For organizations to perform better, it is imperative to get the most out of employees. To this end, the individual-level assessment of work motivation is essential. Work motivation has been the oldest and most researched topic in organizational psychology (see Maslow, 1943; Atkinson, 1958; Herzberg et al., 1959; Vroom, 1964; Locke, 1966; Deci, 1975; Fishbein and Ajzen, 1975; Hackman and Oldham, 1975; Bandura, 1977; Carver and Scheier, 1981; McClelland, 1985; Chen and Kanfer, 2006; Gagné et al., 2018). It touches the skills, jobs, and resource allocation strategies of individuals to influence activities in their organization (Kanfer et al., 2017). Motivation serves as a primary means to make employees work hard and become successful (Kanfer et al., 2017; Omollo and Oloko, 2015). It is a technique to elicit enthusiasm inside the employees so that they broaden their skills to meet the organizational demands. Hence, the presence of motivated employees amplifies the long-lasting success of organizations (Fallatah and Syed, 2017).

Because motivation is individualized, its agenda is customized to fit the needs and wants of the employees. Motivation has diverse manifestations, for instance, enhancing performance and demonstrating how good an organization cares. Perhaps the most vital impact of an employee’s motivation is an increased productivity or performance (Steer, 1994; Grant, 2008; Sekhar et al., 2013; Cerasoli et al., 2014; Aderibigbe, 2017). Therefore, the central aim of adopting an employee motivational programs has been to increase employee motivation and productivity (Kanfer et al., 2017).

Employees make up the workforce of any organization; as such, they are an integral part of an organization. An organization composed of a group of people working collaboratively to achieve a common purpose (Christiana, 2018) highly depends on its employees to survive. Employee motivation stimulates workplace synchronization and better employee performance. It is the key to long-term benefits for the company, a means of staff retention, and a loyalty to a company (Němečková, 2017).

Several theories explain work motivation. For instance, a cognitive evaluation theory states that an intrinsic motivation leads people to satisfaction, whereas the introduction of an extrinsic incentive for people who need intrinsic motivation can have a negative effect (Cook and Artino, 2016). Intrinsic motivation arises from an employee’s internal desire to execute a task out of self-interest rather than a need or wish for some external reward. Put in another way, intrinsic motivation considers the activity itself as a reward (Sullivan, 2019). Extrinsic motivation is the type of motivation that arises when an employee is forced either to act in a specific way because of that employee’s desire for external rewards or to avoid punishment. Extrinsic motivation also helps boost an employee’s effectiveness and efficiency levels. This is because certain external factors such as adequate compensation, work environment as well as training, and career development appeal to employees, and as such are essential in inspiring them to resourcefully discharge their duties (George and Jones, 2012; McShane and Von Glinow, 2018).

While many cognitive evaluation theories hypothesize extrinsic incentives undermine intrinsic motivation (Deci, 1975), the research results are mixed. According to Kanfer et al. (2017), a review of the last century studies on work motivation showed two categories of results: the ones supporting the undermining effect of an extrinsic incentive on intrinsic motivation, and the others that did not show the undermining effects.

Studies conducted in Ethiopia (like Mekonin, 2018; Assefa, 2018; Teshome, 2018; Zemene, 2013) focused on the effect of motivation on employees’ performance. The commonality in those studies is their reliance on descriptive analysis without theoretical underpinning. Besides, those studies tried to see the direct and combined effect of motivation on organizational performance relying on descriptive statistics without splitting extrinsic and intrinsic motivation. However, this direct effect does not inform managers and other stakeholders about the reality on the ground. Additionally, studies of this nature (previous studies) did not clarify the question of whether or not there exists the undermining effect of an extrinsic motivation on intrinsic motivation in explaining organizational performance. One possible source of inability to address those questions is the usage of frequencies and percentages (despite the causal nature of the study titles). As such, studies with routine methodology and lack of theoretical underpinning reduce the quality of papers and it affects the contribution of academia in Ethiopia. By using binary logistic analysis, and basing its theoretical foundation in cognitive evaluation theory, this study, thus extends its analysis to cause–effect explanations. That is, to fill the above-mentioned gaps, this study aimed to assess the effect of extrinsic motivation on intrinsic motivation and organizational performance, from a cognitive evaluation theory perspective at the Oromia Seed Enterprise, Bale branch. This study also opens an avenue for future researchers to extend the methodology as well as include additional moderating variables on the current topic. To the literature, the study finding adds empirical value from an Ethiopian perspective.

