The effects of pay for performance on creative performance

Although companies implementing pay-for-performance system are increasing, the empirical study of effectiveness is scarce. Focusing on creativity which is closely related to organizational productivity, the current study explored the effects of pay-for-performance on creativity. Based on threat-rigidity theory(Staw et al., 1981), this study hypothesized that pay-for-performance would lead to heightened anxiety and attentional narrowing. Also, this study tried to examine the mediating effects of anxiety and attentional breadth on the relationship between pay-for-performance and creativity. Results are as following. First, the creative performance of the pay-for-performance group was lower than that of control group. Second, the level of anxiety in the pay-for-performance group was higher than the control group but there wasn't significantly difference between two groups in attentional breadth. Third, although anxiety was correlated negatively with creative performance, the correlation between attentional breadth and creative performance was not significant. Forth, anxiety fully mediated the relationship between the pay-for-performance and creative performance; yet attentional breadth had no mediation effects. Lastly, the implication and limitations of the current study and suggestions for future research were discussed.