Performance Management in the Public Sector: Does It Decrease or Increase Innovation and Performance?

Abstract

An important discussion in the performance management literature is how performance contingent incentives affect goal attainment. Incentivizing management tools are typically implemented to improve performance, but due to motivation crowding they may decrease innovation and performance. This article focuses on public research institutions and uses both existing performance studies of publications and two new innovation studies of patents to investigate effects of both financial incentives and sanctions within and between universities. Our findings indicate that public managers can create an environment supportive of innovation and performance through the use of performance management tools, but that this is no automatic link.

Keywords:

• performance management
• performance
• innovation
• incentives