Research methodology

The study employed an explanatory research design with a quantitative approach to address the cause–effect relationship among extrinsic motivation, intrinsic motivation and employees’ performance. This is important because explanatory research designs have a power to explain cause–effect relationships. Moreover, the data generated from the data collection instrument are quantitative and as such approaching this study quantitatively is worth taking. To collect the data, a Likert scale close-ended questionnaire was used. Informed consents were obtained from the study participants prior to the distribution of the questionnaire.

The target population of this study consisted of employees and the management body of Bale branch Oromia Seed Enterprise. All participants (i.e., employees and management team) were included in the study (using a census/availability sampling technique). Therefore, the populations of the study were 12 supervisors, 77 professional experts, and 30 supporting staff totalling 119 respondents. The study used descriptive data analysis techniques (frequency, percentage and mean), correlation analysis, and binary logistic regression analysis.

Model specification for binary logistic regression

According to Gujarati (2004), the Logit model for the effect of employees’ motivation on organizational performance is as follows:

$$P\left( {Y_i = 1} \right) = \frac{1}{{1 + {\mathrm{e}}^{ - \left( {{\beta }}_{\mathrm{i}}{\mathrm{X}}_{\mathrm{i}} \right)}}}$$
$$P\left( {Y_i = 1} \right) = \frac{1}{{1 + {\mathrm{e}}^{ - {Z}_{i}}}}$$

where P (Yi = 1) is the probability that the organization has a good performance, Zi is the function of a vector of explanatory variables, e- represents the base of natural logarithms and Eq. (2) is the cumulative employees’ motivation function. If P (Yi = 1) is the probability of the organization exhibiting a good performance, then 1−P (Yi = 0) represents the probability that the organization exhibits a poor performance is expressed as

$$1 - P\left( {Y_i = 1} \right) = 1 - \frac{1}{{1 + {\mathrm{e}}^{ - {\mathrm{Z}}_{\mathrm{i}}}}} = \frac{1}{{1 + {\mathrm{e}}^{{\mathrm{Z}}_{\mathrm{i}}}}}$$
$$\frac{{P\left( {Y_i{\mathrm{ = 1}}} \right)}}{{{1 - P}\left( {Y_i{\mathrm{ = 1}}} \right)}} \, = \, \frac{{{\mathrm{1 + }}{\mathrm {e}}^{Z_i}}}{{{\mathrm{1 + }}{\mathrm {e}}^{ - Z_i}}} \, = \, {\mathrm {e}}^{Z_i}$$

Equation (4) is the odds ratio, the ratio of the probability that the organization exhibits a good performance to the probability that the organization exhibits a poor performance. Taking the natural log of Eq. (4), we obtain

$${L}_{i} = {\mathrm{ln}}\left( {\frac{{P\left( {Y_i = 1} \right)}}{{1 - P\left( {Y = 1_i} \right)}}} \right) = {Z}_{i}$$

where Li is the log of the odds ratio introducing the stochastic error term (Ui), the Logit model is written as

$${Z}_{i} = {\beta}_0 + {\beta}_1{X}_1 + {\beta}_2{X}_2 + {U}_{i}$$

where Xi’s are explanatory variables (intrinsic and extrinsic motivation) that affect the organizational performance, and β0 is the constant term and βi’s are coefficients to be estimated.

Results and discussion

Background of the respondents

Of the 119 respondents, 106 (89% response rate) of them completed and returned the questionnaires. The respondents’ demographic information: sex, age, educational background, service year and workplace are described in Table 1. As such, 59.4% of the respondents were males and 40.6% of the respondents were females. Though the number of females in the Enterprise has envisaged a remarkable growth through time, their male counterparts still dominate the field.

Table 1 Respondents age category by sex.

More specifically, as depicted on Table 1, the dominant number of male supervisors (80%) in the enterprise implies the presence of the traditional barriers that prohibit females from taking part in the supervision roles. These barriers may, however, be attributed to either female employees’ perception of their capacity, or how others view them. At the professional experts’ side, there is nearly an equivalent ratio of male and female employees. Overall, there is a dominance of male employees (78%) over females in the enterprise.

Supervisors in the enterprise were composed of 40% employees aged from 18 to 36, 40% aged from 37 to 45, and 20% aged 45 and above. The implication here is that young employees occupy supervisory positions in the enterprise, making an enabling environment for exuberant and passionate management. Professional experts were mainly composed of 41% aged from 26 to 36, and 24.6% aged from 37 to 45. The remaining 19.1% and 15% aged >45, and between 18 and 25, respectively. Supportive staff were composed of 71.3% who aged from 18 to 36, 17.8% aged from 37 to 45, and 10.7% aged 45 and above.

