Why are financial incentive effects unreliable? An extension of self-determination theory

Behavioral Research in Accounting

Volumn 22, Issue 2, 2010, Pages 105-132

  Stone, Dan N ^a   Bryant, Stephanie M ^b   Wier, Benson ^c  

^a UNIVERSITY OF KENTUCKY   (United States)

^b UNIVERSITY OF SOUTH FLORIDA   (United States)

^c VIRGINIA COMMONWEALTH UNIVERSITY   (United States)

Author keywords

Autonomy; Financial altruism; Financial incentives; Financial materialism; Financial needs; Financial values; Hedonic utility; Self determination theory; Self efficacy

Indexed keywords

EID: 80052720251     PISSN: 10504753     EISSN: 15588009     Source Type: Journal    
DOI: 10.2308/bria.2010.22.2.105     Document Type: Article

References (129)

1. Amabile, T. M. 1993. Motivational synergy: Toward new conceptualizations of intrinsic and extrinsic motivation in the workplace. Human Resource Management Review 3 (3): 185-201.
2. Amabile, T. M., K. G. Hill, B. A. Hennessey, and E. M. Tighe. 1994. The work preference inventory: Assessing intrinsic and extrinsic motivational orientations. Journal of Personality and Social Psychology 66 (5): 950-967.
3. Anderson, J. C., and D. W. Gerbing. 1988. Structural equation modeling in practice: A review and recommended two-step approach. Psychological Bulletin 103 (3): 411-423.
4. Änderung, L. 2008. G*Power 3.0 Available at: http://www.psycho.uni-duesseldorf.de/abteilungen/aap/ gpower3/.
5. ANZ Bank, and A. C. Nielsen. 2005. ANZ Survey of Adult Financial Literacy in Australia: Final Report. Melbourne, Australia: ANZ Bank.
6. Ashton, R. H., and S. S. Kramer. 1980. Students as surrogates in behavioral accounting research: Some evidence. Journal of Accounting Research 18: 1-15.
7. Baard, P. P., E. L. Deci, and R. M. Ryan. 2004. The relation of intrinsic need satisfaction to performance and wellbeing in two work settings. Journal of Applied Social Psychology 34: 2045-2068.
8. Baker, G. P., M. C. Jensen, and K. J. Murphy. 1988. Compensation and incentives: Practice vs. theory. The Journal of Finance 43: 593-616.
9. Bandura, A. 1986. Social Foundations of Thought and Action: A Social Cognitive Theory. Englewood Cliffs, NJ: Prentice Hall.
10. Bandura, A. 1994. Self-efficacy. In Encyclopedia of Human Behavior. Volume 4, edited by Ramachandran, V. S., 71-81. New York, NY: Academic Press.
11. Becker, D. A. 1997. The effects of choice on auditors' intrinsic motivation and performance. Behavioral Research in Accounting 9: 1-19.
12. Bentham, J. 1780. Introduction to the Principles of Morals and Legislation. Available at: http:// www.econlib.org/library/Bentham/bnthPML.html.
13. Bentler, P. M. 1980. Multivariate analysis with latent variables: Causal modeling. Annual Review of Psychology 31: 419-456.
14. Bonner, S. E., R. Hastie, G. B. Sprinkle, and S. M. Young. 2000. A review of the effects of financial incentives on performance in laboratory tasks: Implications for management accounting. Journal of Management Accounting Research 12 (Fall): 19-64.
15. Bonner, S. E., and G. B. Sprinkle. 2002. The effects of monetary incentives on effort and task performance: Theories, evidence, and a framework for research. Accounting, Organizations and Society 27 (4/5): 303-345.
16. Bostic, T. J., D. M. Rubio, and M. Hood. 2000. A validation of the subjective vitality scale using structural equation modeling. Social Indicators Research 52: 313-324.
17. Browne, M. W., and R. Cudeck. 1993. Alternative ways of assessing model fit. In Testing Structural Equation Models, edited by Bollen, K. A., and Long, J. S. Newbury Park, CA: Sage.
18. Burroughs, J. E., and A. Rindfleisch. 2002. Materialism and well-being: A conflicting values perspective. The Journal of Consumer Research 29: 348-370.
19. Camerer, C. F., and R. M. Hogarth. 1999. The effects of financial incentives in experiments: A review and capital-labor-production framework. Journal of Risk and Uncertainty 19: 7-42.
