Pay For Performance And Employee Creativity: A Study Based On Dynamic Mental Accounting Process And Intrinsic-Extrinsic Motivational Synergy

Innovation-driven development is currently the main tone of China’s economic transformation and adaptation to the new normal. Intellectual capital driven innovation will unite new development impetus and help Chinese enterprises to seize the initiative in the new round of global business intelligence revolution. In this background, managers are faced with the challenge of how to attract creative employees and to build the organizational support system that is suitable for the employees to create.Resorting to the pay for performance system that embodies the value of employees is the usual incentive methods of enterprises. Even Microsoft and Google, the world’s leading companies, are also using the methods. However, compared with the ’hot’ enterprise practice, theoretical research is ’abnormal’. Behind this situation of ’practice to the left, theory to the right’, is nearly half a century of view conflict, theoretical debate and school confrontation. Professor Deci, a representative figure of the cognitive psychology school, proposed that monetary incentives have a corrosion effect on intrinsic motivation. Thus caused an unprecedented theoretical ’paradigm crisis’, which has shaken the theoretical foundation of the existence of the new classical economics: ’stimulus→response’ paradigm, so that scholars began to pay attention to the psychological process between motivation and results. However, the behavior psychology school represented by Professor Eisenberger questioned the theoretical premise and experimental manipulation of the cognitive psychology school. They believed that the performance reward provides positive feedback and strengthening mechanism for work, let the individual put more effort into the learning of task related skills and apply the new skills to the new task, thereby enhancing the intrinsic motivation of employees and promoting creativity. The above views were also met with the fierce opposition of cognitive psychology, they believe that the creation itself contains incentive value and against the view that behavior is the result of incentive reinforcement.Sharp opposition on views and theoretical development stagnation caused practitioners do not know what to do. Although they also know that there are many negative effects of performance incentives, but they still prefer to use pay for performance system as the main incentive in practice. Integrating theories and bridging the gap between theory and practice are important agenda for theoretical development. To sum up, there are some issues to be solved in the mechanism of the effect of pay for performance on creativity.First, the two sides ignored the individual dynamic mental accounting process. Creation is a continual process of ’trial and error’ and contains high risk, the individual is bound to make the psychological balance between effort and risk premium. According to the prospect theory, with the increase of the incentive intensity of pay for performance, the reference point of the individual behavior decision will be dynamically adjusted. Therefore, the individual dynamic mental accounting process must be included in the research vision.Second, it is of no practical value to study the rigid incentive methods of pay for performance in isolation and ignore the soft incentive method. However, the existing research has not yet provided convincing evidence about how to combine rigid and soft incentive.Third, the two sides focus on control attributes and information attributes of pay for performance, but ignore potential value compensation attribute of pay for performance, that is, in the case of sufficient intrinsic motivation, whether pay for performance will turn into ’extrinsic motivation of pursue profits’ and jointly affect employee creativity with intrinsic motivation.Based on the above analysis, this article takes the employees of local enterprises in China as the research object and on the basis of exploring the working dynamic mechanism of local employees and the phenomenon of organizational dislocated incentives. By constructing a nonlinear cross level model and using multiple resources time-delay survey method to obtain 60 team level, 274 employee level effective research samples, it systematically studies the internal mechanism that how pay for performance influence employee creativity with the dual perspective of dynamic mental accounting process and intrinsic-extrinsic motivational synergy. The main work and research results are as follows:(1)Based on a review of the relevant literature, this article systematically analyzes the theoretical controversy about the incentive effect of pay for performance. On this basis, through the prospect theory and the dual processing theory, this article pointed out the need to study the boundary conditions of the effect of pay for performance on creativity from the perspective of dynamic mental accounting process and intrinsic-extrinsic motivational synergy.