Educational background

Employees in the enterprise ought to have a minimum of a master’s degree as per the guideline of the Ministry of Agriculture. However, the survey results in Fig. 1 revealed an insignificant percentage (8.49%) of master’s degree holders that denotes weak implementation capacity and low-capacity building in the enterprise. The highest percentage goes to first-degree holders (33.96%) followed by Diploma holders (32.08%), TVET certificate holders (15.09%) and below TVET certificates (10.38%), respectively.

Fig. 1: Educational background of the respondents.
figure 1

Frequency and percentage of respondents’ educational background.

Respondents’ years of service

Figure 2 shows a greater portion (32%) of respondents falling in the service year range: 8–15 years. This is followed by 29% of them who fall in the range of 4–7 years, 24% of them more than 15 years, and 15% of the respondents’ service year range between 1 and 3 years, respectively. This indicates that employees in the enterprise do stay at the post for a very long period which is important for the achievements of the mission and vision of the organization.

Fig. 2: Service years in the current organization.
figure 2

Percentage of respondents’ service years in the current organization.

Extrinsic and intrinsic motivations

Work motivation largely depends on the craving to boost the effectiveness and efficiency in production. While researchers, for instance, Taylor (1911) relied on extrinsic rewards to motivate higher performance, other behavioural theorists focused on intrinsic rewards to boost performance (Kanfer et al., 2017). In Oromia Seed Enterprise, the researchers distributed a 13-item questionnaire to measure the status of extrinsic motivation on a three-point scale. Based on the recommendation of Rushton et al. (1983) and Strube (2000), the study found a summated mean score of 2.36 (see Table 2) for extrinsic motivation. This score indicates the agreement of respondents on the presence of extrinsic motivation in Oromia Seed Enterprise. The other foil of motivation, intrinsic motivation, was measured using a 9-item questionnaire with three-point scale and returned a summated mean score of 2.34 (see Table 3). This score indicates the presence of intrinsic motivation in Oromia Seed Enterprise.

Table 2 Respondents view of extrinsic motivation.
Table 3 Respondents view of intrinsic motivation.

Organizational performance

An 8-item questionnaire was used to assess the current organizational performance. The responses collected from the five-point Likert scale were reduced to two categories. The most frequently responded ingredients of the organizational performance were customer satisfaction and profitability with a mean score of 3.71 and 3.91, respectively. Nonetheless, the least preferred response from the organizational performance ingredient was employee loyalty with a mean score of 3.49. Overall, the grand mean score of 3.62 indicates the agreement of respondents over the presence of good performance. At this point, one cannot predict organizational performance from employee motivation. However, a clear explanation of the relational and causal effect is presented in the topics hereunder.

Correlation analysis

Table 4 shows a positive relationship between organizational performance and employee motivation (both intrinsic and extrinsic). From this analysis, it is noted that extrinsic motivation is positively and moderately correlated (r = 0.399, p < 0.01) with organizational performance. Added to this, intrinsic motivation is positively and moderately correlated (r = 0.418, p < 0.01) with organizational performance.

Table 4 Correlation matrix.

Econometric results

Before conducting the binary logistic regression analysis, assumptions like multicollinearity, binary outcome variable, residuals and outliers were checked against the standards. Hence, the correlation matrix did not show a high correlation among the explanatory variables. Similarly, the outcome variable yielded binary responses that were recoded as poor (0) and good (1) organizational performance. Cook’s distance and DF Beta were less than unity meeting the criteria. Finally, yet importantly, outliers were not seen in the data at hand. The variables were also found to be reliable, scoring >0.7 as recommended by Muijs (2004). Table 5 describes Cronbach’s alpha value of the variables.

Table 5 Reliability test of variables.

Speaking of the model fitness, 72.6% of the cases were correctly classified with the Hosmer and Lemeshow test being 0.983, which is not statistically significant and therefore the model has a good fit. Besides, 36.5% of the variation in the organizational performance was as the result of intrinsic and extrinsic motivation.

Results from Table 6 ascertain the possibility of predicting organizational performance significantly from both intrinsic and extrinsic motivations. The odds of the organization for poorly performing is much lower (OR = 0.057, p < 0.05) among employees who moderately agree on the presence of extrinsic motivation compared to those who disagree with the presence of extrinsic motivation. Similarly, the odds of the organization for poorly performing is much lower (OR = 0.033, p < 0.05) for those employees who moderately agree on the presence of intrinsic motivation compared to those who disagree with the presence of extrinsic motivation. The implication here is those employees who perceived the presence of moderate motivation (intrinsic and extrinsic) were less likely to contribute to poor organizational performance. The ability of intrinsic and extrinsic motivation to predict organizational performance, as evidenced in the moderate sense of the above results, was congruent with the results of (Zemene, 2013; Rizwan, 2001; Maurer, 2001). The results were also partially congruent with Lin (2007) where one of the motivations (intrinsic or extrinsic) aspects were significant predictors of organizational performance.

