A Study On The Effect Of Pay For Performance On Employee Creativity

Employee creativity is an important source of organizational innovation and competitive advantage, whereas pay for performance (PFP) is a potentially powerful driver of performance. This study explores the relationship between PFP and creativity in China, which has been a hot topic in scientific circle for nearly four decades, and alike an important issue that should be clarified in innovation process.In the first part of this dissertation, I outlined the research background, significance, purpose, method, framework and several theoretical contributions. Meanwhile, I reviewed and elaborated several concepts such as reward, PFP, creativity, innovation, innovative behavior, etc. The purpose of this part is to give a detailed arrangement for the whole dissertation in general.In the second part, I reviewed and summarized the literatures relating to PFP, creativity, and the relationship between extrinsic reward and creativity. I firstly reviewed the theory of PFP and its effect on employee outcome variables. Second, I reviewed the literature relevant to creativity, its antecedent, and several basic theories. Finally, the literatures associated with the the relationship between PFP and creativity were reviewed. The inconsistent conclusions among humanity camp and learning camp were presented, and several gaps of prior studies were discussed.In the third part, three empirical studies were conducted to clarify the ambiguities about the relationship between reward and creativity. In the first study, a total of213subordinate-supervisor matched questionnaires were used to examine the moderating effect of procedural justice and willingness to take risks on the PFP-creativity relation. The results suggested that for employees with low procedural justice perception or low willingness to take risks, pay for performance was negatively related to creative self-efficacy and creativity; where procedural justice or willingness to take risks was high, those relationships were positive. In addition, moderated path analysis revealed that when procedural justice or willingness to take risks was high, pay for performance had a positive indirect effect on creativity via creative self-efficacy, whereas when procedural justice or willingness to take risks was low, the indirect effects of pay for performance on creativity via creative self-efficacy were negative.The second study aims to explore the effect of PFP intensity on employee creativity. Data were collected from296dyads of employees and their immediate supervisors in44enterprises. Results of analyzing the matched samples showed that PFP had unique reversed U shape indirect effects on employee creativity via creative self-efficacy. Further, moderated path analysis revealed person-job fit augmented intermediate PFP’s direct positive effect on creative self-efficacy and indirect positive effect on creativity, and attenuated high PFP’s direct negative effect on creative self-efficacy and indirect negative effect on creativity.In the third study, data collected from364dyads of employees and their immediate supervisors in24enterprises were used to test the differential effects of PFP on radical creativity and incremental creativity. The results showed that the relationships between PFP and both intrinsic motivation and radical creativity were nonsignificant, and the relationships between PFP and both extrinsic motivation and incremental creativity were positive; where transformational leadership was high, PFP was positively related to intrinsic motivation and radical creativity, whereas where transformational leadership was low, those relationships were negative; transactional leadership augmented PFP’s direct positive effect on extrinsic motivation and indirect positive effect on incremental creativityIn the final part of the dissertation, I summarized the conclusions, theoretical contributions and practical indications of this research, and the limitations of the present study and the directions for future study were also discussed.