CAN PERFORMANCE-BASED REWARDS AND DEVELOPMENTAL PERFORMANCE APPRAISAL DRIVE RADICAL INNOVATION? THE MEDIATING EFFECT OF INNOVATIVE WORK BEHAVIOUR AND AFFECTIVE COMMITMENT

Abstract

The aim of this paper is to empirically study the impact of the motivation-enhancing practices of performance-based rewards and developmental performance appraisal on radical innovation. The effect of innovative work behaviour (IWB) is also considered as a mediator in this relationship. The paper also considers the effect of performance-based rewards and developmental performance appraisal on affective commitment and whether this mechanism can drive employees’ IWB. A survey questionnaire was used to collect data from employees working in the telecommunications, mining, pharmaceutical, banking and technological industries in Jordan. The final sample comprised 270 valid responses. Research hypotheses were tested via structural equation modelling (SEM) using AMOS v28 and PROCESS by Hayes to test the mediating effects. The paper found that IWB mediates the relationship between performance-based rewards, developmental performance appraisal and radical innovation because the subsequent effect of IWB on radical innovation was significant and positive. This is also confirmed by the mediation analysis. Findings showed support for the positive impact of performance-based rewards and developmental performance appraisal on affective commitment. Additionally, the findings confirmed that affective commitment mediates the relationship between performance-based rewards, developmental performance appraisal and IWB.