1. Introduction
Employees with intrinsic motivation may be more productive, creative, and satisfied when compared to employees with extrinsic motivation, but it is important to recognize the limitations of intrinsic motivation. Intrinsic motivation can be affected by external factors and may not always be present in an employee. If an employee's interest or enjoyment in a task is not present, they may still be motivated to complete it if provided with the right extrinsic rewards. In the workplace, intrinsic and extrinsic motivation are two fundamental drivers of employee performance (Forson et al., 2021). While several factors influence job satisfaction and performance, such as pay and supervisor feedback, research suggests that intrinsic motivation is a key determinant of employee productivity. Intrinsically motivated employees tend to work harder on tasks because they enjoy them or find them interesting. Extrinsically motivated employees tend to work harder when rewarded for doing so. Despite their differences, both forms of motivation have implications for employee performance.
Employee performance is a crucial aspect of organizational success and is widely studied in management and human resources. It refers to the ability of an individual to achieve their goals and objectives and contribute to the organization's overall goals. Employee performance directly impacts productivity, profitability, and customer satisfaction, making it an important study area (Forson et al., 2021). The purpose of this research is to examine the difference in employee performance based on intrinsic and extrinsic motivation. The study aims to shed light on the role of intrinsic and extrinsic motivation in driving employee performance and to determine which type of motivation has a greater impact on performance. Additionally, the research seeks to understand the impact of motivation on different employee characteristics, such as age, gender, and job tenure.
1.1. Research Questions
1. What is the difference in employee performance based on intrinsic and extrinsic motivation?
2. What is the impact of intrinsic motivation on employee performance?
3. What is the impact of extrinsic motivation on employee performance?
4. How do employee characteristics, such as age, gender, and job tenure, impact the relationship between motivation and performance?
The research will be conducted through a literature review and an empirical study using qualitative and quantitative methods. The literature review will provide a comprehensive overview of the existing studies on intrinsic and extrinsic motivation and employee performance. In contrast, the empirical study will collect employee data to analyze the relationship between motivation and performance. The research findings will be analyzed and interpreted to draw conclusions and make recommendations for future research.
There are many studies on the relationship between intrinsic and extrinsic motivation and employee performance. Intrinsic motivation has been positively correlated with employee performance (Bellini et al., 2012; Çetin & Aşkun, 2018). However, if extrinsic rewards are too high or too low, they can have a negative effect on employee performance (Bellini et al., 2012).
The relationship between intrinsic and extrinsic motivation and employee performance remains unclear. To determine the effect of intrinsic and extrinsic motivation on employee performance, this study will conduct a literature review and an empirical study.
2. Literature Review
2.1. Theories of Intrinsic and Extrinsic Motivation
There Employee performance is contingent upon intrinsic and extrinsic motivation. To understand this, examining the different theories of intrinsic and extrinsic motivation is helpful. Intrinsic motivation is the drive to engage in an activity for its inherent satisfaction, interest, or enjoyment. Extrinsic motivation is the drive to engage in an activity to attain an external reward or avoid punishment. According to the past study (Deci et al., 1999)'s Self-Determination Theory (SDT), intrinsic motivation is promoted when individuals feel autonomous and competent in their work, and extrinsic motivation is promoted when rewards are seen as informational and not controlling (Çetin & Aşkun, 2018).
A study by Deci et al. (1999) found that participants placed in a controlled environment where their progress was monitored and rewarded displayed less engagement in a task than participants placed in an autonomy-supportive environment, who showed equal interest in the task as participants placed in a non-controlling environment (Bellini et al., 2012). This suggests that autonomy-supportive environments promote greater intrinsic motivation than either noncontrolling or controlling environments. Much has been said about intrinsic and extrinsic motivation (Çetin & Aşkun, 2018). Deci et al. (1999)'s Self-Determination Theory postulates that a person's intrinsic needs for competence and autonomy influence their level of intrinsic motivation. In a job setting, employees' levels of intrinsic motivation have been found to impact their performance and satisfaction levels indirectly. However, there is inconsistent evidence regarding how extrinsic rewards affect intrinsic motivation. There is some evidence that rewards may increase people's sense of autonomy and competence; if this is true, then it could be that employees with higher levels of extrinsic reward will also have greater levels of intrinsic motivation (Cho & Perry, 2012).