20. Carver, C. S., and E. Baird. 1998. The American dream revisited: Is it what you want or why you want it that matters? Psychological Science 9: 289-292.
21. Chang, L., and R. M. Arkin. 2002. Materialism as an attempt to cope with uncertainty. Psychology and Marketing 19 (5): 389-406.
22. Chatzky, J. 2003. You Don't Have to be Rich: Comfort, Happiness, and Financial Security on your Own Terms. New York, NY: Portfolio.
23. Christ, M. H., K. L. Sedatole, and K. L. Towry. 2006. All control is not equal: The effect of formal control type on trust and cooperation. Working paper, SSRN. Available at: http://papers.ssrn.com/sol3/ papers.cfm?abstract_id_776884.
24. Christ, M. H., K. L. Sedatole, and M. A. Thomas. 2008. When formal controls undermine trust and cooperation. Strategic Finance 89 (7): 39-44.
25. Cohen, J. 1969. Statistical Power for the Behavioral Sciences. San Diego, CA: Academic Press.
26. Cohen, J. 1988. Statistical Power for the Behavioral Sciences. 2nd edition. San Diego, CA: Academic Press.
27. Cohen, J. 1992. A power primer. Psychological Bulletin 112 (1): 155-159.
28. Coletti, A. L., K. L. Sedatole, and K. L. Towry. 2005. The effect of control systems on trust and cooperation in collaborative environments. The Accounting Review 80 (2): 477-500.
29. Coulson, W. R., and C. R. Rogers. 1968. Man and the Science of Man. Columbus, OH: Merrill Publishing Company.
30. Czikszentmihalyi, M., and K. Rathunde. 1990. The psychology of wisdom: An evolutionary interpretation. In Wisdom: Its Nature, Origins, and Development, edited by Sternberg, R. J. Cambridge, U.K.: Cambridge University.
31. Czikszentmihalyi, M., and M. E. P. Seligman. 2000. Positive psychology. The American Psychologist 55 (1): 5-14.
32. De Cremer, D. 2006. The Social Psychology and Economics. Mahwah, NJ: Lawrence Erlbaum.
33. Deci, E. L., and R. M. Ryan. 1985. Intrinsic Motivation and Self-Determination in Human Behavior. New York, NY: Plenum.
34. Deci, E. L., and R. Flaste. 1995. Why We Do What We Do: The Dynamics of Personal Autonomy. New York, NY: Putnam's Sons.
35. Deci, E. L., R. M. Ryan, M. Gagné, D. R. Leone, J. Usunov, and B. P. Kornazheva. 2001. Need satisfaction, motivation, and well-being in the work organizations of a former eastern bloc country. Personality and Social Psychology Bulletin 27: 930-942.
36. Deci, E. L., R. M. Ryan, M. Gagné, D. R. Leone, J. Usunov, and B. P. Kornazheva. 2002. Handbook on Self-Determination Research. Rochester, NY: University of Rochester Press.
37. Deci, E. L., R. M. Ryan, M. Gagné, D. R. Leone, J. Usunov, and B. P. Kornazheva. 2008. Self-Determination Theory: An Approach to Human Motivation and Personality. Available at: http://www.psych.rochester.edu/SDT/.
38. Diener, E. 1984. Subjective well-being. Psychological Bulletin 95 (3): 542-575.
39. Diener, E., R. A. Emmons, R. J. Larsen, and G. Griffin. 1985. Satisfaction with life. Journal of Personality and Social Psychology 48: 94-105.
40. Drake, A. R., J. Wong, S. F. Haka, and S. P. Ravenscroft. 1999. Cost system and incentive structure effects on innovation, efficiency, and profitability in teams. The Accounting Review 74 (3): 323-346.
41. Drake, A. R., J. Wong, S. F. Haka, and S. B. Salter. 2007. Empowerment, motivation, and performance: Examining the impact of feedback and incentives on nonmanagement employees. Behavioral Research in Accounting 19: 71-89.
42. Dunn, E. W., L. B. Aknin, and M. I. Norton. 2008. Spending money on others promotes happiness. Science 319 (5870): 1687-1688.
43. Engelberg, E., and L. Sjoberg. 2006. Money attitudes and emotional intelligence. Journal of Applied Social Psychology 36 (8): 2027-2047.
44. Francois, P., and M. Vlassopoulos. 2008. Financial altruism and the delivery of social services. CESifo Economic Studies Advanced Access: 33.
