Does performance-related pay and public service motivation research treat state-owned enterprises like a neglected Cinderella? A systematic literature review and agenda for future research on performance effects

ABSTRACT

Studies of the performance effects of performance-related pay (PRP) and other-regarding motivations such as public service motivation (PSM) show that organizational goals and ownership structure play a crucial role, but these determinants are under-researched. In narrowing this gap, state-owned enterprises (SOEs) are relevant research objects. However, this systematic literature review categorizing different types of public sector organization reveals that only 9% of the 232 identified articles examine SOEs. On that basis, this article develops a research agenda for examining the performance effects of the combination of PRP and PSM/other-regarding motivations in SOEs as a foundation for future research in different disciplines.

KEYWORDS:

• Performance-related pay (PRP)
• public service motivation (PSM)
• other-regarding motivation
• state-owned enterprise (SOE)
• public sector organization (PSO)
• agencification

Supplemental data

Supplemental data for this article can be accessed at https://doi.org/10.1080/14719037.2020.1740300.

Acknowledgements

We are grateful to the insightful suggestions we received from Neil Boyd and two anonymous reviewers. We would also like to thank Lukas Schmid for his assistance during the literature review process.

Disclosure statement

No potential conflict of interest was reported by the author(s).

Notes

1 For a definition of ‘other-regarding motivations’ (Boyd et al. 2018; Nowell et al. 2016), see ‘Conceptual aspects: PRP and PSM/other-regarding motivations’.

2 Other terms include municipally owned enterprises, corporations, government-owned companies, public enterprises, local corporations, government-sponsored enterprises, mixed enterprises, and indirect or direct holdings of government. Table 1 sets out a categorization of PSO types.

3 Agencification refers to the process leading to the establishment of semi-autonomous agencies in many countries (Overman and Van Thiel 2016).

4 Van Thiel’s (2012) categorization proposes PSO type 4 as a residual category, which includes all regional/municipal PSOs (‘execution of tasks by regional or local bodies and/or governments’). Instead, the present study differentiates conceptually between two levels of analysis: ‘PSO type’ and ‘government level’. PSOs that Van Thiel’s categorization would have categorized as residual PSO type 4 are instead categorized as PSO types 0, 1, 2, 3, or 4 (where PSO type 4 equates to PSO type 5 in Van Thiel’s categorization), and government level is a separate classification.

5 As a further search criterion, the concept of PSM described by Perry and Wise (1990) had to be included as a single or major baseline.

6 For the PRP searches, the keywords were ‘performance*’ and ‘pay*’ or ‘compensation’, ‘remuneration’, and ‘financial incentive’* (including phrase and Boolean searches). As a further criterion, each included article had to address PRP directly. The keywords used for the PSM searches were ‘PSM’, ‘public service and motivation’, ‘public service and altruism’, ‘public service and ethics,’ and ‘public service and pro*social’ (including phrase and Boolean searches). All relevant studies in the context of PSM and other-regarding motivations in leading journals in (public) management and public administration should be included, especially as the search term ‘public service and motivation’ should with a very high probability cover all studies on motivation in public service provision contexts. Moreover, the inclusion of renowned reviews like Ritz, Brewer, and Neumann (2016) serves as an additional mechanism to ensure the quality and exhaustiveness of the presented search.

7 For an alphabetical list of the 18 journals included in the review, see Table S1 in the Supplementary Material.

8 The keywords used for this additional coding were ‘affective and organizational commitment’, ‘altruism’, ‘ethic’, ‘other-oriented’, ‘other-regarding’, ‘pro-social behaviour and motivation’, ‘value’, and ‘sense of community’ (including phrase and Boolean searches). All of these motivational constructs can be – in a very broad understanding – other-regarding in the sense of being ‘intended to do good for others and shape the wellbeing of society’ (Perry and Hondeghem 2008, 3). As a complementary search strategy, the titles and key variables of the sample of the 232 studies were reviewed qualitatively and confirmed the results. According to the methodological literature, this indicates the use of proper and exhaustive search terms (Cooper 2010).

9 The (perceived) ‘publicness’ of PSOs is a measurement scale that seeks to assess perceptions of PSOs as more or less ‘public’. This includes such issues as whether services are of general public value; whether services should be provided by an authoritative organization or a disinterested one; whether services should be free to citizens (because they are too expensive or because the general norm is that they should be); and whether services relate to social welfare (Houston 2011; Vandenabeele 2008).

10 Sorting effects are defined as the influence exerted by PRP/PSM ‘on the composition (e.g., in terms of ability, personality) of an organization’s workforce via attraction, selection, and attrition processes’ (Gerhart and Rynes 2003, 151).

Additional information

Notes on contributors

Ulf Papenfuß

Prof. Dr. Ulf Papenfuß is Professor of Public Management & Public Policy at the Zeppelin University, Friedrichshafen, Germany. His research focuses on public corporate governance and political control of public administrations and state-owned enterprises as well as outcome-orientated policy field control .

Florian Keppeler

Florian Keppeler is Research Fellow at the Chair of Public Management & Public Policy, Zeppelin University, Friedrichshafen, Germany. His research focuses on motivation and remuneration in public sector organizations.