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Organizational Control Systems and Pay-for-Performance in the Public Service

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  • Bruno S. Frey
  • Fabian Homberg
  • Margit Osterloh

Abstract

Under certain conditions, output related performance measurement and pay-for-performance produce negative outcomes. We argue that in public service, these negative effects are stronger than in the private sector. We combine Behavioural Economics and Management Control Theory to determine under which conditions this is the case. We suggest as alternatives to the dominant output related pay-for-performance systems selection and socialization, exploratory use of output performance measures, and awards.

Suggested Citation

  • Bruno S. Frey & Fabian Homberg & Margit Osterloh, 2013. "Organizational Control Systems and Pay-for-Performance in the Public Service," CREMA Working Paper Series 2013-11, Center for Research in Economics, Management and the Arts (CREMA).
    • Handle: RePEc:cra:wpaper:2013-11
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    References listed on IDEAS

    as
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    Full references (including those not matched with items on IDEAS)

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    1. Organizational Control Systems and Pay-for-Performance in the Public Service
      by Alessandro Cerboni in Knowledge Team on 2013-09-16 23:07:05

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    Cited by:

    1. Edward Gu & Tianguang Meng & Hongying Wang & Alexander Zhang, 2023. "E-Government Use, Perceived Transparency, Public Knowledge of Government Performance, and Satisfaction with Government: An Analysis of Mediating, Moderating, and Framing Mechanisms Based on the COVID-," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 169(1), pages 79-124, September.
    2. Anna Rakowska & Jorge Valdes-Conca & Susana de Juana-Espinosa, 2014. "Affecting Factors of Public Employees’ Organizational Commitment," International Journal of Synergy and Research, ToKnowPress, vol. 3(1), pages 5-26.
    3. Linda Ponta & Francesco Delfino & Gian Carlo Cainarca, 2020. "The Role of Monetary Incentives: Bonus and/or Stimulus," Administrative Sciences, MDPI, vol. 10(1), pages 1-18, February.
    4. Cordella, Antonio & Cordella, Tito, 2017. "Motivations, monitoring technologies, and pay for performance," Journal of Economic Behavior & Organization, Elsevier, vol. 133(C), pages 236-255.
    5. Yahagi, Ken, 2021. "Law enforcement with motivated agents," International Review of Law and Economics, Elsevier, vol. 66(C).
    6. Piotr Urbanek, 2019. "Teorie ładu akademickiego," Gospodarka Narodowa. The Polish Journal of Economics, Warsaw School of Economics, issue 4, pages 5-30.
    7. Gabriele Faßauer, 2018. "Linking deviation with innovation: behavioral effects of management control through the lens of a theory of deviance," Journal of Management Control: Zeitschrift für Planung und Unternehmenssteuerung, Springer, vol. 29(3), pages 275-293, December.
    8. Jake B. Telkamp & Marc H. Anderson, 2022. "The Implications of Diverse Human Moral Foundations for Assessing the Ethicality of Artificial Intelligence," Journal of Business Ethics, Springer, vol. 178(4), pages 961-976, July.
    9. Ola Andersson & Marieke Huysentruyt & Topi Miettinen & Ute Stephan, 2017. "Person–Organization Fit and Incentives: A Causal Test," Management Science, INFORMS, vol. 63(1), pages 73-96, January.
    10. Lina Maria Ellegård, 2020. "Effects of pay-for-performance on prescription of hypertension drugs among public and private primary care providers in Sweden," International Journal of Health Economics and Management, Springer, vol. 20(3), pages 215-228, September.
    11. Johansson Vicki, 2015. "When will we ever learn ?," NISPAcee Journal of Public Administration and Policy, Sciendo, vol. 8(2), pages 149-170, December.
    12. Yang, Feifei & Shinkle, George A. & Goudsmit, Mirjam, 2022. "The efficacy of organizational control interactions: External environmental uncertainty as a critical contingency," Journal of Business Research, Elsevier, vol. 139(C), pages 855-868.
    13. Alejandro Agafonow & Marybel Perez, 2024. "When an A Is NOT an A in Academic Research, or How A-Journal List Metrics Inhibit Exploratory Behaviour in Academia," Journal of Interdisciplinary Economics, , vol. 36(1), pages 105-121, January.
    14. Roshni Das, 2023. "Does public service motivation predict performance in public sector organizations? A longitudinal science mapping study," Management Review Quarterly, Springer, vol. 73(3), pages 1237-1271, September.
    15. Tobias Johansson, 2022. "Do Evaluative Pressures and Group Identification Cultivate Competitive Orientations and Cynical Attitudes Among Academics?," Journal of Business Ethics, Springer, vol. 176(4), pages 761-780, April.
    16. Shandana Shoaib & Yehuda Baruch, 2019. "Deviant Behavior in a Moderated-Mediation Framework of Incentives, Organizational Justice Perception, and Reward Expectancy," Journal of Business Ethics, Springer, vol. 157(3), pages 617-633, July.
    17. Federico Ceschel & Alessandro Hinna & Fabian Homberg, 2022. "Public Sector Strategies in Curbing Corruption: A Review of the Literature," Public Organization Review, Springer, vol. 22(3), pages 571-591, September.
    18. Bruno Frey, 2017. "Policy consequences of pay-for-performance and crowding-out," Journal of Behavioral Economics for Policy, Society for the Advancement of Behavioral Economics (SABE), vol. 1(1), pages 55-59, February.
    19. Christian Jung-Gehling & Erik Strauss, 2018. "A Contemporary Concept of Organizational Control: Its Dependence on Shared Values and Impact on Motivation," Schmalenbach Business Review, Springer;Schmalenbach-Gesellschaft, vol. 70(4), pages 341-374, November.
    20. Felício, Teresa & Samagaio, António & Rodrigues, Ricardo, 2021. "Adoption of management control systems and performance in public sector organizations," Journal of Business Research, Elsevier, vol. 124(C), pages 593-602.
    21. Sidra Rehman & Hafiz Muhammad Shahrukh & Ayesha Mansha Virk & Mattiullah Butt, 2019. "Pay for Performance (Pfp) Increasing Creativity Through Intrinsic Motivation," International Journal of Research in Business and Social Science (2147-4478), Center for the Strategic Studies in Business and Finance, vol. 8(2), pages 74-90, April.
    22. Gian Carlo Cainarca & Francesco Delfino & Linda Ponta, 2019. "The Effect of Monetary Incentives on Individual and Organizational Performance in an Italian Public Institution," Administrative Sciences, MDPI, vol. 9(3), pages 1-19, September.
    23. Osuagwu, Eze Simpson, 2021. "Empirical Analysis of Reward for Creativity, Innovation and Length of Service of Federal Employees," MPRA Paper 112949, University Library of Munich, Germany.
    24. Emil Inauen & Margit Osterloh & Bruno Frey & Fabian Homberg, 2015. "How a multiple orientation of control reduces governance failures: a focus on monastic auditing," Journal of Management & Governance, Springer;Accademia Italiana di Economia Aziendale (AIDEA), vol. 19(4), pages 763-796, November.
    25. Maria Alessandra Antonelli, 2014. "Organizational Governance: Managerial Discretion, Automatic Rules or Ethics?," Public Finance Research Papers 5, Istituto di Economia e Finanza, DSGE, Sapienza University of Rome.

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    Keywords

    organization control; organizational forms; public administration; organizations; public service motivation;
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