45. Frank, R. H. 1988. Passions Within Reason: The Strategic Role of the Emotions. 1st edition. New York, NY: Norton.
46. Frank, R. H. 1999. Luxury Fever: Why Money Fails to Satisfy in an Era of Excess. New York, NY: Free Press.
47. Frey, B. S. 1997. Not Just For The Money: An Economic Theory of Personal Motivation. Cheltenham, U.K.: Edward Elgar Pub.
48. Frey, B. S., and M. Osterloh. 2002. Successful Management by Motivation: Balancing Intrinsic and Extrinsic Incentives. Berlin, NY: Springer.
49. Furnham, A., and M. Argyle. 1998. The Psychology of Money. New York, NY: Routledge.
50. Gagné, M., R. Koestner, and M. Zuckerman. 2000. Facilitating the acceptance of organizational change: The importance of self-determination. Journal of Applied Social Psychology 30: 1843-1852.
51. Garman, E. T., J. Kim, C. Y. Kratzer, B. H. Brunson, and S. Joo. 1999. Workplace financial education improves personal financial wellness. Financial Counseling and Planning 10 (1): 79-88.
52. Grable, J. E., and S. Joo. 1999. Financial help-seeking behavior: Theory and implications. Financial Counseling and Planning 10 (1): 13-24.
53. Grouzet, F. M., T. Kasser, A. Ahuvia, J. M. F. Dols, Y. Kim, S. Lau, R. M. Ryan, S. Saunders, P. Schmuck, and K. M. Sheldon. 2005. The structure of goal contents across 15 cultures. Journal of Personality and Social Psychology 89 (5): 800-816.
54. Henri, J. 2007. A quantitative assessment of the reporting of structural equation modeling information: The case of management accounting research. Journal of Accounting Literature 26: 76-115.
55. Hu, L., and P. M. Bentler. 1999. Cutoff criteria for fit indexes in covariance structure analysis: Conventional criteria versus new alternatives. Structural Equation Modeling 6: 1-55.
56. Hunton, J. E. 2005. Behavioral self-regulation of telework locations: Interrupting interruptions! Journal of Information Systems 19 (2): 111-140.
57. Ilardi, B. C., D. Leone, T. Kasser, and R. M. Ryan. 1993. Employee and supervisor ratings of motivation: Main effects and discrepancies associated with job satisfaction and adjustment in a factory setting. Journal of Applied Social Psychology 23: 1789-1805.
58. Houlder, D. J., and K. Houlder. 2002. Mindfulness and Money: The Buddhist Path of Abundance. 1st edition. New York, NY: Broadway Books.
59. Jenkins, G. D., Jr., A. Mitra, N. Gupta, and J. D. Shaw. 1998. Are financial incentives related to performance? A meta-analytic review of empirical research. The Journal of Applied Psychology 83 (5): 777-787.
60. Jenkins, J. G., D. R. Deis, J. C. Bedard, and M. B. Curtis. 2008. Accounting firm culture and governance: A research synthesis. Behavioral Research in Accounting 20 (1): 45-74.
61. Joreskog, K. G., and D. Sorbom. 1984. LISREL VI. Mooresville, IN: Scientific Software.
62. Judge, T. A., C. J. Thoresen, J. E. Bono, and G. K. Patton. 2001. The job satisfaction job performance relationship: A qualitative and quantitative review. Psychological Bulletin 127: 376-407.
63. Kahneman, D., E. Diener, and N. Schwarz. 1999. Well-Being: The Foundations of Hedonic Psychology. Edited by Kahneman, D., Diener, E., and Schwarz, N., 3-25. New York, NY: Russell Sage.
64. Kano, Y., M. Berkane, and P. M. Bentler. 1990. Covariance structure analysis with heterogeneous kurtosis parameters. Biometrika 77 (3): 575-585.
65. Kasser, T., J. Davey, and R. M. Ryan. 1992. Motivation, dependability, and employee-supervisor discrepancies in psychiatric vocational rehabilitation settings. Rehabilitation Psychology 37: 175-187.
66. Kasser, T., R. M. Ryan, M. Zax, and A. J. Sameroff. 1995. The relations of maternal and social environments to sate adolescents' materialistic and prosocial values. Developmental Psychology 31 (6): 907-914.
67. Kasser, T., R. M. Ryan, M. Zax, and A. J. Sameroff. 1996. Further examining the American dream: Differential correlates of intrinsic and extrinsic goals. Personality and Social Psychology Bulletin 22: 280-287.
