The Impact of Management Control on Employee Motivation and Performance in the Public Sector

Abstract

This study examines the relations among various types of management control (MC), intrinsic and extrinsic motivation, and performance in the public sector. In this study, we draw on motivation crowding theory as well as self-determination theory to argue that four different types of MC (i.e., personnel, cultural, action, and results control) are likely to have an influence on intrinsic motivation and/or extrinsic motivation. Using survey data from 105 similar departments in the public sector, we test a structural equation model that relates the four MC types to intrinsic and extrinsic motivation, which in turn are linked with performance. We find that the use of personnel and cultural MC elements is positively associated with employees' intrinsic motivation, and that the use of results controls is positively associated with employees' extrinsic motivation. Moreover, both intrinsic motivation and extrinsic motivation are positively associated with performance. Taken together, these findings support the idea advocated by New Public Management proponents that results control can enhance employee motivation and performance in the public sector. However, the findings also highlight an important nuance; in addition to results control, cultural and personnel controls are also important, as they enhance intrinsic motivation and performance. This implies that a sole focus on results control is too narrow and leads to suboptimal levels of employee motivation and performance in the public sector.