and Its Discontents," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 75(1), pages 201-228.
    9. Constança Esteves-Sorenson, 2018. "Gift Exchange in the Workplace: Addressing the Conflicting Evidence with a Careful Test," Management Science, INFORMS, vol. 64(9), pages 4365-4388, September.
    10. Linda Argote & Sunkee Lee & Jisoo Park, 2021. "Organizational Learning Processes and Outcomes: Major Findings and Future Research Directions," Management Science, INFORMS, vol. 67(9), pages 5399-5429, September.
    11. Valerio Capraro & David G. Rand, 2018. "Do the Right Thing: Experimental evidence that preferences for moral behavior, rather than equity or efficiency per se, drive human prosociality," Judgment and Decision Making, Society for Judgment and Decision Making, vol. 13(1), pages 99-111, January.
    12. Charness, Gary & Naef, Michael & Sontuoso, Alessandro, 2019. "Opportunistic conformism," Journal of Economic Theory, Elsevier, vol. 180(C), pages 100-134.
    13. Lorenz Goette & David Huffman & Stephan Meier & Matthias Sutter, 2010. "Group Membership, Competition, and Altruistic versus Antisocial Punishment: Evidence from Randomly Assigned Army Groups," Working Papers 2010-24, Faculty of Economics and Statistics, Universität Innsbruck.
    14. Charness, Gary & Kuhn, Peter, 2011. "Lab Labor: What Can Labor Economists Learn from the Lab?," Handbook of Labor Economics, in: O. Ashenfelter & D. Card (ed.), Handbook of Labor Economics, edition 1, volume 4, chapter 3, pages 229-330, Elsevier.
    15. Frigau, Luca & Medda, Tiziana & Pelligra, Vittorio, 2019. "From the field to the lab. An experiment on the representativeness of standard laboratory subjects," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 78(C), pages 160-169.
    16. Sunkee Lee, 2019. "Learning-by-Moving: Can Reconfiguring Spatial Proximity Between Organizational Members Promote Individual-level Exploration?," Organization Science, INFORMS, vol. 30(3), pages 467-488, May.
    17. Falk, Armin & Zehnder, Christian & Meier, Stephan, 2010. "Did We Overestimate the Role of Social Preferences? The Case of Self-Selected Student Samples," CEPR Discussion Papers 8019, C.E.P.R. Discussion Papers.
    18. Mehrzad B. Baktash, 2024. "Does Performance Pay Increase the Risk of Worker Loneliness?," Research Papers in Economics 2024-12, University of Trier, Department of Economics.
    19. Bigoni, Maria & Camera, Gabriele & Casari, Marco, 2013. "Strategies of cooperation and punishment among students and clerical workers," Journal of Economic Behavior & Organization, Elsevier, vol. 94(C), pages 172-182.
    20. Thomas Cornelissen & John S. Heywood & Uwe Jirjahn, 2010. "Profit Sharing and Reciprocity: Theory and Survey Evidence," SOEPpapers on Multidisciplinary Panel Data Research 292, DIW Berlin, The German Socio-Economic Panel (SOEP).

    More about this item

    Keywords

    Values; social norms; remuneration systems; intrinsic motivation; monitoring; agent-based modelling;
    All these keywords.

    JEL classification:

    • D24 - Microeconomics - - Production and Organizations - - - Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity
    • D91 - Microeconomics - - Micro-Based Behavioral Economics - - - Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making
    • J22 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Time Allocation and Labor Supply
    • M52 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Personnel Economics - - - Compensation and Compensation Methods and Their Effects
    • M54 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Personnel Economics - - - Labor Management
    • Z13 - Other Special Topics - - Cultural Economics - - - Economic Sociology; Economic Anthropology; Language; Social and Economic Stratification

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:zbw:rwirep:917. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: ZBW - Leibniz Information Centre for Economics (email available below). General contact details of provider: https://edirc.repec.org/data/rwiesde.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.