Investigation into intrinsic motivation and reputational concerns in the public sector

Abstract

The objective of this thesis is to provide both empirical evidence and theoretical explanations that will show the positive and negative effects of intrinsic motivation and reputational concerns in the public sector. The thesis argues that by having intrinsically motivated individuals in the public sector (i.e. individuals that are public service motivated), the government can provide higher quality public goods and services at a lower cost. The thesis finds empirical evidence for the existence of public service motivation and also finds that high extrinsic rewards in the public sector deter individuals with high levels of public service motivation from joining the public sector. There is also empirical evidence showing that individuals remain public service motivated in the long term. This thesis also investigates whether the reputational concerns of a principal (government) can lead to under provision of quality improving effort by contracted firms in procurement contracts. The thesis finds that reputational concerns cause the decision maker to intervene in procurement projects more frequently than is optimal. This then results in the contracted private firm exerting less effort to produce quality improving firm specific investments. Since public service motivation can improve the delivery of public goods and services, these findings lead us to conclude that governments must find ways to recruit a larger proportion of public service motivated individuals into the public sector. These findings also highlight the importance of reputational concerns in the decision making process of governments. They show us that reputational concerns can have very negative effects on procurement contracts.