Extrinsic versus intrinsic rewards in performance-based contracts: A provider’s perspective

Kostas Selviaridis, Wendy van der Valk

Research output: Chapter in Book/Report/Conference proceedingConference contributionScientificpeer-review


Performance-Based Contracting (PBC) literature has thus far focused on extrinsic rewards, rather than intrinsic ones, for performance improvement and service innovation outcomes. We draw on agency theory and psychology literature to study the provider’s view of both extrinsic and intrinsic rewards in three cases of logistics outsourcing. We find that both extrinsic rewards (i.e., financial bonuses and customer retention) and intrinsic rewards (e.g. autonomy and ownership) are present in PBC. We also find extrinsic rewards to either reinforce or diminish the effects of intrinsic rewards, depending on whether the contractual incentives are framed positively or negatively.
Original languageEnglish
Title of host publicationProceedings of the 22nd EurOMA Conference - Neuchatel 27 June - 1 July 2015: Operations Management for Sustainable Competitiveness
EditorsGerard Reiner
Number of pages10
Publication statusPublished - 26 Jun 2015


  • performance-based contracting
  • incentives
  • business services


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