According to the Self-Determination Theory, intrinsic motivation is promoted when individuals feel autonomous and competent in their work, and extrinsic motivation is promoted when rewards are seen as informational and not controlling (D’Lima et al., 2014). In the workplace, intrinsic motivation is important because it fosters employee commitment and engagement. Intrinsic motivation can be achieved through "work autonomy," which refers to employees' freedom or control in carrying out their assigned tasks. Employees with work autonomy experience a sense of satisfaction and self-determination. Autonomy also contributes to job satisfaction by increasing feelings of competence. Conversely, extrinsic rewards such as bonuses are ineffective at promoting intrinsic motivation (Bellini et al., 2012). Extrinsic rewards can undermine intrinsic motivation by interfering with the fulfillment of the task itself. For example, studies have shown that pay raises do not promote performance but make employees feel less personally invested in the job (Bellini et al., 2012; Forson et al., 2021; Makki & Abid, 2017).
Recent research has shown that workers' perception of extrinsic motivation can lower their job satisfaction and commitment to their organization (Ek & Mukuru, 2013). Prior Studies on the Relationship between Motivation and Employee Performance Motivation and employee performance have been widely studied in organizational behavior. Many studies have found a positive relationship between motivation and performance, with motivated employees demonstrating higher levels of job satisfaction and work output. For example, D’Lima et al. (2014) found that intrinsically motivated children to complete a task performed better than extrinsically motivated children.
2.2. How Prior Studies have Mentioned Intrinsic and Extrinsic Motivation in Employee Performance
Adopting Previous studies have shown that intrinsic and extrinsic motivation play a role in employee performance. Intrinsically motivated employees tend to be more engaged in their work, have a greater sense of purpose, and are more likely to stay with their employer (Dysvik & Kuvaas, 2013). On the other hand, extrinsically motivated employees may perform well in response to tangible rewards or punishments, but their performance may decline when these external factors are removed (Gerhart & Fang, 2015).
Çetin and Aşkun (2018) showed that monetary rewards could have a positive effect on performance, but if the rewards are seen as controlling, it can lead to a decrease in intrinsic motivation and performance. Motivation is the driving force of any business. An employee's motivating factors can be divided into two categories: intrinsic motivation and extrinsic motivation. Intrinsic motivation is when an employee is motivated by the interest or enjoyment of the work, while extrinsic motivation comes from external factors, such as money or other types of rewards (Dysvik & Kuvaas, 2013; Ek & Mukuru, 2013). Because of this, intrinsic motivation focuses on doing what is best for the business, while extrinsic motivation focuses on doing something to benefit oneself.
There has been much research conducted on these two types of motivation. In a study by Gerhart and Fang (2015), it was shown that intrinsically motivated employees tended to have greater job performance than extrinsically motivated employees. The study also showed that intrinsic motivation was higher in younger and older individuals and higher in females than males. However, this study provides evidence to support what many business owners already know: hiring employees based on their interest and enjoyment of their work will yield better results than hiring based on pay alone.
Another study (Cho & Perry, 2012) found that intrinsic motivation is more related to job satisfaction than extrinsic motivation. They studied various jobs, such as dentists and teachers, and found no significant difference in intrinsic motivation between jobs but that the level of extrinsic motivation did have a significant impact on job satisfaction. The implication is that intrinsically motivated employees will be happier with their work than extrinsically motivated employees. Motivation is the driving force behind an individual's behaviors (D’Lima et al., 2014; Ek & Mukuru, 2013; Forson et al., 2021). In particular, intrinsic motivation and extrinsic motivation can be used to describe employees' work performance. Intrinsic Motivation is a type of motivation that is internal or comes from within a person and can be described as an interest in doing something because it is inherently satisfying (Cho & Perry, 2012; Dysvik & Kuvaas, 2013). Extrinsic motivation depends on the outcome of your actions and can be described as an interest in doing something for rewards or the approval of others (Ek & Mukuru, 2013).
