Reconciliation Between Monetary Incentives and Motivation Crowding-Out: The Influence of Perceptions of Incentives on Research Performance

Motivation crowding theories suggest that the influence of performance-based monetary incentives on performance may depend on how employees perceive the incentives. To examine the crowding-out effect, this article analyzed a panel dataset of faculty’s research published over 9 years in a Korean university, focusing on the moderating role of perceptions of incentives. We found that, as the university increased financial incentives for research performance, academic researchers who perceived the incentives as supportive published more papers in higher impact factor journals. In contrast, the quantity and quality of research performance of those who perceived such incentives as controlling were not significantly associated with the increase in the incentives. To improve the performance of the performance-incentive system with potential crowding-out effects, administrators should communicate with employees to help them perceive incentives as supportive and positive.