A Fistful of Dollars: Financial Rewards, Payment Norms, and Motivation Crowding in Open Source Software Development

Abstract

Existing literature on open source software (OSS) maintains that intrinsic motivation and extrinsic financial rewards have a unidimensionally positive effect on the motivation of individual developers. Based on self-determination theory, which underlies most of these studies, we challenge this assumption. We argue that the effect of payment on both intrinsic motivation and total motivation of OSS developers is far more complex. To illustrate our point, we introduce the concept of individuals’ norms about payment to the field of OSS. In doing so, we are able to show that payment norms moderate the effect of payment on intrinsic motivation and total motivation. Conducting a scenario experiment, we find that intrinsic motivation decreases for individuals with norms against payment. This effect becomes even stronger when analyzing for mediation effects. Total motivation is impacted positively by payment, but the effect turns insignificant for individuals with norms for payment. Our findings help explain the results of previous studies in which OSS developers did not seem to be affected by motivation crowding. They further contribute to the more general debate on how to manage individuals in the absence of formal contracts. From a practical perspective, we show that financial rewards may create a management dilemma for OSS project leaders.

Keywords: open source software (OSS); intrinsic motivation; norms about payment; crowding out; financial rewards

JEL Classification: O32, M52, M54, O33, O31, M12