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Rewards and employee creative performance: Moderating effects of creative self-efcacy, reward importance, and locus of control MUHAMMAD ABDUR RAHMAN MALIK 1 , ARIF N. BUTT 1 AND JIN NAM CHOI 2 * 1 Suleman Dawood School of Business, Lahore University of Management Sciences, Lahore, Pakistan 2 Graduate School of Business, Seoul National University, Seoul, South Korea Summary The effects of extrinsic rewards on creative performance have been controversial, and scholars have called for the examination of the boundary conditions of such effects. Drawing upon expectancy theory, we attend to both reinforcement and self-determination pathways that reveal the informational and controlling func- tions of creativity-related extrinsic rewards. We further identify the individual dispositions that moderate these two pathways. Specically, we propose that extrinsic rewards for creativity positively predict creative performance only when employees have high creative self-efcacy and regard such rewards as important. We likewise propose that extrinsic rewards positively affect the intrinsic motivation of employees with an internal locus of control, thus enhancing their creative performance. Results based on a sample of 181 em- ployeesupervisor dyads largely supported these expectations. The current analysis enriches the creativity literature by combining different perspectives in a coherent framework, by demonstrating the positive effects of extrinsic rewards on intrinsic motivation, and by demonstrating that the rewardscreativity relationship varies across employees depending on their individual differences. Copyright © 2014 John Wiley & Sons, Ltd. Keywords: rewards; creative performance; intrinsic motivation; creative self-efcacy; locus of control; expectancy; self-determination Organizations offer various types of rewards to employees to enhance their performance (Amabile, 1996). The effectiveness of rewards in inuencing employee performance is critical because it affects the achievement of organiza- tional goals. Despite the importance of rewards and their widespread use in organizations, empirical evidence supporting the effectiveness of rewards is at best mixed (Eisenberger & Shanock, 2003). Thus, scholars have recently called for an investigation into the boundary conditions within which rewards affect employee performance (Byron & Khazanchi, 2012). The present study explores the potential contingencies that determine the nature of the rewardsperformance relationship, particularly focusing on individual differences. One performance dimension that has received increasing interest among practitioners and researchers alike is the creative performance of employees (Coelho, Augusto, & Lages, 2011). Creative performance is dened as the generation of products, ideas, or procedures that satisfy two conditions, namely, they are novel or original, and they are potentially relevant for, or useful to, an organization(Oldham & Cummings, 1996, p. 608). Although organizations provide various rewards to promote the creative performance of employees, issues persist regarding the functions of these rewards in enhancing creative performance. A recent meta-analysis by Byron and Khazanchi (2012) identied three moderators that affect the rewardscreative performance relationship. These moderators are reward contingency, performance feedback, and the extent to which the context offers choice or imposes control. Therefore, these authors suggest that the effects of rewards on creative performance depend on the nature of rewards and the context in which the rewards are being offered. *Correspondence to: Jin Nam Choi, Graduate School of Business, Seoul National University, Shinlim-dong, San 56-1, Gwanak-gu, Seoul 151-742, South Korea. E-mail: [email protected] This work was partially supported by the National Research Foundation of Korea Grant funded by the Korean Government (NRF-2011-327-250- 20130030) granted to Jin Nam Choi. Copyright © 2014 John Wiley & Sons, Ltd. Received 29 January 2013 Revised 25 April 2014, Accepted 12 May 2014 Journal of Organizational Behavior, J. Organiz. Behav. (2014) Published online in Wiley Online Library (wileyonlinelibrary.com) DOI: 10.1002/job.1943 Research Article

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Page 1: Rewards and employee creative performance: Moderating effects of creative self-efficacy, reward importance, and locus of control

Rewards and employee creative performance:Moderating effects of creative self-efficacy, rewardimportance, and locus of control†

MUHAMMAD ABDUR RAHMAN MALIK1, ARIF N. BUTT1 AND JIN NAM CHOI2*1Suleman Dawood School of Business, Lahore University of Management Sciences, Lahore, Pakistan2Graduate School of Business, Seoul National University, Seoul, South Korea

Summary The effects of extrinsic rewards on creative performance have been controversial, and scholars have calledfor the examination of the boundary conditions of such effects. Drawing upon expectancy theory, we attendto both reinforcement and self-determination pathways that reveal the informational and controlling func-tions of creativity-related extrinsic rewards. We further identify the individual dispositions that moderatethese two pathways. Specifically, we propose that extrinsic rewards for creativity positively predict creativeperformance only when employees have high creative self-efficacy and regard such rewards as important.We likewise propose that extrinsic rewards positively affect the intrinsic motivation of employees with aninternal locus of control, thus enhancing their creative performance. Results based on a sample of 181 em-ployee–supervisor dyads largely supported these expectations. The current analysis enriches the creativityliterature by combining different perspectives in a coherent framework, by demonstrating the positiveeffects of extrinsic rewards on intrinsic motivation, and by demonstrating that the rewards–creativityrelationship varies across employees depending on their individual differences. Copyright © 2014 JohnWiley & Sons, Ltd.

Keywords: rewards; creative performance; intrinsic motivation; creative self-efficacy; locus of control;expectancy; self-determination

Organizations offer various types of rewards to employees to enhance their performance (Amabile, 1996). Theeffectiveness of rewards in influencing employee performance is critical because it affects the achievement of organiza-tional goals. Despite the importance of rewards and their widespread use in organizations, empirical evidence supportingthe effectiveness of rewards is at best mixed (Eisenberger & Shanock, 2003). Thus, scholars have recently called for aninvestigation into the boundary conditions within which rewards affect employee performance (Byron & Khazanchi,2012). The present study explores the potential contingencies that determine the nature of the rewards–performancerelationship, particularly focusing on individual differences.One performance dimension that has received increasing interest among practitioners and researchers alike is the creative

performance of employees (Coelho, Augusto, & Lages, 2011). Creative performance is defined as the generation of“products, ideas, or procedures that satisfy two conditions, namely, they are novel or original, and they are potentiallyrelevant for, or useful to, an organization” (Oldham & Cummings, 1996, p. 608). Although organizations provide variousrewards to promote the creative performance of employees, issues persist regarding the functions of these rewards inenhancing creative performance. A recent meta-analysis by Byron and Khazanchi (2012) identified three moderators thataffect the rewards–creative performance relationship. These moderators are reward contingency, performance feedback,and the extent to which the context offers choice or imposes control. Therefore, these authors suggest that the effects ofrewards on creative performance depend on the nature of rewards and the context in which the rewards are being offered.

