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EMPLOYEES EXTRINSIC MOTIVATION AND PERFORMANCE IN SMALL BUSINESSES IN MINNA METROPOLIS

CHAPTER ONE

INTRODUCTION

1.1 Background to the Study

Motivation is a multifaceted concept that plays a fundamental role in human behavior, driving individuals to initiate and sustain actions towards achieving their goals. At its core, motivation refers to the internal and external factors that stimulate, direct, and maintain behavior. It encompasses the cognitive, emotional, and physiological processes that energize and guide individuals towards specific outcomes. Motivation can be intrinsic, stemming from personal desires, interests, and values, or extrinsic, arising from external rewards or pressures. According to Jonathan (2015) various theories have been proposed to explain the nature of motivation, including Maslow’s hierarchy of needs, which suggests that individuals are motivated by a progression of needs, starting from basic physiological requirements and culminating in self-actualization. Another influential theory is self-determination theory, which emphasizes the importance of autonomy, competence, and relatedness in fostering intrinsic motivation. Goal-setting theory posits that setting specific and challenging goals can enhance motivation and performance. Additionally, expectancy theory suggests that individuals are motivated when they believe their efforts will lead to desired outcomes and that these outcomes are valuable to them. Motivation is influenced by a range of factors, such as personality traits, social and cultural contexts, past experiences, and the presence of rewards or punishments.

Motivation can be classified into various types based on different factors and perspectives. One common categorization is intrinsic and extrinsic motivation. Intrinsic motivation refers to engaging in an activity for the inherent satisfaction and enjoyment it brings. According to Donkor and Niamatu-Lai (2017) it is driven by internal factors such as personal interests, curiosity, and the desire to grow and learn. In contrast, extrinsic motivation arises from external factors, such as rewards, recognition, or punishments. It involves engaging in an activity to obtain a separate outcome or to avoid negative consequences. Another classification is based on the source of motivation, such as biological motivation, which includes instinctual drives like hunger and thirst, and social motivation, which involves the need for affiliation, approval, and belongingness. Achievement motivation is another type that relates to the drive to excel, accomplish goals, and experience success. Power motivation pertains to the desire for control, influence, and authority. Additionally, there are intrinsic types of motivations specific to certain contexts, such as learning motivation, which involves the desire to acquire knowledge and skills, and work motivation, which encompasses factors like job satisfaction, autonomy, and career progression. It is important to note that these types of motivations are not mutually exclusive, and individuals can be influenced by a combination of factors in their motivational orientation.

Extrinsic motivation refers to engagement in activities or behaviors that are driven by external factors, such as rewards, recognition, or punishments. It involves seeking external incentives or avoiding negative consequences rather than being inherently satisfied or fulfilled by the activity itself. According to Ombuya (2015) extrinsic motivations can take various forms, including tangible rewards like money, gifts, or prizes, as well as intangible rewards such as praise, status, or social approval. Examples of extrinsic motivations include studying for a good grade, working to earn a salary, or participating in a competition to win a trophy. Extrinsic motivations can be powerful drivers of behavior, as they provide tangible or social benefits that individuals value. However, they may also have limitations. While extrinsic rewards can initially enhance motivation and performance, over time, they may undermine intrinsic motivation if individuals come to rely solely on external incentives and lose their inherent interest or enjoyment in the activity. This phenomenon, known as the overjustification effect, suggests that when external rewards are removed, intrinsic motivation may decrease. It is important to strike a balance between extrinsic and intrinsic motivations, recognizing that both can play a role in driving behavior and achieving desired outcomes.

A small business refers to a privately owned enterprise that typically operates on a small scale with a limited number of employees, assets, and revenue compared to larger corporations. Small businesses are diverse and encompass a wide range of industries, including retail, food services, professional services, manufacturing, and technology. They play a vital role in the economy, contributing to job creation, innovation, and local development. Small businesses are often characterized by their entrepreneurial nature, as they are typically initiated by individuals or a small group of founders who take on the risks and responsibilities of running the business. To Byaruhanga (2018) they often exhibit flexibility, adaptability, and a close connection to the local community. Small business owners face a unique set of challenges, including limited resources, competition, regulatory compliance, and access to financing. However, they also have certain advantages, such as the ability to provide personalized services, build strong customer relationships, and make quick decisions. Small businesses can be sole proprietorships, partnerships, or incorporated entities, and they may operate as physical storefronts, online businesses, or a combination of both. In recent years, technological advancements and the rise of e-commerce have provided new opportunities for small businesses to reach a wider market and compete with larger enterprises. Governments and organizations often provide support and resources to small businesses through initiatives, training programs, and access to capital, recognizing their importance as engines of economic growth and innovation.