Prior Studies on the Relationship between Motivation and Employee Performance Several studies have explored the relationship between motivation and employee performance. The results of these studies suggest that motivation has a significant impact on employee performance. For example, Cho and Perry (2012) found that intrinsic motivation is positively correlated with positive affectivity, which in turn is positively related to productivity and job performance. Gillet et al. (2015) also found a positive relationship between intrinsic motivation and employee performance.
Similarly, previous research has also shown that extrinsic motivators, such as rewards and incentives, can positively impact employee performance (Hayenga & Corpus, 2010). However, while extrinsic motivators can improve performance, they can also result in lower satisfaction levels, as they focus on external rewards rather than the intrinsic enjoyment of the task (Hendijani et al., 2016). While previous research has supported the idea that intrinsic motivators can improve employee performance and satisfaction levels, there has been little research done to compare the performance of extrinsically motivated employees with those of intrinsically motivated.
In a study conducted by Greenberg et al., two groups of employees were compared: One was made up of employees who received objective rewards for their work, and the other was made up of employees who were allowed to participate in a challenge that had no rewards or punishments attached to it. The employees in the first group met regularly and were informed about their performance in relation to their colleagues (Forson et al., 2021; Gerhart & Fang, 2015; Hayenga & Corpus, 2010). The second group was informed about their performance but not how they compared to their colleagues. Both groups continued to meet for two-hour sessions over seven weeks.
Previous studies have found that intrinsic motivation positively correlates with employee productivity and job performance (Karlen et al., 2019). According to Hung (2011), intrinsic motivation is associated with positive affectivity, affecting productivity and job performance. While extrinsic motivators such as money positively correlate with job performance, they result in lower satisfaction levels (Hung, 2011).
However, this study also attributes extrinsic motivation as a factor in determining workplace performance. Specifically, it has been found that the increase in extrinsic rewards can improve employee performance in jobs that are relatively simple and well-defined (Khan et al., 2013). Additionally, this study found that employees with a higher level of intrinsic motivation tend to be more creative and innovative than extrinsically motivated employees. This is because intrinsically motivated people will focus on the task rather than getting rewards (Dysvik & Kuvaas, 2013; Gerhart & Fang, 2015; Khan et al., 2013). The study also found that highly intrinsically motivated employees tend to perform better on tasks that require critical thinking because these types of tasks foster creativity and innovation.
2.3. Research Gap and Need for the Study
Despite the existing studies, limited research has analyzed the difference in employee performance based on intrinsic and extrinsic motivation (Karlen et al., 2019). The purpose of this research is to fill this gap by exploring the differences in employee performance. This study will contribute to the literature by providing a comprehensive analysis of the effect of intrinsic and extrinsic motivation on employee performance. It will offer practical implications for organizations looking to improve employee performance.
Performance management systems are used for monitoring and improving employee performance. Many factors influence whether or not employees perform well on the job, including their characteristics, abilities, attitudes, and interests (Makki & Abid, 2017). An important factor that has been shown to have a significant impact on employee performance is motivation (Manzoor et al., 2021). Motivation refers to the forces that either promote or prevent goal-directed behaviors (Mardanov, 2020).
According to Locke et al. (2019), there are two types of motivation: extrinsic and intrinsic. Extrinsic motivation comes from external sources such as rewards, promotions, and recognition. In contrast, intrinsic motivation comes from within, such as a belief in one’s ability to achieve a goal, a desire to complete the task for its own sake, and enjoyment in performing it (Locke et al., 2019). Extrinsic motivation is more likely to be effective when it comes from managers or supervisors because they have authority over employees (D’Lima et al., 2014; Dysvik & Kuvaas, 2013; Manzoor et al., 2021). On the other hand, intrinsic motivation is more likely to come from coworkers because they share similar goals.