(2)The article explores the working dynamic mechanism of Chinese employees and inhibiting effect of organizational dislocated incentives on creativity. After systematically analyzing the working dynamic mechanism of local employees, the phenomenon of organizational dislocated incentives, and whether existing incentive system matches employees’ work value needs. Result shows that: Firstly, local employees’ work is driven by extrinsic motivation generally, and local employees’ intrinsic motivation is much weaker than the American employees. What’s more, intrinsic motivation has trended down with the increase of age and generation, and it of new-generation employees is strongest.Secondly, for new generation employees, the perceived work value is significantly weaker than perceived reward value, which means dislocated incentives is the common phenomenon among the enterprises in China. Thirdly, when the perceived work value can match perceived reward value, the creativity can be significantly increased, otherwise, inhibited. This article reveals that the deviation in intrinsic motivation, caused by dislocated incentives, have to pay for the lack of Chinese creativity to some extent. Reforming the incentive model of salary and creating the environment of soft incentive must be viewed as the important strategic agenda of enterprises.(3)Based on dynamic mental accounting process, the article studies the nonlinear relationship between pay for performance and employee creativity. From the two paths of heuristic mental accounting process and analysis mental accounting process, the article analyze the function of motivation and arousal level of creativity with different compensation incentive intensity. Result shows that: Firstly, with the increase of compensation incentive intensity, the individual perception of pay for performance will go through the path ‘control→information→control’, both of which alternately dominate. The effect of pay for performance on intrinsic motivation evolves along the main line ‘crowding-out effect→crowding-in effect→crowding-out effect’, which means that the effect of pay for performance on intrinsic motivation is an S-curve. Secondly, intrinsic motivation nonlinearly mediate the relationship between pay for performance and employee creativity, and with the increasing of compensation incentive intensity, the instantaneous mediating effect of intrinsic motivation will increase first and then decrease. With the medium compensation incentive intensity, the instantaneous medium effect of intrinsic motivation reaches the highest point, and at the time, the nonlinear mediating effect is the complete mediating effect, which means appropriate pay for performance can totally crowd in intrinsic motivation to wake up high-level creativity.(4)Based on the perspective of intrinsic-extrinsic motivational synergy, the article studies the moderating effect of perceived organizational support of creativity on the mediate effect of intrinsic motivation. Through investigating cross-level moderated mediation model, analyzing the effect of synergy of ’extrinsic motivation of pursue profits’ which caused by value compensation of pay for performance and intrinsic motivation increased by perceived organizational support of creativity on creativity. Result shows that: Firstly, the cross-level interaction of perceived organizational support of creativity and pay for performance negatively influence intrinsic motivation of employees, and the lower the perceived organizational support of creativity is, the stronger crowding-in effect pay for performance on intrinsic motivation will be which implicates that there is a compensation perspective of pay for performance on intrinsic motivation. Secondly, perceived organizational support of creativity moderates the mediating effect of intrinsic motivation on the relationship between pay for performance and employee creativity, and with the increasing of perceived organizational support of creativity, the mediating effect of intrinsic motivation becomes weaker, which means that in the circumstance of high perceived organizational support of creativity, there is a direct effect of pay for performance on creativity. In another way, intrinsic-extrinsic motivational synergy can wake up high level employee creativity.The creation points of the article mainly includes: From the aspect of perspective, based on the dual perspective of dynamic mental accounting process and intrinsic-extrinsic motivational synergy, the article reexamines and studies the internal mechanism that how pay for performance influence employee creativity. From the aspect of theory, the article points out that pay for performance has the attribute of economic significance(value compensation) which is different from the traditional attribute of psychological significance(information). And the article also points out that under the condition of insufficient soft incentive, pay for performance can increase intrinsic motivation through individual internalization mechanism of extrinsic motivation. On the other hand, under the condition of sufficient soft incentive, the extrinsic motivation caused by pay for performance and the intrinsic motivation increased by soft incentives synergistic promote the creativity. From the aspect of methods, this research improves the traditional Bootstrap analysis method of instantaneous mediating effect and moderated mediating effect.