Intrinsic Motivation and the Crowding-Out Conjecture

From the start behavioural agency theory was intended to be first and foremost a theory about the effectiveness and efficiency of executive compensation; it is not a complete theory of executive agency. It traces a link between the performance of an individual executive, which the theory postulates is a function of the executive’s ability, motivation and work opportunity, and corporate performance, which it contends is a function of the performance of the individual executive, the performance of other executives who are part of the same top-management team and the business environment. Ability, work opportunity and business environment are exogenous independent variables which are in effect taken as given; they are not explored further in this book, although executive ability is certainly a factor which economic psychologists might like to pursue. Some would call this “individual human capital”, the combination of personality, education and experience that makes for the most effective executive. The business environment, the micro and macro-economic circumstances in which a business is situated at any particular point in time, is primarily the domain of economists and strategy scholars. Work opportunity might be an area which network theorists would like to investigate, but may also in part be a random factor or a matter of luck.