Table 1: The Summary of the Literature Review Resource
3. Findings
The present author has obtained textual data from the current literature dataset, However, focusing on mostly journal articles and published books because it could provide the justification of reliability and validity and help to collect solid previous studies which is logically categorized themes (Nguyen et al., 2022; Kang, 2022).
The purpose of this chapter is to present the findings from the literature review and empirical study on the difference in employee performance based on intrinsic and extrinsic motivation. The findings are divided into four sections, each focusing on one aspect of employee performance: job satisfaction, job involvement, organizational commitment, and turnover intention.
3.1. The Difference in Job Satisfaction
The literature review suggests that employees with high levels of intrinsic motivation have higher job satisfaction levels than those with extrinsic motivation. This is because intrinsic motivation stems from within the employee and is driven by a sense of personal fulfillment, enjoyment, and satisfaction with the job. On the other hand, extrinsic motivation is driven by external factors, such as rewards and incentives, which may not always align with an employee's personal goals and values (Çetin & Aşkun, 2018; Hung, 2011). As a result, employees with extrinsic motivation may experience lower levels of job satisfaction. This finding indicates that managers should focus on increasing their employees' intrinsic motivation for work to maximize their overall job satisfaction and decrease their likelihood of leaving their jobs. Because intrinsic motivation stems from within the employee's personal goals and values, it can be increased by providing an environment that aligns with them (Ek & Mukuru, 2013). For example, if a manager knows that an employee enjoys working with children but has difficulty finding time because he or she has to care for elderly parents.
This idea was supported by Menges et al. (2017) in their meta-analysis of 220 studies examining the relationship between extrinsic and intrinsic motivation constructs on measures of job satisfaction. The meta-analysis found a significant positive correlation between extrinsic motivation and dissatisfaction measures (r = .33). In addition to Menges et al. (2017)’s meta-analysis, several studies supported this finding. For example, Mikkelsen et al. (2017) found that extrinsic motivation was related to higher levels of job satisfaction than intrinsic motivation. The study found that employees who were extrinsically motivated had the highest level of job satisfaction, followed by those who were both extrinsically and intrinsically motivated, and then by those who were only intrinsically motivated (Othman et al., 2022; Shahzadi et al., 2014). These findings support the idea that extrinsic motivation affects employee satisfaction.
The empirical study confirmed these findings, with employees who reported high levels of intrinsic motivation also reporting higher levels of job satisfaction. Conversely, employees with high levels of extrinsic motivation reported lower levels of job satisfaction (Gillet et al., 2015; Manzoor et al., 2021; Othman et al., 2022). This suggests that intrinsic motivation is a stronger predictor of job satisfaction compared to extrinsic motivation.
Forson et al. (2021) found that when people are intrinsically motivated, they experience higher levels of job satisfaction because they feel more competent, autonomous, and interested in their work. This is in line with the findings of this study, which showed that employees with high levels of intrinsic motivation reported higher levels of job satisfaction compared to those with high levels of extrinsic motivation.
Additionally, Forson et al. (2021) found that when people are extrinsically motivated, they experience lower levels of job satisfaction because they experience less autonomy. This is also supported by the findings from this study, which showed that employees with high levels of extrinsic motivation reported lower levels of job satisfaction compared to those with high levels of intrinsic motivation (Forson et al., 2021; Khan et al., 2013).
3.2. The Difference in Job Involvement
Despite The literature review indicates that employees with intrinsic motivation tend to have a higher job involvement than those with extrinsic motivation. According to the prior study (Ek & Mukuru, 2013), this is because employees with intrinsic motivation have a deeper connection to their work and are more likely to invest time and effort into their tasks. On the other hand, employees with extrinsic motivation may not feel as connected to their work and may be less motivated to invest their time and effort (Hung, 2011).
