Intrinsic and Extrinsic Motivation and Participation in Budgeting: Antecedents and Consequences

Abstract

Based on Self-Determination Theory (SDT; Ryan and Deci 2000b; Gagne´ and Deci 2005), the present research proposes and tests a motivation-based model of participation in budgeting that distinguishes among intrinsic motivation, autonomous extrinsic motivation, and controlled extrinsic motivation for participative budgeting. The proposed model was tested using a survey conducted among managers of an international bank. The results suggest that while intrinsic motivation and autonomous extrinsic motivation for participation in budgeting are positively related to performance, controlled extrinsic motivation is negatively associated with performance. These findings highlight the importance of distinguishing among various forms of motivation in participative budgeting research and suggest that the mechanism by which the information benefits of participation in budgeting are obtained may be more complex than assumed. The results also provide evidence of the viability of using the proposed model to study commonly assumed reasons for participative budgeting within a general theoretically based framework of motivation.

Realising the richness of psychology theory in contingency-based management accounting research

“…Research also examined how the effects of participative budgeting were indirect through mediating variables such as organisational commitment (Nouri and Parker, 1998) and role ambiguity (Chenhall and Brownell, 1988). More recent research has drawn on advances in motivational theory to examine how budget participation is related to different forms of motivation (Wong-On-Wing, Guo and Lui, 2010;De Baerdemaeker and Bruggeman, 2015).…”

Enabling employees through co-development of performance measures

“…Vroeger bleven mensen vaak hun hele loopbaan bij één organisatie werken en speelden extrinsieke beloningen een belangrijke rol (Rosenbaum, 1979). Tegenwoordig switchen mensen sneller van organisatie en zijn ze op zoek naar intrinsiek motiverende banen (Hall, 1996(Hall, , 2004 (Deci, Koestner, & Ryan, 1999;Falk & Kosfeld, 2006;Gagné & Deci, 2005;Wong-On-Wing, Guo, & Lui, 2010). Op basis hiervan wordt verwacht dat de extrinsieke geldelijke en niet-geldelijke beloningen zullen leiden tot een verlaging van medewerkersprestaties (Hypotheses 5a en 6a).…”

“…Thus, explicit incentives can lead to more controlled and therefore less autonomous 1 52 Introduction motivation and consequently to less employee job performance (Deci, et al, 1999;Falk & Kosfeld, 2006;Wong-On-Wing, Guo, & Lui, 2010). With explicit incentives I mean for example monetary compensation such as bonuses or a raise or nonmonetary rewards such as getting a promotion or more responsibilities.…”

“…These possible negative effects of incentives have been explained by selfdetermination theory, a theory which is also increasingly recognized within the field of management accounting as an alternative or at least an addition to parts of the classic agency theory (e.g. Guo, 2007;Kunz & Pfaff, 2002;Wong-On-Wing, Guo, & Lui, 2010). Based on these new insights and our empirical results, as a secondary contribution, this study gives a more nuanced view on the effects of using incentives than the so far prevalent view in management accounting.…”

“…People generally see explicit incentives as a controller of their behavior (Deci, Koestner, & Ryan, 1999;Holmås, Kjerstad, Luråsd, & Straume, 2010). Therefore, explicit incentives can lead to less autonomous motivation and consequently to less employee job performance (Deci, et al, 1999;Falk & Kosfeld, 2006;Wong-On-Wing, et al, 2010). This view has long been neglected by accounting scholars, but is receiving increasingly more of their research attention; see, for example, the review study by Kunz and Pfaff (2002) and the empirical studies of Guo (2007) and Wong-On-Wing et al (2010).…”