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Incentives, Job Satisfaction and Performance: Empirical Evidence in Italian Social Enterprises

Euricse Working Papers No. 012|10

Sara Depedri, Ermanno Tortia, Maurizio Carpita, 2010

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Summary :

he paper offers a contribution to the understanding of the relations between incentives, satisfaction and performance of employees in social enterprises. It starts by criticizing the general hypotheses of the principal-agent theory and especially that employee satisfaction is determined exclusively by the level of salary received. These criticisms are explained both by looking to the organizational definition of job satisfaction by Locke and by taking a behavioural economics perspective. Job satisfaction is thus assumed to derive from a composed mix of incentives received on the job, equity perceived and employee motivations. It is no longer possible to assume that the wage is the sole (not even the most important) variable influencing worker performance. This claim is especially valid in social enterprises, where worker performance is difficult to monitor and evaluate, while high intrinsic motivations can better explain job satisfaction.

The empirical analysis helps to shed light on the determinants of job satisfaction and individual performance. Data was collected on 4,134 employees working in 320 Italian social cooperatives. The paper introduces the methodologies of categorical principal components analysis, factor analysis, and Rasch models to group the items of intrinsic and extrinsic satisfaction, motivations and fairness. The data was then analysed by means of linear regression where the dependent variables are not only the stated degree of job satisfaction, but also satisfaction with extrinsic and intrinsic aspects of the job. The models come to demonstrate the particular relevance of employee motivations and fairness perceived in explaining job satisfaction and its sub-dimensions. Furthermore, organizational perceptions and the work environment are found to be significant as are individual perceptions and motivations.

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