Small businesses face a multitude of challenges that can impact their operations, growth, and long-term success. One significant challenge is limited financial resources and access to capital. Small businesses often struggle to secure sufficient funding for initial startup costs, working capital, and expansion initiatives. They may face difficulties in obtaining loans or attracting investors due to perceived risks or lack of collateral. Additionally, small businesses confront the challenge of fierce competition from larger corporations with greater resources, established brand recognition, and economies of scale. This competition can make it challenging for small businesses to differentiate themselves, capture market share, and maintain profitability. Moreover, small business owners often face the burden of wearing multiple hats and juggling various responsibilities, such as marketing, finance, operations, and human resources. In the opinion of Fadeyi, Abayomi, and Rotimi (2015) this can lead to time constraints and a lack of expertise in certain areas, potentially hindering growth and efficiency. Additionally, compliance with regulations and legal requirements poses a challenge for small businesses, as they may lack the resources to navigate complex legal frameworks or hire dedicated legal support. Furthermore, small businesses are vulnerable to economic fluctuations, market volatility, and external shocks, such as recessions or changes in consumer preferences. These uncertainties can impact revenue, customer demand, and overall stability. According to Mc, Ssekakubo, Lwanga, and Ndiwalana (2014), attracting and retaining talent can be a challenge for small businesses, as they may struggle to offer competitive salaries, benefits, and career advancement opportunities compared to larger organizations. Despite these challenges, small businesses can mitigate risks and enhance their prospects for success through strategic planning, innovation, networking, partnerships, and leveraging technology to optimize operations and reach a broader customer base.

The effects of employee extrinsic motivation on the performance of small businesses can be significant. Extrinsic motivation, which includes external rewards such as bonuses, promotions, or recognition, can serve as powerful incentives for employees to enhance their performance and contribute to the success of the organization. When employees are motivated by extrinsic factors, they may be more focused on achieving tangible rewards or meeting specific targets, which can lead to increased productivity and efficiency. According to Matoke, Okibo and Nyamongo (2015), extrinsic motivation can also promote healthy competition among employees, driving them to strive for excellence and surpass their goals. Furthermore, external rewards can help attract and retain talented individuals, as they provide tangible benefits that employees value. By offering competitive compensation packages or performance-based incentives, small businesses can create a positive work environment and foster employee loyalty. However, it is essential to strike a balance between extrinsic and intrinsic motivation, as over-reliance on external rewards may diminish intrinsic motivation and the inherent satisfaction employees derive from their work. Additionally, small businesses should ensure that the criteria for receiving extrinsic rewards are fair, transparent, and aligned with the organization’s goals and values to prevent potential negative consequences, such as unethical behavior or a focus solely on short-term outcomes.

1.2 Statement of the Problem

Motivation plays a crucial role in driving employee performance and organizational success. In the context of small businesses, it is important to explore the factors influencing employees’ extrinsic motivation and its impact on their overall performance. This study aims to address the current lack of extrinsic motivation among employees in small businesses and its consequences on their performance. In an ideal situation, employees in small businesses would exhibit high levels of extrinsic motivation, leading to increased job satisfaction, productivity, and overall performance. They would be motivated by external factors such as competitive salaries, performance-based incentives, recognition, and opportunities for advancement.

Regrettably, there is a prevailing lack of extrinsic motivation among employees in small businesses. Many employees feel undervalued, inadequately rewarded, and lack the necessary incentives to perform at their best. This situation adversely affects their engagement, productivity, and job satisfaction, ultimately hampering the success and growth of the small businesses. Various measures have been put in place over time to address the issue of low extrinsic motivation. These measures include the implementation of performance-based incentive programs, recognition schemes, salary adjustments, and career development opportunities. Small business owners and managers have recognized the importance of motivating their employees and have made efforts to create a conducive work environment. Despite the implementation of these measures, the problem of low extrinsic motivation among employees persists. Employees continue to exhibit signs of demotivation, leading to suboptimal performance levels. The existing strategies have not been effective in fully addressing the underlying factors contributing to the lack of extrinsic motivation.

The lack of extrinsic motivation has significant consequences for both employees and the small businesses. Employees experience decreased job satisfaction, diminished commitment, and reduced productivity. They may also become disengaged, leading to higher turnover rates and difficulties in attracting and retaining talented individuals. Moreover, the overall performance and competitiveness of the small businesses are compromised, hindering their growth and success in a competitive market.

