- 11 Oct 2018
Intentions for Doing Good Matter for Doing Well: The Negative Effects of Prosocial Incentives
11 Oct 2018 -12:00 - 13:30
Abstract: Many firms consider prosocial initiatives to be an effective tool to motivate workers. However, despite some initial supportive evidence, little is known about when and how prosocial incentives work. We argue that the instrumental use of prosocial incentives to increase effort has a negative effect on workers’ image of the firm and, therefore, can backfire. We test our predictions in a field experiment where we varied whether a charitable donation made by the firm was conditional or unconditional on workers’ performance. Consistent with our theory we find that performance-based donations, which are, by construction, more instrumental than unconditional donations, lead to lower effort. As predicted, the negative effect is particularly strong for workers who do not care about charities and, thus, who do not face the countervailing effect of working harder in order to benefit the charity. Finally, we also find that the donations even backfire compared to a baseline with no incentives. These findings highlight some serious limitations of prosocial incentives: firms’ perceived motives and pool of employees will be crucial for their effectiveness.
Technical University of Munich
TUM School of Management