*Correspondence to: Jin NamChoi, Graduate School of Business, Seoul National University, Shinlim-dong, San 56-1, Gwanak-gu, Seoul 151-742,South Korea. E-mail: [email protected]†This work was partially supported by the National Research Foundation of Korea Grant funded by the Korean Government (NRF-2011-327-250-20130030) granted to Jin Nam Choi.

Copyright © 2014 John Wiley & Sons, Ltd.Received 29 January 2013

Revised 25 April 2014, Accepted 12 May 2014

Journal of Organizational Behavior, J. Organiz. Behav. (2014)Published online in Wiley Online Library (wileyonlinelibrary.com) DOI: 10.1002/job.1943

Research

Article

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Employing expectancy theory as an overarching theoretical driver, we develop an integrative framework thataccounts for the effects of extrinsic rewards on the intrinsic motivation and creative performance of employees.Drawing on previous research, we maintain that extrinsic rewards have both positive and negative effects (Deci,Koestner, & Ryan, 1999; Eisenberger, Pierce, & Cameron, 1999), and the relative magnitude of these conflictingeffects determines the net effect of these rewards.

In many cases, rewards have conflicting effects, being experienced to some extent as controlling and to some extent as infor-mational … these two processes work against each other, so additional factors must be taken into account in predicting thelikely effect of such rewards (Deci et al., 1999, p. 628, italics added).

We use expectancy and self-determination theories to explain the informational and controlling aspect of extrinsicrewards, respectively. Although researchers have attempted to identify the boundary conditions within which rewardsaffect creative performance (Byron & Khazanchi, 2012; Yoon & Choi, 2010), previous studies have overlooked animportant theoretical perspective. The existing literature is largely based on the assumption that rewards affectindividuals in a similar fashion, regardless of their individual differences. Personality theories, however, suggest thatthe effects of contextual factors (i.e., extrinsic rewards) on human behavior depend on individual differences thatresult in different perceptions and attributions of the same context (Ajzen, 1991). To fill the gap in the existing liter-ature, we propose that the effects of rewards are not only determined by the nature of rewards and the context in whichthey are offered (Byron & Khazanchi, 2012), but also by the personality traits of employees to whom the rewards areoffered. Hence, we suggest that individual dispositions are among the “additional factors” that determine the effectsof rewards on creative performance, thus varying the effects of extrinsic rewards from one individual to another.The effects of rewards on the creative performance of employees depend on their personal traits, which play a signif-

icant role in the interpretation of the rewards. In line with expectancy theory (Vroom, 1964), we propose that the positiveeffects of extrinsic rewards on creative performance are realized only when the target employees value the given rewardsand exhibit a strong belief in creative self-efficacy. In addition, drawing on self-determination theory (Gagné & Deci,2005), we advance that employees with an internal locus of control are more likely to experience the positive effectsof rewards on their intrinsic motivation and subsequently on their creative performance. Hence, the increase in thecreative performance of employees in the presence of rewards is partially attributed to an increase in their intrinsicmotivation toward the activity.In summary, the present study investigates the individual differences of employees that allow them to experience

either the positive or negative effects of extrinsic rewards. This exploration of potential boundary conditions mean-ingfully expands the rewards–creative performance debate, which has focused mostly on the main effects ofrewards. Considering the previous finding that creative performance is affected only by the rewards contingent oncreativity (Eisenberger, Pierce, et al., 1999), we focus on extrinsic rewards that pertain to creativity. Thus, through-out this paper, extrinsic rewards refer to the rewards that are contingent on creative performance and not the rewardsthat are dependent on general task performance. Hypotheses are empirically tested using the data on181 employee–supervisor dyads collected from business organizations in Pakistan.

Relationship between Extrinsic Rewards and Creative Performance

Extrinsic motivation refers to the desire to perform an activity to achieve an outcome other than the activity itself(Deci & Ryan, 1985). Rewards that induce extrinsic motivation among individuals are termed as extrinsic rewards.These rewards include financial incentives such as bonus and incentive pay, and non-financial incentives such asrecognition and appreciation, as well as better career prospects such as promotion opportunities in the future.Extrinsic rewards have both informational and controlling aspects (Deci et al., 1999) that occur through the mech-anisms of expectancy (Vroom, 1964), reinforcement (Komaki, 2003), and self-determination (Gagné & Deci, 2005),as explained later.

M. A. R. MALIK ET AL.

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Informational aspect of rewards: reinforcement and expectancy pathway

Expectancy theory identifies three conditions that result in high motivation to perform a task, namely, (i) expectancyor the belief that greater effort will increase performance, (ii) instrumentality or the belief in the systems that gaugeperformance and offer performance-based rewards, and (iii) valence or the value assigned by individuals to specificrewards (Vroom, 1964). The fundamental idea of expectancy theory is based on the reinforcement perspective,which endorses the utilitarian view of human nature and assumes that external reinforcements can strengthen anybehavioral dimension, such as force, duration, novelty, and variability (Skinner, 1938). This perspective maintainsthat extrinsic rewards lead employee efforts in the desired direction and elicit behavioral changes toward creativitywhen the given rewards are contingent on creative performance (Eisenberger & Cameron, 1998). This core mecha-nism of reinforcement corresponds with the instrumentality component of expectancy theory (Vroom, 1964), whichsuggests the presence of performance-contingent rewards as a prerequisite of motivation to perform. The rewardsused in the current study were contingent on creative performance, hence fulfilling the instrumentality of the givenrewards. Drawing on expectancy theory, we propose that the creative self-efficacy of employees and the importancethat employees assigned to the given rewards fulfill the other two conditions for work motivation (i.e., expectancyand valence). Therefore, creative self-efficacy and reward importance are expected to moderate the effects of extrin-sic rewards for creativity on the creative performance of employees.