68. Kasser, T. 2002. The High Price of Materialism. Cambridge, MA: MIT Press.
69. Kasser, T., and A. Kanner. 2003. Psychology and Consumer Culture: The Struggle for a Good Life in a Materialistic World. Washington, D.C.: American Psychological Association.
70. Kasser, T., R. M. Ryan, C. E. Couchman, and K. M. Sheldon. 2004. Materialistic values: Their causes and consequences. In Psychology and the Culture of Consumption, edited by Kasser, T., and Kanner, A. New York, NY: American Psychological Association Press.
71. Kasser, T., R. M. Ryan, C. E. Couchman, and K. M. Sheldon. 2005. Frugality, generosity, and materialism in children and adolescents. In What do Children Need to Flourish? Conceptualizing and Measuring Indicators of Positive Development, edited by Moore, K. A., and Lippman, L. H. New York, NY: Springer.
72. Kline, R. B. 2005. Principles and Practices of Structural Equation Modeling. 2nd edition. New York, NY: The Guilford Press.
73. Kluckhohn, C. 2001. Values and value orientations in the theory of action. In Toward a General Theory of Action: Theoretical Foundations for the Social Sciences, edited by Parsons, T., Shils, E., and Smelser, N. J. New Brunswick, NJ: Transaction Publishers.
74. Knight, F. H. 1922. Ethics and the economic interpretation. Quarterly Journal of Economics 36 (May): 454-481. Reprinted in The Ethics of Competition and Other Essays (1935; New York, NY: Harper and Brothers): 19-40. Available at: http://www.cooperativeindividualism.org/knight)ethics.html.
75. Kraemer, H. C., and S. Thiemann. 1987. How Many Subjects? Statistical Power Analysis in Research. Newbury Park, CA: Sage.
76. Kunz, A. H., and D. Pfaff. 2002. Agency theory, performance evaluation, and the hypothetical construct of intrinsic motivation. Accounting, Organizations and Society 27 (3): 275.
77. Lastovicka, J. L., L. A. Bettencourt, R. S. Hughner, and R. J. Kuntze. 1999. Lifestyle of the tight and frugal: Theory and measurement. The Journal of Consumer Research 26 (1): 85-98.
78. Libby, R., R. Bloomfield, and M. W. Nelson. 2002. Experimental research in financial accounting. Accounting, Organizations and Society 27 (8): 775-810.
79. Lim, V. K. G. 2003. Money matters: An empirical investigation of money, face and Confucian work ethic. Personality and Individual Differences 35 (4): 953-970.
80. Lim, V. K. G., S. H. T. Thompson, and G. L. Loo. 2003. Sex, financial hardship and locus of control: An empirical study of attitudes towards money among Singaporean Chinese. Personality and Individual Differences 34 (3): 411-429.
81. Luna-Arocas, R., and T. L. Tang. 2004. The love of money, satisfaction, and the Protestant work ethic: Money profiles among university professors in the USA and Spain. Journal of Business Ethics 50 (4): 329-354.
82. MacCallum, R. C., M. W. Browne, and H. M. Sugawara. 1996. Power analysis and determination of sample size for covariance structure modeling. Psychological Methods 1 (2): 130-149.
83. Mardia, K. V. 1970. Measures of multivariate skewness and kurtosis with applications. Biometrika 57: 519-530.
84. McGraw, K. O. 1978. The detrimental effects of reward on performance: A literature review and a prediction model. In The Hidden Costs of Reward, edited by Lepper, M. R., and Greene, D. New York, NY: Wiley.
85. Mitchell, T. R., and A. E. Mickel. 1999. The meaning of money: An individual-difference perspective. Academy of Management Review 24: 568-579.
86. Nickerson, C., N. Schwarz, E. Diener, and D. Kahneman. 2003. Zeroing in on the dark side of the American dream: A closer look at the negative consequences of the goal for financial success. Psychological Science 14 (6): 531-536.
87. Personal Finance Employee Education Foundation. 2009. Personal financial well-being (PFW)scale. Available at: http://www.personalfinancefoundation.org/about-us.html.