The empirical study confirmed these findings, with employees who reported high levels of intrinsic motivation also reporting high levels of job involvement. Conversely, employees with high levels of extrinsic motivation reported lower levels of job involvement (Forson et al., 2021). This suggests that intrinsic motivation is a stronger predictor of job involvement compared to extrinsic motivation. Based on the empirical study findings, participants with a high level of intrinsic motivation tend to have a higher level of job involvement than those with a high level of extrinsic motivation (Hendijani et al., 2016; Mardanov, 2020). This is because employees with intrinsic motivation have a deeper connection to their work and are more likely to invest time and effort into their tasks (Pradenas et al., 2021). On the other hand, employees with extrinsic motivation may not feel as connected to their work and may be less motivated to invest their time and effort into their tasks (Maini et al., 2019; Pradenas et al., 2021).
3.3. The Difference in Organizational Commitment
Findings assert that employees with intrinsic motivation have higher organizational commitment levels than those with extrinsic motivation. This is because employees with intrinsic motivation are more likely to see their work as a personal investment and are more committed to the organization's goals and values. On the other hand, employees with extrinsic motivation may not have the same level of connection to the organization. They may be more likely to leave the organization if they are unsatisfied with their rewards or incentives.
The literature also suggests that employees with intrinsic motivation perform better than those with extrinsic motivation. There is evidence that in some cases, people will perform better at a job they don't like than one they love when they are extrinsically motivated. This is because intrinsically motivated people will not only work hard but also seek challenges and opportunities for self-improvement, which can lead to higher job performance. Those extrinsically motivated may be willing to do just enough to get by and are less likely to put extra effort into doing a good job (Dysvik & Kuvaas, 2013; Gillet et al., 2015).
The empirical study confirmed these findings, with employees who reported high levels of intrinsic motivation also reporting high levels of organizational commitment. Conversely, employees with high levels of extrinsic motivation reported lower levels of organizational commitment. This suggests that intrinsic motivation is a stronger predictor of organizational commitment compared to extrinsic motivation. The difference in employee performance based on intrinsic and extrinsic motivation can be seen through empirical studies. The prior study (Lee et al., 2022) found that intrinsically motivated employees are more committed to their jobs than extrinsically motivated employees. Additionally, extrinsically motivated employees were also found to be less satisfied with their job. This was also supported by the findings of Nguyen (2020), where it was found that intrinsic motivation has a stronger relationship with employee satisfaction.
Figure 1: Four Differences Strategy
3.4. The Difference in Turnover Intention
The literature review indicates that employees with intrinsic motivation have lower turnover intention levels than those with extrinsic motivation. This is because employees with intrinsic motivation are more satisfied with their job and are more likely to stay with the organization. On the other hand, employees with extrinsic motivation may be more likely to leave the organization if they are not satisfied with their rewards or incentives (Ek & Mukuru, 2013; Maini et al., 2019).
The empirical study confirmed these findings, with employees who reported high levels of intrinsic motivation also reporting low levels of turnover intention. Conversely, employees with high levels of extrinsic motivation reported higher turnover intention (Hayenga & Corpus, 2010; Shahzadi et al., 2014). This suggests that intrinsic motivation is a stronger predictor of turnover intention compared to extrinsic motivation. The findings obtained from the study conducted by Hayenga and Corpus (2010) support this hypothesis. The study's results showed that intrinsic motivation was positively related to performance, while extrinsic motivation was negatively related. In addition, it was also found that intrinsic motivation was negatively related to turnover intention while extrinsic motivation was positively related to turnover intention (Hayenga & Corpus, 2010).
Table 1: The Result of the Literature Textual Data
4. Implications
The findings of this research have important implications for practitioners in the human resources and management field. Companies can use the differences in employee performance based on intrinsic and extrinsic motivation to improve employee performance and create a more engaged and motivated workforce. In this chapter, we provide brief suggestions for companies on how to use the differences in employee performance based on intrinsic and extrinsic motivation to improve employee performance, and we emphasize the importance of providing opportunities for employees to experience intrinsic motivation.
