Applying self-determination theory to understand the motivational impact of cash rewards: New evidence from lab experiments.

We investigated, based on self-determination theory (SDT), the impact of the functional meaning of monetary rewards on individuals' motivation and performance and further tested the role of the psychological needs as the underlying mechanism. In two experimental studies, we show that when presented in an autonomy-supportive way, rewards lead participants to experience greater intrinsic motivation, which leads them to perform better, than when monetary rewards are presented in a controlling way. This is mediated by greater psychological need satisfaction, indicating that through greater feelings of competence, autonomy, and relatedness, individuals experience greater intrinsic motivation for the task at hand. Our findings suggest that rewards can have a distinct effect on individuals' motivation and performance depending on whether they take on an autonomy-supportive or controlling meaning, thus providing empirical evidence for the theoretical and practical implications of SDT's concept of functional meaning of rewards. By highlighting the importance of this concept, this research contributes to our understanding of the effectiveness of such rewards in the workplace, suggesting that they can foster employee motivation and performance if organisations present them to employees in an autonomy-supportive way to convey an informational meaning and positively contribute to their psychological need stisfaction.