Crowding‐out or crowding‐in? Direct voice, performance‐related pay, and organizational innovation in European firms

• Date: 01 March 2020
• Author: Edoardo Della Torre,Antonio Giangreco,Meysam Salimi
• Published date: 01 March 2020
• DOI: http://doi.org/10.1002/hrm.21987

ORIGINAL ARTICLE

Crowding-out or crowding-in? Direct voice, performance-

related pay, and organizational innovation in European firms

Edoardo Della Torre

1,2

| Meysam Salimi

3

| Antonio Giangreco

2,4

1

Department of Management, Economics and

Quantitative Methods, University of Bergamo,

Bergamo, Italy

2

Management Department, IESEG School of

Management, Lille, France

3

Department of Economics and Management,

University of Brescia, Brescia, Italy

4

LEM-CNRS (UMR 9221), Lille, France

Correspondence

Edoardo Della Torre, Department of

Management, Economics and Quantitative

Methods, University of Bergamo, via dei

Caniana, 2 24127 Bergamo, Italy.

Email: edoardo.dellatorre@unibg.it

[Correction added on 22 August 2019 after

first online publication: the second affiliation

for the third author, Antonio Giangreco, has

been added.]

Abstract

Building on motivation crowding theory (MCT), this article contributes to the human

resources management (HRM)-innovation debate by examining the potential trade-

offs between HRM practices targeted to increase employees' intrinsic motivation,

such as direct employee voice (EV), and the presence of extrinsic incentives in the

form of individual and collective performance-related pay (PRP). The results of the

analysis on more than 22,000 European establishments show support for the positive

relationship between EV and a firm's organizational innovation, and that this relation-

ship is weaker in companies that adopted individual PRP schemes (piece-rate plans).

Moreover, while we found that collective PRP (profit-sharing) does not moderate the

relationship between EV and organizational innovation, a positive and significant

moderation effect emerged when the combined presence of individual and collective

PRP was considered. By advocating that the coexistence of multiple forms of PRP

could overcome the crowding-out effect of individual PRP on EV, the study contrib-

utes to the HRM debate by also calling for a better understanding of the potential

contingencies between different HRM practices when innovation is focus of the

analysis.

KEYWORDS

collective performance-related pay, direct voice, individual performance-related pay,

motivation crowding theory, organizational innovation

1|INTRODUCTION

As a way to succeed in a world of increasingly global competition,

many companies have targeted initiatives focusing on firm innovation

by making more effective use of the potential contribution of

employees' knowledge, information, and experience (Chowhan, 2016;

Jiménez-Jiménez & Sanz-Valle,2011). In the strategic human resources

management (HRM) debate there has been,on the one side, a growing

attention to innovationas a strategic outcome (e.g., Bamber, Bartram,&

Stanton, 2017; Liu, Gong, Zhou, & Huang,2017; Shipton, Budhwar,

Sparrow, & Brown, 2017) and, on the other side, a return to a central

role for employee voice (EV) in the broader HRM system (e.g., Della

Torre, 2018; Holland, Cooper, & Sheehan, 2017; Kim, MacDuffie, &

Pil, 2010; Wilkinson & Fay, 2011). The adoption of EV mechanisms

represents a major focal point of a firm's innovation strategies as

employees possess information that help managers make insightful

decisions and resolve problems in responseto dynamic business condi-

tions (Morrison, 2011). Through voice channels employees can detect

problems and suggest innovativesolutions at the workplace that man-

agers may otherwise not necessarily identify and that, in turn, may

contribute to organizational innovation and performance. It has also

been argued that EV functions as a mediator between creativity and

innovation, as it allows new ideas to be articulated and eventually

implemented by management(Rank, Pace, & Frese, 2004).

Despite the theoretical and practical relevance, only a few studies

have analyzed the specific relationship between employees' opportu-

nities to express their voice and firm innovation (e.g., Chen & Huang,

2009; Walsworth & Verma, 2007), and even lower attention is paid to

DOI: 10.1002/hrm.21987

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