Table 6 Binary logit regression results (orgperf: dependent variable).

The study also checked for the interaction effect of intrinsic and extrinsic motivations on organizational performance. The result from Table 6 indicates such an interaction does not have a significant interplaying effect on organizational performance. However, the intrinsic and extrinsic motivations, as the main effect, had a significant effect on organizational performance. This by itself is an indication of the absence of the moderating effect of extrinsic motivation on the relationship between intrinsic motivation and organizational performance. Thus, our finding failed to prove the proposition of Deci (1975) and adds support to the work and results of other researchers (see Eisenberger et al., 1999; Cameron and Pierce, 1994; Phillips and Lord, 1980) who found no undermining effect of extrinsic motivation on intrinsic motivation.

Conclusion and discussion

This research aimed to assess the effect of extrinsic motivation on intrinsic motivation and organizational performance from cognitive evaluation theory perspective. For this purpose, we relied on explanatory research design, took all employees in the enterprise and collected responses through questionnaires from 106 respondents. Accordingly, the following conclusions and discussions were obtained.

Research conclusions

The descriptive statistics show the majority of the respondents were male. Besides, the majority of the respondents were aged 26–36. First-degree holders took the lion’s share, followed by diploma, certificate, TVET and master degree holders in the enterprise. The service year of the respondents include 8–15 years (32%), 4–7 years (29%), more than 15 years (24%), and 1–3 years (15%), respectively. The result also shows the agreement of respondents on the presence of extrinsic and intrinsic motivations in the enterprise. The econometric results show that those employees who perceived the presence of moderate motivation (intrinsic and extrinsic) were less likely to contribute to poor organizational performance. The study also checked for the interaction effect of intrinsic and extrinsic motivation on organizational performance and indicated an insignificant interplaying effect on organizational performance.

Research contributions

This study draws attention to the effect of extrinsic motivation on intrinsic motivation and organizational performance in the Oromia Seed enterprise context. The results have significant contributions to researchers, the existing theory, practice, and policymakers. First, despite the maturity of the field and presence of research on the relationships between motivation and organizational performance, still, empirical studies looking at the interaction effect of intrinsic and extrinsic motivations need to be conducted in the Ethiopian context. Second, results from this study support the existing proposition that extrinsic motivation does not have a significant effect on intrinsic motivation and resulting organizational performance. Hence, the study results have a theoretical contribution for compensating the lack of actual experience in the Ethiopian organization’s context. Third, the understanding of the moderated relationship among the study variables will encourage Oromia Seed Enterprise and its managers to develop a practical motivation system, which entertains the complex interaction of motivation variables, to improve organizational performance. Finally, this study specifically focused on the Seed Enterprise, Bale Branch, and insights into the enterprise’s perceived motivation (extrinsic and intrinsic), as well as organizational performance, may also be of interest to other branches in the Oromia Region. In addition, studies of this nature can inform policymakers to strengthen the incentive system as well as other motivation veins in the Ethiopian public organizations.

Limitations and future research

Assessing the effect of extrinsic motivation on intrinsic motivation and organizational performance through explanatory research has its values. However, we acknowledge a few limitations of this study to be improved. First, this study focused only on extrinsic and intrinsic motivations as well as their interaction effect on organizational performance. In doing so, our ability to see the moderating effect of other variables that are outside the scope of this study is limited. Besides, the usage of binary logistic regression may limit the ability to see complex relationships among the study variables. Future studies can extend this study by adding other relevant moderating variables, for instance, autonomy, to examine the moderating role of autonomy in the relationship between motivation (extrinsic and intrinsic) and organizational performance so that they can further extend our understanding of motivation from the cognitive evaluation theory perspective. It is also worth considering (for future studies) to use structural equation modelling to uncover complex relationships among the study variables. Second, this study is cross-sectional in nature that does not consider the effect over a long period. As such, the cause–effect relationship of the study variables can only be representative of one point at a time. Thus, future studies can extend the research design into longitudinal and look into the effect of extrinsic motivation on intrinsic motivation and organizational performance across multiple times. Third, this study did not cover all Seed Enterprises in Ethiopia due to budgetary limitations. Though the study achieved its objectives, its results cannot be generalized to all enterprises in Ethiopia. Hence, future studies can extend the research to cover more enterprises across Ethiopia.