Creative self-efficacySelf-efficacy is defined as the belief of individuals in their ability to perform a given task and to meet situationaldemands (Bandura, 1997). Self-efficacy related to a specific domain more effectively predicts the behavior related to thisdomain (Choi, 2004). In this research context, we employ creative self-efficacy, which refers to “the belief (that) one hasthe ability to produce creative outcomes” (Tierney & Farmer, 2002, p. 1138). In contrast to prior studies that havedemonstrated the direct or mediated effects of creative self-efficacy on creative performance (Choi, 2004; Gong, Huang,& Farh, 2009), the present study focuses on its moderating role.As previously stated, expectancy theory (Vroom, 1964) suggests that individuals become motivated to engage in a

task when they are confident that their efforts will improve performance. Individuals with high creative self-efficacyhave confidence in their ability to perform creatively. Thus, in the presence of creativity-contingent extrinsicrewards, these individuals become highly motivated to perform creatively and are confident about the results of theirefforts. This positive expectation of favorable outcomes guides and molds their behavior that generates the expectedoutcomes, thus initiating a virtuous cycle through self-fulfilling prophecy (Eden, 1984; Peterson & Seligman, 2004).Thus, extrinsic rewards will be effective in generating creative performance for individuals with high creative self-efficacy because of the expectancy to perform creatively and the virtuous cycle between efficacy and performance.Hence, we hypothesize that

Hypothesis 1: Creative self-efficacy moderates the relationship between extrinsic rewards for creativity andemployee creative performance, such that this relationship is positive for those with high creative self-efficacy.

In contrast, individuals with low creative self-efficacy have a low expectancy belief that they can successfullyperform creative tasks even when they put in substantial efforts (Dewett, 2007). With the low expectancy regardingtheir efforts toward creative performance, these employees regard extrinsic rewards for creativity as a threat thatimposes demands they cannot fulfill (Putwain, Kearsley, & Symes, 2011). Thus, instead of pursuing the rewardspromised for creative performance, employees with low creative self-efficacy avoid the situation or intentionallyignore the task demands for creativity so that they can attribute the lack of rewards to the fact that they just didnot do the task and not because they failed to perform it. This case is similar to the situation of evaluationapprehension (Cottrell, 1972) in which the employees with low creative self-efficacy doubt their ability to performcreatively; thus, they avoid the situations in which they recognize the possibility of negative outcomes. Because oflow expectancy of performing creatively, employees with low creative self-efficacy will intentionally divert their

MODERATORS OF THE REWARDS–CREATIVITY RELATIONSHIP

Copyright © 2014 John Wiley & Sons, Ltd. J. Organiz. Behav. (2014)DOI: 10.1002/job

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efforts to other performance dimensions, thus exhibiting low creative performance (McFall, Jamieson, & Harkins,2009). Hence, we hypothesize that

Hypothesis 2: Creative self-efficacy moderates the relationship between extrinsic rewards for creativity andemployee creative performance, such that this relationship is negative for those with low creative self-efficacy.

Reward importanceExpectancy theory (Vroom, 1964) identifies valence as a basic requirement for any reward to affect individualbehavior. External reinforcements, such as rewards and punishments, can influence human behavior when thereinforcement is valued by the target individuals (Eisenberger, Rhoades, & Cameron, 1999). Empirical evidenceindicates that rewards can influence individual behavior to the extent that rewards are perceived as valuable andrelevant by their recipients (Schwab, Olian-Gottlieb, & Heneman, 1979). In a similar vein, we advance that extrinsicrewards enhance creative performance only for those who value such rewards, thus suggesting the moderating roleof reward importance of the relationship between extrinsic rewards and creative performance. Although theoreticallyplausible, this moderation effect has yet to be tested, especially in the perspective of rewards–creative performancerelationship. To fill this gap, we advance the following moderation hypothesis:

Hypothesis 3: The importance of extrinsic rewards moderates the relationship between extrinsic rewards for cre-ativity and employee creative performance, such that this relationship is positive for those who perceive extrinsicrewards as important.

Controlling aspect of rewards: self-determination pathway

According to self-determination theory (Ryan &Deci, 2000a), rewards that emphasize external regulation or control areapt to decrease the intrinsic motivation of employees. Thus, different from the expectancy and reinforcement pathwaydriven by the instrumentality and valence of rewards that directly affect the target behavior, the self-determinationpathway based on the changing sense of control driven by rewards may affect intrinsic motivation, which more directlyaffects creativity as established by previous studies (Amabile, 1983; Sagiv, Arieli, Goldenberg, & Goldschmidt, 2010).In this perspective, extrinsic rewards diminish intrinsic motivation and creativity only when they reduce the perceptionof self-control (Gagné & Deci, 2005). Moreover, cognitive evaluation theory suggests that the perception of beingexternally controlled, triggered by extrinsic rewards, is important in predicting the effects of these rewards:

… rewards can be interpreted by recipients primarily as controllers of their behavior or, alternatively, as indicators of theircompetence. In the former case, rewards are predicted to thwart satisfaction of the need for autonomy… and undermine intrinsicmotivation. In the latter case, however, rewards are predicted … to enhance intrinsic motivation (Deci et al., 1999, p. 628).

