Assumptions about Human Motivation have Consequences for Practice

Management practice is informed by fundamental assumptions about human motivation. We review two contrasting perspectives: agency theory – which assumes that humans are self‐interested rational beings whose actions should be constrained to achieve organizational goals (which are opposing) – and self‐determination theory – which assumes that individuals will thrive when they have autonomy to pursue activities and can internalize external goals when their needs are satisfied. We highlight how the assumptions of agency theory continue to dominate the design and implementation of management practices and management education, despite decades of evidence that individuals are not solely driven by economic rationality. We suggest that attempts to refine these assumptions have so far fallen short of adequately representing human motivation and highlight an important aspect of self‐determination theory which is often neglected from these debates: how people come to internalize goals. Placing motivation internalization as more central to management thinking yields practices that more effectively align the interests of employees and organizations.