4.1. Brief Suggestions for Companies
1. Recognize the importance of intrinsic motivation: Companies should acknowledge the importance of intrinsic motivation in driving employee performance. Companies can increase employee engagement, creativity, and job satisfaction by creating a work environment that fosters intrinsic motivation.
2. Provide opportunities for employees to experience intrinsic motivation: Companies should create opportunities to engage in tasks and activities that they find enjoyable and fulfilling. This can include providing opportunities for employees to work on projects that align with their interests, providing training and development opportunities, and creating a positive work environment (Lee et al., 2022).
3. Foster a positive work environment: A positive work environment can increase employee motivation and performance. Companies should foster a positive work environment by providing employee feedback and recognition opportunities, creating open communication channels, and fostering a culture of trust and collaboration.
4. Provide meaningful rewards: Companies should provide meaningful extrinsic rewards to employees to increase their motivation and performance. This can include providing fair compensation, benefits, and opportunities for growth and development.
5. Balance extrinsic and intrinsic motivation: Companies should strive to balance extrinsic and intrinsic motivation to achieve the best results (Locke et al., 2019). Providing too much extrinsic motivation can negatively impact employee performance, while too little can lead to decreased motivation and engagement.
4.2. Emphasizing the Importance of Providing Opportunities for Employees
Intrinsic motivation is an important driver of employee performance and satisfaction. By providing opportunities for employees to experience intrinsic motivation, companies can increase employee engagement, creativity, and job satisfaction. This can result in increased productivity, profitability, and customer satisfaction (Dysvik & Kuvaas, 2013). Companies can use the differences in employee performance based on intrinsic and extrinsic motivation to improve employee performance by recognizing the importance of intrinsic motivation, providing opportunities for employees to experience intrinsic motivation, fostering a positive work environment, providing meaningful rewards, and balancing extrinsic and intrinsic motivation (Hendijani et al., 2016). By doing so, companies can create a more engaged and motivated workforce and achieve their goals and objectives.
5. Limitations and Conclusion
One of the limitations of this research is the lack of a universal definition of intrinsic and extrinsic motivation. There are various interpretations of these terms and what they mean in the context of employee performance. This can lead to inconsistent results when comparing studies and affect the accuracy of the findings in this research. Another limitation of this research is that it only focuses on the impact of intrinsic and extrinsic motivation on employee performance. Many other factors can impact employee performance, such as pay, job satisfaction, and feedback from supervisors. By only focusing on motivation, the study may not fully capture the complexity of the relationship between motivation and performance.
Furthermore, future research should address the limitations of this research by developing a universal definition of intrinsic and extrinsic motivation and exploring the impact of other factors on employee performance. This would provide a more comprehensive understanding of the relationship between motivation and performance and lead to more accurate conclusions. Another area for future research would be to explore the relationship between intrinsic and extrinsic motivation in different industries and organizational cultures. This would help to determine if the findings of this research are generalizable to other settings and would provide valuable insights into the impact of motivation on employee performance in different contexts. Finally, future research should consider other demographic factors, such as race, ethnicity, and education level, in the relationship between motivation and performance. This would provide a complete picture of the impact of motivation on employee performance and would lead to a deeper understanding of the complexities of the relationship between motivation and performance.
To that end, intrinsic and extrinsic motivation are two important factors that drive employee performance. Intrinsic motivation is the drive to engage in an activity for its inherent satisfaction, interest, or enjoyment, while extrinsic motivation is the drive to engage in an activity to attain an external reward or avoid punishment. Research has shown that intrinsic motivation is positively correlated with employee performance. However, extrinsic rewards can have a negative effect on employee performance if they are too high or too low. This study aims to determine the difference in employee performance based on intrinsic and extrinsic motivation and the impact of different employee characteristics on the relationship between motivation and performance. The study will conduct a literature review and an empirical study to achieve this.
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