Research on personality traits suggests that the perceptions of individuals about the extent of their control over theirbehavior and the situation depend on their locus of control beliefs. Thus, locus of control can operate as a critical bound-ary condition for the effects of rewards on intrinsic motivation. Locus of control refers to the perception of who is incontrol of the events around us (Rotter, 1966). Research reveals that individuals can be classified into two categories,namely, internals and externals. Individuals with an internal locus of control attribute their successes and failures to theirown capabilities and efforts; they have high expectations of their own control over situations and events that affect them.Individuals with an external locus of control perceive that external factors control the events around them; they exhibit alow sense of control over situations (Rotter, 1966). The definition of locus of control suggests that individuals differentlyperceive their typical levels of self-control over events and situations. Accordingly, the influence of external factors onperceived self-control depends on the locus of control beliefs of a person, and different individuals can perceive the sameexternal factor differently.

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Cognitive evaluation theory suggests that the effects of extrinsic rewards on intrinsic motivation and creativity aredetermined by how individuals interpret those rewards (Deci et al., 1999). Individuals with an internal locus of con-trol are less likely to view external factors (i.e., extrinsic rewards) as “controllers of their behavior” and are thereforeless likely to experience feelings of being externally controlled in the presence of these rewards (Gagné & Deci,2005). Consequently, these individuals may view the rewards contingent on creative performance as an opportunityand as indicators of their competence not as a threat to their self-control or autonomy, thus experiencing the positiveeffects of rewards on their intrinsic motivation (Earn, 1982).

Hypothesis 4: Locus of control moderates the relationship between extrinsic rewards for creativity and employeeintrinsic motivation to perform creatively, such that this relationship is positive for those with an internal locusof control.

In contrast, individuals with an external locus of control are more likely to interpret rewards as controllers of theirbehavior or external regulation (Gagné & Deci, 2005). These individuals are more likely to experience the feeling ofbeing externally controlled because they have a trait-like vulnerability to the external attribution of events andcontextual stimuli (Richmond & de la Serna, 1980). Thus, extrinsic rewards will negatively affect their perceptionsof control and self-determination, reducing their intrinsic interest in the creative activities on which the rewards arecontingent. Hence, we hypothesize that

Hypothesis 5: Locus of control moderates the relationship between extrinsic rewards for creativity and employeeintrinsic motivation to perform creatively, such that this relationship is negative for those with an external locusof control.

Finally, existing empirical studies have demonstrated the role of intrinsic motivation as a key driver of creativity(Grant & Berry, 2011; Zhou, Zhang, & Montoro-Sánchez, 2011). In the moderation hypotheses developed earlier, weproposed that extrinsic rewards enhance the intrinsicmotivation of employees with an internal locus of control.We furtherexpect that intrinsic motivation in turn affects the creative performance of employees (Zhang & Bartol, 2010). This effectis likely to be even stronger in this study because we focus more specifically on intrinsic motivation to perform creativelyinstead of intrinsic motivation in general. The overall framework and hypotheses are summarized in Figure 1.

Hypothesis 6: Intrinsic motivation to perform creatively is positively related to the creative performance of employees.

Method

Sample and data collection procedure

The data for this study were collected from employees registered in executive training programs at two privateuniversities in Pakistan. A total of 275 questionnaires were distributed, 239 of which were completed and returned. Afterthe exclusion of the questionnaires with substantial missing information or unreliable response patterns, 225 usableresponses were identified. The participants provided the e-mail addresses of their supervisors in the questionnaire.Twoweeks after the survey data collection, e-mails were sent to the supervisors. The supervisors who had not respondedwere likewise reminded a week after via e-mail. Supervisors who responded to the e-mail rated the creative performanceof focal participants on a four-item scale. A total of 181 e-mails from supervisors (out of 225 sent) were received withinthree weeks (response rate = 80.4 percent). Thus, the final sample for this study included 181 pairs of focal employeesand their supervisors.The final analysis sample comprised responses from 73 organizations (41 percent service and 59 percent manufactur-

ing industries). The sample had a low rate of female responses (14 percent), which is consistent with the low

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employment rate of females in Pakistan. The average years of education, work experience, and age of the focal partic-ipants were 15.2, 13.3, and 36.8 years, respectively. The participants were from diverse functional backgrounds, includ-ing finance, planning, human resources, marketing, and operations. The participants were employed at differenthierarchical levels, ranging from clerical staff to senior managers.

Measures

Scales with established reliability and validity were applied to operationalize the variables of this study. All of theitems, other than the locus of control, were rated on a five-point Likert scale, ranging from “strongly disagree” to“strongly agree.” The questionnaires were administered in English, the official language in Pakistan.

Extrinsic rewards for creativityWe assessed extrinsic rewards for creativity with an eight-item scale (α=0.85) developed by Yoon and Choi (2010).The scale was based on the items from Ryan and Deci (2000b), Deci et al. (1999), and Baer, Oldham, and Cummings(2003). The eight items were “When I perform creatively, I receive financial rewards, such as incentives or bonuses”;“When I perform creative work, it affects my promotion”; “If I suggest new ideas for tasks, this approach influencesmy performance evaluation”; “I get recognized by my supervisor when I suggest new ideas for the task”; “Mycoworkers recognize me when I perform creatively at work”; “When an employee exhibits creative performance, mycompany offers some treats such as a celebration dinner”; “When I perform creatively at work, my company offerscorresponding benefits in return”; and “When I perform creatively at work, my manager or the top managementcompliments me publicly”.

Creative self-efficacyOne of the most reliable scales for operationalizing self-efficacy is the one developed by Schwarzer (1999). Wemodified five items of this scale to measure creative self-efficacy (α= 0.75). One sample item from Schwarzer(1999) and its corresponding measure of creative self-efficacy are as follows: “When I am confronted with a prob-lem, I usually find several solutions” and “When I am confronted with a problem, I usually find several innovativeand unique solutions.” Another modified item is “With my creative skills, I can handle unforeseen situations.”

