Financial rewards are often thought to be powerful motivators, however, this is not necessarily the case when it comes to stimulating intrinsic task motivation, and ultimately creative performance, within NPD teams. According to the article “Extrinsic Rewards, Intrinsic Motivation, and New Product Development Performance,” published in the latest issue of the JPIM, both formal recognition and social rewards have a positive effect on the creativity of a team, in addition to being less “resource-intensive” actions. This is not the case for financial rewards, which appear to involve high managerial control, in essence taking away each team member’s sense of autonomy, and seem to place too much emphasis on the outcome rather than the task at hand.
Though, an important caveat discussed is project complexity. When it comes to simple projects, the authors argue that social rewards fare best in elevating intrinsic motivation. Yet, complexity changes perception. The concerns of lacking control associated with financial rewards are not as prevalent with more complex projects, making this type of extrinsic reward useful within this context. Recognition rewards are noted to be beneficial, regardless of the level of complexity.
Given that product quality and degree of innovation, two indicators of the creative performance of NPD teams, are positively related to intrinsic motivation, it’s essential that managers carefully select suitable extrinsic rewards and provide NPD teams the right level of guidance and involvement.
Graduate Research Assistant