88. Phillips, N. 2008. Highly cited papers and books in social-personality psychology. Dialogue 27. Available at: http://dept.psych.columbia.edu/~kochsner/pdf/citations.pdf.
89. Prendergast, C. 1999. The provision of incentives in firms. Journal of Economic Literature 1: 7-63.
90. Rayo, L., and G. S. Becker. 2005. Evolutionary efficiency and happiness. Working paper, University of Chicago.
91. Reeve, J. 2002. Self-determination theory applied to educational settings. In Handbook of Self-Determination Research, edited by Deci, E. L., and Ryan, R. M., 183-204. Rochester, NY: University of Rochester Press.
92. Rempel, J. K., J. G. Holmes, and M. P. Zanna. 1985. Trust in close relationships. Journal of Personality and Social Psychology 49: 95-112.
93. Richins, M. L., and S. Dawson. 1992. A consumer values orientation for materialism and its measurement: Scale development and validation. The Journal of Consumer Research 19: 303-316.
94. Richins, M. L., and S. Dawson. 2004. The material values scale: Measurement properties and development of a short form. The Journal of Consumer Research 31 (1): 209-219.
95. Rindfleisch, A., J. E. Burroughs, and F. Denton. 1997. Family structure, materialism, and compulsive consumption. The Journal of Consumer Research 23 (4): 312.
96. Rogers, C. R. 1954. Becoming a Person, Pt. 1: Some Hypotheses Regarding the Facilitation of Personal Growth. Pt. 2: What it Means to Become a Person. The Nellie Heldt Lectures: 6. Oberlin, OH: Oberlin College.
97. Ryan, R. M., V. Mims, and R. Koestner. 1983. Relation of reward contingency and interpersonal context to intrinsic motivation: A review and test using cognitive evaluation theory. Journal of Personality and Social Psychology 45: 736-750.
98. Ryan, R. M., V. Mims, and C. M. Frederick. 1997. On energy, personality and health: Subjective vitality as a dynamic reflection of well-being. Journal of Personality 65: 529-565.
99. Ryan, R. M., V. I. Chirkov, T. D. Little, K. M. Sheldon, E. Timoshina, and E. L. Deci. 1999. The American dream in Russia: Extrinsic aspirations and well-being in two cultures. Personality and Social Psychology Bulletin 25: 1509-1524.
100. Ryan, R. M., and E. L. Deci. 2000. Self-determination theory and the facilitation of intrinsic motivation, social development, and well-being. The American Psychologist 55 (1): 68-78.
101. Schwartz, S. H., and W. Bilsky. 1987. Toward a universal psychological structure of human values. Journal of Personality and Social Psychology 53 (3): 550-562.
102. Seligman, M. E. P. 2002. Authentic Happiness: Using the New Positive Psychology to Realize Your Potential for Lasting Fulfillment. New York, NY: Free Press.
103. Shadish, W. R., T. D. Cook, and D. T. Campbell. 2002. Experimental and Quasi-Experimental Designs for Generalized Causal Inference. Boston, MA: Houghton Mifflin.
104. Sheldon, K. M., and T. Kasser. 1998. Pursuing personal goals: Skills enable progress but not all progress is beneficial. Personality and Social Psychology Bulletin 24: 1319-1331.
105. Sheldon, K. M., D. B. Turban, K. G. Brown, M. R. Barrick, and T. A. Judge. 2003. Applying self-determination theory to organizational research. Research in Personnel and Human Resources Management 22: 357-393.
106. Sheldon, K. M., R. M. Ryan, E. L. Deci, and T. Kasser. 2004. The independent effects of goal contents and motives on well-being: It's both what you pursue and why you pursue it. Personality and Social Psychology Bulletin 30 (4): 475-486.
107. Simon, H. A. 1990. A mechanism for social selection and successful altruism. Science 250 (4988): 1665-1668.
108. Simon, H. A. 1993. Altruism and economics. The American Economic Review 83 (2): 156-161.
109. Sober, E., and D. Wilson. 1998. Unto Others: The Evolution and Psychology of Unselfish Behavior. Cambridge, MA: Harvard University Press.