Figure 1. Theoretical framework

M. A. R. MALIK ET AL.

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Importance of extrinsic rewardsThe importance of extrinsic rewards was operationalized by a three-item scale (α = 0.84) developed by Yoon andChoi (2010). A sample item is “Extrinsic rewards, such as financial incentives, promotions, and respect that I canobtain from my creative performance, are quite meaningful to me.”

Locus of controlWe measured the locus of control using the scale developed by Rotter (1966). This scale consisted of nine pairs ofitems. Each pair comprised two statements, with one representing an internal locus of control and the other anexternal locus of control. Respondents were asked to select one statement from each of the nine pairs. Items forthe internal locus of control were scored as one, whereas those for the external locus of control were scored as zero.The total score of a respondent represents the strength of his or her internal locus of control. A sample pair ofstatements is as follows: “Most misfortunes are the result of the lack of ability, ignorance, laziness, or all three”(internal locus) and “In the long run, the bad things that happen to us are balanced by good ones” (external locus).

Intrinsic motivation for creativitySeveral established scales measure intrinsic motivation, such as Work Preference Inventory (Amabile, Hill,Hennessey, & Tighe, 1994). However, our aim in this study was not to gauge generalized intrinsic motivation butto measure intrinsic motivation to perform creatively within the context of a given task that can be driven by extrin-sic rewards for creativity. Hence, we used a scale that specifically operationalized “intrinsic motivation to performcreatively” using the six items developed by Yoon and Choi (2010). This scale was constructed based on the itemsfrom Ryan and Deci (2000b), Deci et al. (1999), and Baer et al. (2003). Sample items include “I feel satisfactionwhen I perform creatively” and “I feel a sense of achievement when I suggest new task ideas.” The scale exhibitedhigh reliability index (α= 0.86).

Creative performanceWe measured creative performance using four items (α= 0.76) developed by Scott and Bruce (1994). As previouslyexplained, the creative performance of focal employees was rated by their supervisors to avoid potential commonsource bias. Sample items include “This person generates creative ideas” and “This person searches for new technol-ogies, processes, techniques, and/or product ideas.”

Control variablesWe considered education (years of formal education) and work experience (years of work experience) as controlvariables in our analysis because previous studies have reported that these demographic variables affect the creativeperformance of employees (Hirst, Knippenberg, & Zhou, 2009). With the respondents coming from differentindustries and having different hierarchical levels, we likewise controlled for the effects of their respective industries(service = 0 and manufacturing = 1) and position (rank-and-file employees = 1, first-line supervisors = 2, and high-level managers = 3).

Results

To check the validity of the present measures, we conducted a confirmatory factor analysis using AMOS forthe measurement model, including the five self-reported variables and supervisor-rated creative performance.The results indicated that a six-factor model fits the data better (χ2 = 429.3, df = 334, CFI = 0.95, RMSEA=0.04) than any of the alternative five-factor or four-factor models (χ2 difference tests, all p< 0.01), and allof the factor loadings were highly significant (all p< 0.001). This analysis indicated the empirical validityand distinctiveness of the study variables. Table 1 presents the scale means, standard deviations, and inter-scale correlations.

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Moderation of the extrinsic rewards–creative performance relationship

We examined the main effects of extrinsic rewards on employee creative performance prior to testing the moderationhypotheses. As reported in Model 1 (Table 2), extrinsic rewards did not show any significant direct effect on creativeperformance (β = 0.01, p> 0.05).Hypotheses 1 and 2 propose that the effects of rewards on creative performance would be positive for employees

with high creative self-efficacy, whereas the same effect would be negative for those with low creative self-efficacy.These hypotheses were tested by hierarchical regression analysis in which the interaction term was introduced afterentering the control variables and the main effects of the interacting variables (Model 3, Table 2). All of the variablesinvolved in the interaction terms were centered to reduce the problem of multicollinearity (Aiken & West, 1991).The results suggested that creative self-efficacy was a significant predictor of creative performance (β= 0.27,p< 0.001), and it significantly moderated the relationship between extrinsic rewards and creative performance(β= 0.21, p< 0.01). Figure 2 graphically represents the pattern of this significant interaction by comparing two sub-groups formed at one standard deviation above and below the mean values of the moderator (Anderson, 1986). Thissimple slope analysis (Aiken & West, 1991) revealed that the relationship between extrinsic rewards and creative

Table 1. Means, standard deviations, and correlations among study variables.

Variable Mean SD 1 2 3 4 5 6 7 8 9

1. Education 15.22 2.86 –2. Experience 13.31 9.81 0.01 –3. Industry 0.60 0.49 0.06 �0.30** –4. Hierarchical position 2.13 0.76 0.37** 0.08 0.14 –5. Extrinsic rewards 3.20 0.69 �0.11 0.02 �0.05 0.01 –6. Creative self-efficacy 3.88 0.51 �0.11 0.11 �0.03 �0.14 �0.01 –7. Importance of extrinsic

rewards3.97 0.76 0.15 �0.24** 0.16* 0.20** 0.12 0.01 –

8 Locus of control 4.56 1.93 0.09 �0.03 0.05 0.17* 0.08 �0.02 0.17* –9. Intrinsic motivation 4.26 0.52 �0.10 �0.01 0.06 �0.06 0.12 0.38** 0.06 �0.1010. Creative performance 3.27 0.43 0.05 0.06 0.01 �0.04 0.01 0.28** 0.19* 0.17* 0.33**

*p< 0.05; **p< 0.01.

Table 2. Moderated effects of extrinsic rewards on creative performance.

