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Motivation toward financial incentive goals on construction projects

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  • Rose, Timothy
  • Manley, Karen
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    Abstract

    Construction industry observers tout the use of financial incentives as promoters of motivation and commitment on projects. Yet, little empirical evidence exists concerning their effectiveness. What are the drivers of motivation on construction projects? The reasons that construction project participants are motivated to pursue voluntary incentive goals are examined through four Australian case studies. The results demonstrate the critical role played by project relationships and equitable contract conditions in promoting the effectiveness of financial incentives. In the context of a construction project, this study finds financial incentives to be less important to motivation and performance than relationship enhancement initiatives. This finding is unexpected and has implications for the design of project procurement strategies. These results suggest that if project clients ignore the importance of relationship quality between participants, the impact of any financial incentive will be compromised.

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    Bibliographic Info

    Article provided by Elsevier in its journal Journal of Business Research.

    Volume (Year): 64 (2011)
    Issue (Month): 7 (July)
    Pages: 765-773

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    Handle: RePEc:eee:jbrese:v:64:y:2011:i:7:p:765-773

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    Web page: http://www.elsevier.com/locate/jbusres

    Related research

    Keywords: Financial incentives Construction Contracts Motivation Projects;

    References

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    1. Andersen, Poul Houman & Cook, Nicole & Marceau, Jane, 2004. "Dynamic innovation strategies and stable networks in the construction industry: Implanting solar energy projects in the Sydney Olympic Village," Journal of Business Research, Elsevier, vol. 57(4), pages 351-360, April.
    2. Jensen, Michael C. & Meckling, William H., 1976. "Theory of the firm: Managerial behavior, agency costs and ownership structure," Journal of Financial Economics, Elsevier, vol. 3(4), pages 305-360, October.
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    5. Robert Gibbons, 1998. "Incentives in Organizations," Journal of Economic Perspectives, American Economic Association, vol. 12(4), pages 115-132, Fall.
    6. Marco Herpen & Mirjam Praag & Kees Cools, 2005. "The Effects of Performance Measurement and Compensation on Motivation: An Empirical Study," De Economist, Springer, vol. 153(3), pages 303-329, 09.
    7. Sliwka, Dirk, 2003. "On the Hidden Costs of Incentive Schemes," IZA Discussion Papers 844, Institute for the Study of Labor (IZA).
    8. Ranjay Gulati & Maxim Sytch, 2008. "Does familiarity breed trust? Revisiting the antecedents of trust," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 29(2-3), pages 165-190.
    9. AriƱo, Africa & de la Torre, Jose & Ring, Peter S., 2001. "Relational quality: Managing trust in corporate alliances," IESE Research Papers D/434, IESE Business School.
    10. Mike Bresnen & Nick Marshall, 2000. "Motivation, commitment and the use of incentives in partnerships and alliances," Construction Management and Economics, Taylor & Francis Journals, vol. 18(5), pages 587-598.
    11. Moers,F, 2000. "The Role of Performance Measure Characteristics in the Design of Incentive Systems: An Empirical Analysis," Research Memorandum 020, Maastricht University, Maastricht Research School of Economics of Technology and Organization (METEOR).
    12. Karen Manley, 2006. "The innovation competence of repeat public sector clients in the Australian construction industry," Construction Management and Economics, Taylor & Francis Journals, vol. 24(12), pages 1295-1304.
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