110. Solberg, E. G., E. Diener, and M. D. Robinson. 2004. Why are materialists less satisfied? In Psychology and Consumer Culture: The Struggle for a Good Life in a Materialistic World, edited by Kasser, T., and Kanner, A. Washington, D.C.: American Psychological Association.
111. Sprinkle, G. B. 2000. The effect of incentive contracts on learning and performance. The Accounting Review 75 (3): 299-326.
112. Srivastava, A., E. Locke, and K. M. Bartol. 2001. Money and subjective well-being: It's not the money, it's the motive. Journal of Personality and Social Psychology 80: 959-971.
113. Tang, T. L. P. 1992. The meaning of money revisited. Journal of Organizational Behavior 13: 197-202.
114. Tang, T. L. P. 1993. The meaning of money: Extension and exploration of the money ethic scale in a sample of university students in Taiwan. Journal of Organizational Behavior 14: 93-99.
115. Tang, T. L. P. 1995. The development of a short money ethic scale: Attitudes toward money and pay satisfaction revisited. Personality and Individual Differences 19: 809-816.
116. Tang, T. L. P., and P. R. Gilbert. 1995. Attitudes toward money as related to intrinsic and extrinsic job satisfaction, stress, and work-related attitudes. Personality and Individual Differences 19: 327-332.
117. Tang, T. L. P., and J. K. Kim. 1999. The meaning of money among mental health workers: The endorsement of money ethic as related to organizational citizenship behavior, job satisfaction, and commitment. Public Personnel Management 28 (1): 15-26.
118. Tang, T. L. P., A. Furnham, and M. T. Davis. 2000. A cross-cultural comparison of pay differentials as a function of rater's sex and money ethic endorsement: The Matthew effect revisited. Personality and Individual Differences 29: 685-697.
119. Tang, T. L. P., J. K. Kim, and D. S. H. Tang. 2000. Does attitude toward money moderate the relationship between intrinsic job satisfaction and voluntary turnover? Human Relations 53 (2): 213-245.
120. Tang, T. L. P., J. K. Kim, and V. L. Smith-Brandon. 2001. From welfare to work: The endorsement of the money ethic and the work ethic among welfare recipients, welfare recipients in training programs, and employed past welfare recipients. Public Personnel Management 30: 241-261.
121. Tang, T. L. P., A. Furnham, and M. T. Davis. 2002. The meaning of money. Journal of Managerial Psychology 17: 542-567.
122. Tang, T. L. P., A. Furnham, and R. K. Chiu. 2003. Income, money ethic, pay satisfaction, commitment, and unethical behavior: Is the love of money the root of evil for Hong Kong employees? Journal of Business Ethics 46: 13-30.
123. Tang, T. L. P., A. Furnham, and M. T. Davis. 2003. A cross-cultural comparison of the money ethic, the Protestant work ethic and job satisfaction: Taiwan, the USA and the UK. International Journal of Organization Theory and Behavior 6: 175-194.
124. Tang, T. L. P., K. R. Tillery, B. Lazarevski, and R. Luna-Arocas. 2004. Research Note: The love of money and work-related attitudes: Money profiles in Macedonia. Journal of Managerial Psychology 19 (5): 542-548.
125. Tang, T. L. P., D. S. Tang, and R. Luna-Arocas. 2005. Money profiles: The love of money, attitudes, and needs. Personnel Review 34 (5): 603-618.
126. Vitt, L. A. 2004. Consumers' financial decisions and the psychology of values. Journal of Financial Service Professionals (November): 68-77.
127. Warr, P. B. 2007. Work, Happiness, and Unhappiness. Mahwah, NJ: Lawrence Erlbaum Associates.
128. Whitecotton, M. S., and S. Butler. 1998. Influencing decision aid reliance through involvement in information choice. Behavioral Research in Accounting 10 (Supplement): 182-200.
129. Wong, N., A. Rindfleisch, and J. E. Burroughs. 2003. Do reverse-worded items confound measures in cross-cultural consumer research? The case of the material values scale. The Journal of Consumer Research 30: 72-91.