Independent variables

Outcome variable: employee creative performance

Model 1 Model 2 Model 3 Model 4 Model 5

Education 0.06 0.09 0.10 0.02 0.07Job experience 0.08 0.09 0.05 0.13 0.09Industry 0.04 0.01 0.01 0.01 �0.01Hierarchical position 0.01 0.01 0.05 �0.03 0.02Extrinsic rewards for creativity 0.01 �0.02 �0.02 �0.04Intrinsic motivation 0.35***Creative self-efficacy (CSE) 0.27*** 0.24**Extrinsic rewards ×CSE 0.21** 0.19**Importance of extrinsic rewards 0.21** 0.17*Extrinsic rewards × importance of extrinsic rewards 0.23** 0.20**R2 0.01 0.13*** 0.14** 0.10** 0.20***

*p< 0.05; **p< 0.01; ***p< 0.001.

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performance was positive for employees with high creative self-efficacy (β = 0.20, p< 0.05), whereas the relation-ship was negative for those with low creative self-efficacy (β =�0.22, p< 0.05). This interaction pattern is consis-tent with Hypotheses 1 and 2.Hypothesis 3 proposes the moderating role of the perceived importance of extrinsic rewards; that is, the effects of

rewards on creative performance would be positive for employees who regard these rewards to be important. Theimportance of extrinsic rewards demonstrates both a significant main effect and a significant interaction with extrin-sic rewards (β = 0.21 and 0.23, respectively, both p< 0.01, see Model 4, Table 2). As shown in Figure 3, extrinsicrewards have a significant positive effect on the creative performance of employees who perceived the rewards asimportant (β= 0.22, p< 0.05). Interestingly, although not hypothesized, the results likewise revealed that extrinsicrewards were negatively related to the creative performance of employees who did not perceive them to be important(β=�0.27, p< 0.05). In sum, the overall interaction pattern supports Hypothesis 3.

Moderation of the extrinsic rewards–intrinsic motivation relationship

In Hypotheses 4 and 5, we posit that the effects of extrinsic rewards on intrinsic motivation to perform creativelywould be positive for employees with an internal locus of control and negative for employees with an external locus

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Figure 2. Moderation of the extrinsic rewards–creative performance relationship by creative self-efficacy (CSE)

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Figure 3. Moderation of the extrinsic rewards–creative performance relationship by the importance of reward

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of control. As reported in Model 2 (Table 3), locus of control significantly moderated the relationship betweenextrinsic rewards and intrinsic motivation (β= 0.16, p< 0.05). The findings indicated that the effects of extrinsicrewards significantly vary for individuals with an internal versus an external locus of control. Employees with aninternal locus of control experienced significantly higher positive effects of extrinsic rewards on their intrinsicmotivation to perform creatively compared with employees with an external locus of control. Figure 4 graphicallyillustrates this interaction. Simple slope analysis revealed that extrinsic rewards are positively and significantlyrelated to the intrinsic motivation of employees with an internal locus of control (β = 0.21, p< 0.05), whereas theeffects of extrinsic rewards on intrinsic motivation of employees with an external locus of control were negative,although statistically non-significant (β =�0.09, p> 0.05). Thus, Hypothesis 4 was supported by the data, whereasHypothesis 5 was not supported, as the pattern was in the hypothesized direction but not statistically significant.

Positive effects of intrinsic motivation on creative performance

To test Hypothesis 6 regarding the effects of intrinsic motivation for creativity on actual creative performance, weused regression analysis, outlined in Model 2 (Table 2). The results indicated that intrinsic motivation to performcreatively was a significant predictor of the creative performance of employees (β= 0.35, p< 0.001), thusconfirming Hypothesis 6.

Table 3. Moderated effects of extrinsic rewards on intrinsic motivation.

Independent variables

Outcome variable: intrinsic motivation

Model 1 Model 2

Education �0.08 �0.08Job experience �0.01 �0.02Industry 0.08 0.0Hierarchical Position �0.01 0.01Extrinsic rewards for creativity 0.10 0.06Locus of control (LOC) �0.08 �0.09Extrinsic rewards × LOC 0.16*R2 0.03 0.05

*p< 0.05; **p< 0.01; ***p< 0.001.

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External LOC

Figure 4. Moderation of the extrinsic rewards–intrinsic motivation relationship by locus of control (LOC)

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When Hypotheses 4, 5, and 6 are considered together, they effectively suggest the possibility that intrinsicmotivation mediates the interaction effect of extrinsic rewards and locus of control on creative performance. Toexplore this possibility, we employed the procedure outlined by Preacher, Rucker, and Hayes (2007) and testedthe significance of the indirect effect of the interaction term, consisting of locus of control and extrinsic rewards,on the creative performance of employees. The results indicated that extrinsic rewards have a significant positiveindirect effect on creative performance via intrinsic motivation for employees with an internal locus of control(conditional indirect effect = 0.05, z=2.11, p< 0.05). In contrast, the indirect effect was not significant for employeeswith an external locus of control. This pattern indicates that extrinsic rewards exert different levels of indirect effectson the creative performance of employees depending on their locus of control.

Post-hoc analyses

To check the robustness of our findings, we performed several post-hoc analyses. First, the scale used to measureextrinsic rewards included financial (i.e., bonuses and pay increases) and non-financial (i.e., recognition and praise)rewards. To check if these two types of extrinsic rewards have a similar relationship with intrinsic motivation andcreative performance, we repeated the moderation analysis for both types of rewards. The results suggested thatneither of these rewards has a significant main effect on intrinsic motivation or on creative performance. Rewardimportance and creative self-efficacy significantly moderated the relationship between financial rewards and creativeperformance (β = 0.20 and 0.17 for reward importance and creative self-efficacy, respectively, both p< 0.05), aswell as between non-financial rewards and creative performance (β = 0.22 and 0.21 for reward importance andcreative self-efficacy, respectively, both p< 0.05). Locus of control moderated the relationship between financialrewards and intrinsic motivation (β =0.17, p< 0.05); however, the moderation was not significant for the non-financialrewards–intrinsic motivation relationship (β=0.13, p > 0.05).Second, the results indicated that locus of control and creative self-efficacy directly affect creative performance. These

findings are consistent with those from previous studies (Gong et al., 2009; Jaswal & Jerath, 1991). We likewiseobserved a significant direct effect of the importance of extrinsic rewards on creative performance, which was counter-intuitive, considering the non-significant link between extrinsic rewards for creativity and creative performance. Thus,we performed an additional moderation analysis to gain a better understanding of this direct effect. We consequentlyobserved that the relationship between the importance of extrinsic rewards and creative performance is positive andsignificant only in the presence of extrinsic rewards (β =0.22, p< 0.05) (see Figure 5). When extrinsic rewards are

