The Influences of Perceptions of Pay for Performance on Innovative Behavior: Focusing on the Mediating Effect of Work Engagement

Purpose This study investigates the influences of employees’ perceived informativeness and perceived controllability of pay-for-performance (PFP) on innovative behavior and examines the mediating effect of work engagement.Methods An online survey questionnaire was administered to employees working in seven companies, and data collected from 233 respondents was analyzed using structural equation modeling (SEM) to test the research hypotheses.Results The findings revealed that perceived informativeness of PFP positively influences work engagement and innovative behavior. In contrast, perceived controllability of PFP showed no significant relationship with either work engagement or innovative behavior. Additionally, work engagement mediated the relationship between perceived informativeness of PFP and innovative behavior, but did not mediate the relationship between perceived controllability of PFP and innovative behavior.Conclusion Work engagement is identified as a key psychological state that underlies the influence of perceived informativeness of PFP on employees’ innovative behavior. Thus, when implementing PFP, managers should provide sufficient feedback so that the employees clearly understand the reasons for their specific evaluation ratings and establish concrete action plans to improve their innovation performance.