A Multi-Method Examination of the Effect of Budget Emphasis on the Relation between Extrinsic Valence and Managerial Performance : The Influence of Budgetary Slack and Task Programmability

Externally mediated outcomes are frequently used to encourage managers to enhance their performance. The literature argues that performance-contingent rewards, and especially financial ones, have a motivating effect on performance. One presumption is that differences in pay levels are differentially extrinsically valent. Whether extrinsically valent performance outcomes are met may depend on the extent to which there is slack in subordinates' budgets, the inherent degree of task programmability budgets represent, and the degree of budget emphasis in evaluation. A multi-method approach was used to evaluate this proposition based on a survey, conducted in Australia, and an experiment, undertaken in the U.S. Potential confounding effects were controlled for in the experiment and performance was objectively measured to add explanatory power. The results of the survey suggest that the influence of slack and task programmability on the relation between extrinsic valence and performance hold only in conditions of high budget emphasis. The experimental findings indicate that slack and extrinsic valence interact to affect performance when task programmability is low, but not when it is high. Moreover, the results show that extrinsic valence enhances performance in low task programmability settings when slack is low but not when it is high