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Figure 5. Moderation of the importance of extrinsic rewards–creative performance relationship by the presence of extrinsicrewards

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absent, the relationship between reward importance and creative performance is not significant (β =�0.05, p > 0.05).This pattern indicates that the direct effect of reward importance is meaningful only with the co-presence of extrinsicrewards.

Discussion

The present study significantly advanced the debate regarding the rewards–creative performance relationship inthree aspects. First, it identified and empirically validated expectancy or reinforcement and self-determination astwo distinct pathways linking extrinsic rewards and employee creativity that can be affected by different moderatingcontingencies and mediating processes. Second, it highlighted the overlooked role of personal dispositions in thereward–performance relationship by showing that the effects of extrinsic rewards on the creative performance of em-ployees depend on their values and personal dispositions. Failure to consider these individual differences as boundaryconditions could explain the inconsistent findings that characterize the rewards–creativity relationship (Eisenberger &Shanock, 2003). Finally, the study suggested that extrinsic rewards can actually enhance the intrinsic motivation of em-ployees to perform creatively when they have an internal locus of control, thus being buffered from the potential threat ofthe controlling and constraining functions of rewards. We underscore the following theoretical and practical implica-tions of this study as well as its limitations that may inspire future research.

Theoretical implications

This study meaningfully extended the thoughts on the role of rewards in driving the creative performance ofemployees. It endorsed previous studies that identified the negative effects of extrinsic rewards on creative perfor-mance (Amabile, 1985; Sagiv et al., 2010). Our analysis confirmed that rewards can reduce creative performancewhen offered to employees with low creative self-efficacy and employees who perceive the rewards as unimportant.The present study likewise validated that rewards enhance creativity, as reported by several researchers (Burroughs,Dahl, Moreau, Chattopadhyay, & Gorn, 2011; Eisenberger & Aselage, 2009). Within the framework of two distinctpathways based on expectancy and self-determination, we explored the boundary conditions that engender either thepositive or negative effects of rewards on creative performance. Examining the boundary conditions instead of thedirect effects of rewards allowed us to offer new critical insights into the rewards–performance research (Byron &Khazanchi, 2012; Choi, 2004). In this respect, meta-analytic reviews indicated that the relationship between extrinsicrewards and creativity depends on the nature of rewards, feedback, and task-related contingencies (Byron &Khazanchi, 2012; Eisenberger, Pierce, et al., 1999). The present study expanded this literature and provided a morenuanced explanation by demonstrating the moderating role of individual differences for the reward–performancerelationship.The current analysis revealed the significance of creative self-efficacy in the perspective of the rewards–creative

performance relationship. The moderating function of this individual disposition makes intuitive sense. When individ-uals find a task to be intrinsically motivating, they will constantly attempt to perform the task for its own sake becauseperforming the task itself is enjoyable and satisfying. However, for employees performing the same task to obtainextrinsic rewards, the efficacy belief to successfully perform the task becomes important. If individuals believe that theylack the skills required to complete the task, they would not be motivated to perform because of the low probability ofachieving extrinsic rewards (Sternberg, 2006). Hence, creative self-efficacy has significant instrumental values inmaterializing the potential expectancy of extrinsic rewards toward the actual creative performance.In addition, extrinsic rewards tend to promote the creative performance of employees who regard these incentives as

important. Existing studies have reported that the impact of rewards on performance varies between significant positiveto non-significant, depending on the importance that employees associate with the rewards (Eisenberger, Pierce, et al.,1999). Unexpectedly, our analysis indicated that unimportant rewards may actually affect the performance negatively.

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Results suggested that employees who perceived extrinsic rewards for creativity to be unimportant exhibited lowerlevels of creative performance, and their creative performance further decreased with an increase in extrinsic rewards.Several explanations clarify this relationship. Conservation of resources theory (Hobfoll, 1989, p. 513) suggests that“people strive to retain, protect, and build resources.” Employees who view the rewards contingent on creative perfor-mance as unimportant may decide to protect their cognitive resources by shifting their attention toward other perfor-mance dimensions that result in outcomes they value, and may consequently ignore creative performance. Learnedindustriousness theory (Eisenberger, 1992) likewise maintains that when employees focus their resources on a particularperformance dimension (i.e., productivity and accuracy), other performance dimensions are neglected and fall belowtheir normal performance level. Hence, the unimportant rewards for creativity may encourage employees to concentrateon other performance dimensions at the expense of creativity. Although these are plausible explanations, futureresearchers can explore the underlying mechanism through which unimportant rewards diminish creative performance.Finally, the present study identified an intermediate mechanism through which extrinsic rewards exert positive

