Reforming the Public Sector: How to Achieve Better Transparency, Service, and Leadership

5. Public Service Motivation: The State of the Art

The concept of public service motivation, or PSM, can be traced back to 1982, when Hal G. Rainey studied middle managers at four public agencies and four private organizations to understand whether they reported any differences in their reward preferences. Results found that “public managers are higher, to a statistically significant degree, on the items concerning public service and work that is helpful to others.”1 Even though he did not use the term PSM, with this statement the author advanced the idea that public and private employees have a different motivational basis. The former are particularly attracted by motives regarding third parties. This does not mean that public sector workers are not self-interested whereas workers in the private sector are. It underlines that desire to help others and work for the common good are stronger motivators in the public rather than the private sector.2 In the United States, James Perry and Lois Wise identified the need for dedicated research into PSM for the first time in 1990, given the failure of the ten-year experience of performance-related pay in the American public sector , the long-standing claims of scholars of the existence of a service ethic, and the scant systematic research available. PSM offset the theory of rational choice, which assumes that individuals take decisions to maximize their own utility. PSM, to the contrary, relates to the desire to help others improve their status.3 The authors based their main arguments on an article by Daniel Katz, “The Motivational Basis of Organizational Behavior,”published in 1964. Katz, an expert on psychology, introduced the notion that employee motivation makes the difference in organizations because it affects three fundamental components of organizational behavior: membership, reliable role behavior, and performance.4 96 5 Public Service Motivation: The State of the Art nicola bellé and paola cantarelli Many studies have been published since 1982 regarding the definition, measurement, and implications of PSM. However, the construct still has to be fine-tuned and the acquired knowledge needs to be integrated better to enable organizations to implement it and take full advantage of it. In fact, there is still a gap between what is known and what it would be useful to know. Consequently , in this chapter we present a thorough review of existing literature and identify five main streams within it: 1. Defining the concept of PSM 2. Measuring PSM 3. Generalizing the PSM construct 4. Relating PSM to other variables 5. Translating the theory of PSM into practice The lack of a generally accepted theoretical framework for the PSM construct is clear evidence that additional research is needed. This observation holds true despite the fact that several authors have tried to expand the concept of PSM by drawing on contributions from other disciplines (such as psychological economics, psychology, and political science). Bruno S. Frey and Felix Oberholzer-Gee were the initiators of the crowding theory after verifying that it is consistent with rational choice principles and so can be integrated into economics. They found that where public spirit prevails, the introduction of monetary incentives for the localization of a facility considered socially desirable but locally unwelcome squeezes out civic duty. Therefore, greater incentives have to be provided to the local population than one would tend to expect when applying standard economic rules. In general,“the use of price incentives needs to be reconsidered in all areas where intrinsic motivation can empirically be shown to be important.”5 Perry looked at literature on prosocial behavior and institutional theory in order to consider a new paradigm of motivation whereby the boundaries between organizations and society are less defined and the assumptions regarding what motivates people are more heterogeneous. Drawing on this, he called for a theory on motivation that includes society and expresses the differences in motivation between public and private employees. He concluded by suggesting that sociohistorical context, motivational context, individual characteristics, and behavior should all be part of the PSM theory.6 Frey and Reto Jegen reviewed all circumstantial evidence studies, laboratory evidence by psychologists and economists, and field evidence achieved by means of econometric studies that showed crowding-in and crowding-out effects. In this way, they corroborated the idea that economic rewards increase extrinsic motivation and decrease intrinsic motivation. Therefore, the effectiveness of the implementation of monetary incentives depends on the relative Public Service Motivation: The State of the Art 97 strengths of the two opposite...