Abstract

ABSTRACT Changes in public sector management systems have resulted in public sector organizations adopting business models similar to private corporations. Using two experiments that vary in the service quality provided to public sector constituents, this study examines how different incentive schemes impact public sector employees’ decision-making. We find that performance-based incentive schemes in the public sector increase employees’ self-interest and lead them to focus more on maximizing their personal wealth (which is aligned with organizational economic efficiency) at the expense of service quality to public sector constituents (i.e., public interest). However, we also find that employees’ decisions are more focused on service quality and less on wealth maximization when their decisions may negatively impact public sector constituents. Overall, we find that employees who receive fixed compensation are more likely to consider how their decisions impact public service quality and are less likely to focus on personal wealth maximization. JEL Classifications: H11; L33; M21; M41.

Talk to us

Join us for a 30 min session where you can share your feedback and ask us any queries you have

Schedule a call

Disclaimer: All third-party content on this website/platform is and will remain the property of their respective owners and is provided on "as is" basis without any warranties, express or implied. Use of third-party content does not indicate any affiliation, sponsorship with or endorsement by them. Any references to third-party content is to identify the corresponding services and shall be considered fair use under The CopyrightLaw.