effects on creative performance. The analysis indicated that extrinsic rewards can enhance the intrinsic motivation ofemployees who have an internal locus of control. Moreover, the indirect effects of extrinsic rewards on the intrinsicmotivation of employees and on their creative performance (through intrinsic motivation) were significant foremployees with an internal locus of control but not for employees with an external locus of control. Self-determinationtheory suggests that some forms of extrinsic rewards can positively affect intrinsic motivation through the identificationand integration processes (Gagné & Deci, 2005). The current study moves a step further by identifying individualdispositions that increase the likelihood of employees to experience the positive effects of extrinsic rewards on theirintrinsic motivation and subsequently on their creative performance. The present study adds to the existing literatureby demonstrating that the positive effects of extrinsic rewards on creative performance occur not only through thereinforcement and expectancy pathway, but also through the self-determination pathway. Moreover, considering thatthe existing literature tends to portray the role of extrinsic rewards as detrimental to intrinsic motivation and creativity(Cooper & Jayatilaka, 2006), the current findings raise the need to reconsider the role of extrinsic rewards. Specifically,our analysis suggests that extrinsic and intrinsic motivations are not constantly related in zero-sum style and can bepooled in a synergistic manner to predict creative performance.Post-hoc analyses revealed that an internal locus of control is particularly important for materializing the positive

effects of financial rewards compared with non-financial rewards. One explanation for this finding might be the morecontrolling nature of financial rewards (i.e., bonuses and incentives) compared with non-financial rewards (i.e., recogni-tion and appreciation), and thus, their effects could substantially differ for employees with an internal versus an externallocus of control. The controlling aspect of non-financial rewards is relatively less salient, and hence, it may have similareffects on employees with both internal and external loci of control. Future research can further investigate the varyingeffects of financial and non-financial rewards on employees with different dispositions.

Practical implications

This study provided several important managerial implications. The creative performance of employees cannot beenhanced by simply offering them incentives for creativity. The present results indicated that extrinsic rewards onlypromote the creative performance of employees who value these rewards but actually hinder the creativity of employeeswho discount their value. Resonating the notion of valence in expectancy theory (Vroom, 1964), this pattern highlights thepractical significance of providing remunerations and incentives that are in line with employee needs and values to channeltheir efforts toward an intended direction (cf. cafeteria benefit plan; Dennis-Escoffier, 2008). Rewards that are regarded asunimportant by employees must be avoided at all costs. Such rewards may not only waste resources for the organizationbut can also suppress the behavior that the organization intends to promote. The current analysis indicates that the rewardsperceived to be unimportant can actually backfire; hence, managers must be cautious in selecting rewards for employees.The current study likewise indicated that the effects of extrinsic rewards on creative performance depend on employee

values and dispositions. The same extrinsic reward that enhances the creative performance of one employeemay impede

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that of others, depending on their personal dispositions. The study demonstrated that creative self-efficacy is importantin materializing the intended benefits of organizational interventions, such as incentives and praises for creativeperformance, whereas locus of control is important in materializing the positive effects of financial rewards. Thus,managers should consider not only reward contingency and performance feedback when offering rewards (Byron &Khazanchi, 2012), but also the employees to whom the rewards are targeted. Future research with a similar focus canhelp managers design and offer incentives or compensation packages and other managerial interventions that can fosteremployee creativity.

Study limitations and directions for further research

The results of this study should be considered with the following limitations. First, although supervisors evaluated thecreative performance of employees 2weeks after they reported the predictors and moderators, this duration of temporalseparation may be insufficient to ensure the causal influences between the two sets of variables. Second, although thepresent data collected from the employees of a number of different organizations in diverse industries enhance thegeneralizability of the findings, certain industry-specific or organization-specific patterns may have been overlooked.Future studies may explore potential industry and/or organizational contingencies that may modify the role of rewardsin enhancing employee creativity. Thus, further research efforts can be directed toward the exploration of additionalmoderators, particularly those related to the group or organizational context, in the rewards–performance link.Finally, this research was one of the first studies to identify individual dispositions as potential moderators of the

rewards–creative performance relationship. The study was conducted in a specific contextual and cultural setting ofPakistani organizations. The cultural dimensions of Pakistan, marked by high uncertainty avoidance, power distance,and collectivism, are different from those of the countries in Europe and North America where the majority of the previousrewards–performance research has been conducted. Thus, the present research requires validation through similar studiesconducted in different cultural settings before generalizability across different contexts and cultures can be claimed.Despite these limitations, this study meaningfully expanded the creativity literature. Although the rewards–creative

performance relationship has been substantially explored, efforts to identify the moderators of the relationship remainscarce and have mostly focused on the nature of extrinsic rewards and feedback or task-related contingencies (Byron& Khazanchi, 2012; Eisenberger et al., 1999; Yoon & Choi, 2010). The present findings indicated that the prevailingfocus on the direct effects of extrinsic rewards on creativity may fail to examine the intriguing underlying dynamics. Amore productive approach may be applied to examine the boundary conditions within which extrinsic rewards can affectcreative performance positively or negatively. We likewise identified one mechanism through which extrinsic rewardspositively affect intrinsic motivation and creative performance. The identification of other mechanisms through whichextrinsic rewards affect creative performance is another area that requires additional research. Moreover, this study indi-cated that rewards that are perceived as unimportant can negatively affect employee performance. Researchers may ex-plore the underlying mechanisms, such as resource preservation and the negative affective reactions resulting fromthe perceptions of control and unimportant rewards, which are responsible for the negative effects of these rewards.

Author biographies

Muhammad Abdur Rahman Malik is an assistant professor of organizational behavior at the Suleman DawoodSchool of Business, Lahore University of Management Sciences, Pakistan. He earned his Ph.D. in Management fromLahore University of Management Sciences, Pakistan. His research interests include employee creativity, rewards,and motivation.Arif Nazir Butt is a professor of organizational behavior and human resource management at the Suleman DawoodSchool of Business, Lahore University of Management Sciences, Pakistan. He earned his Ph.D. in Management

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from the McGill University, Canada. His research interests include negotiation and conflict management, and lead-ership and innovation.Jin Nam Choi is a professor of management at Seoul National University, South Korea. He earned his Ph.D. inOrganizational Psychology from the University of Michigan. His research interests include innovation implementa-tion, organizational creativity, and multilevel processes of human behavior in organizations.

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