Given the critical role of extrinsic motivation in driving employee performance, it is imperative to conduct research to identify the underlying factors responsible for the lack of motivation in small businesses. By understanding these factors, organizations can develop targeted strategies to enhance extrinsic motivation, improve employee performance, and foster a positive work environment.

While previous studies such as Mc, Ssekakubo, Lwanga, and Ndiwalana (2014), Matoke, Okibo and Nyamongo (2015), Fadeyi, Abayomi, and Rotimi (2015), Byaruhanga (2018) among others have extensively explored motivation and performance in various organizational settings, there is a dearth of research specifically focusing on small businesses, especially small bakeries in Minna metropolis. This knowledge gap necessitates an in-depth investigation into the unique dynamics of extrinsic motivation and its impact on employee performance in this particular context. By bridging this gap, the research will contribute to the existing body of knowledge and provide valuable insights and recommendations tailored to the specific needs of small businesses in Minna metropolis.

1.3 Aim and Objectives of the Study

            The aim of this study is to examine employees extrinsic motivation and performance in small businesses in Minna metropolis. Other specific objectives of the study are:

1. To determine the extent to which external regulation affects employees’ performance in small businesses in Minna Metropolis.
2. To find out the effects of introjected regulations on employees performance.
3. To examine the effects of identified regulation on small businesses performance in Minna.

1.4 Research Questions

            The following research questions guided the study:

1. What is the extent to which external regulation affects employees’ performance in small businesses in Minna Metropolis?
2. What are the effects of introjected regulations on employees’ performance?
3. How does identified regulation impact small business performance in Minna?

1.5 Hypotheses

The following null hypotheses will be test at 0.05 level of significance:

H₀₁: There is no significant relationship between external regulation and employees’ performance in small businesses in Minna Metropolis.

H₀₂: There is no significant effect of introjected regulations on employees’ performance.

H₀₃: There is no significant impact of identified regulation on small business performance in Minna.

1.6 Significance of the Study

The beneficiaries of the study can include:

The findings of the study can provide insights for small business owners in Minna metropolis on the importance of extrinsic motivation in enhancing employee performance. They can benefit from understanding the factors that influence employee motivation and how it impacts overall business performance.

The study can benefit employees by shedding light on the role of extrinsic motivation in their performance. It can help them understand the types of extrinsic motivators they are likely to receive from their employers and how these motivators can affect their job satisfaction and performance.

The study can contribute to the existing body of knowledge on the relationship between extrinsic motivation and employee performance in small businesses. Researchers and academicians can build upon this study to further explore the topic or incorporate the findings into their own research or teaching materials.

The findings of the study can inform policy-makers and government agencies involved in small business development and support. It can help them understand the importance of fostering a motivating work environment and provide insights for formulating policies and programs that promote employee motivation and enhance small business performance in the Minna metropolis.

Associations and networks representing small businesses in Minna metropolis can benefit from the study’s findings. They can use the insights to develop training programs, workshops, or seminars for their members, focusing on effective strategies for motivating employees and improving overall business performance. The study can provide valuable knowledge to assist small business owners in their decision-making processes.

A thriving small business sector has positive implications for the broader society. The study’s outcomes, by highlighting the significance of extrinsic motivation in small businesses, can contribute to economic growth, job creation, and poverty reduction in the Minna metropolis. When employees are motivated and perform well, it can lead to increased productivity, profitability, and overall prosperity, benefiting the local community and society as a whole.

1.7 Scope and Delimitation of the Study:

The scope of the study includes the examination of extrinsic motivation and its relationship with employee performance specifically within the context of small bakeries located in the Minna metropolis. The study focuses on the extent to which external regulation affects employees’ performance in small bakeries, effects of introjected regulations on employees performance and the effects of identified regulation on small bakeries performance in Minna.

However, there are certain delimitations to be considered. Firstly, the study is limited to small bakeries in the Minna metropolis, and the findings may not be generalized to other geographical locations or different business contexts. Secondly, the study primarily focuses on extrinsic motivation and its impact on employee performance, excluding other factors that may influence performance, such as intrinsic motivation or organizational factors. Thirdly, the study mainly relies on the perspectives of employees regarding their experiences of extrinsic motivation, and the views of employers or managers are not extensively examined. Lastly, the study does not delve into the specific industry sectors or types of small businesses, and therefore, the findings may not be applicable to every specific industry or sector within the Minna metropolis.

1.8 Operational Definitions of Terms

            The following terms are defined operationally:

Employees: Refers to individuals who are employed by small businesses in the Minna metropolis. They may hold various positions within the organization, including full-time, part-time, or contract-based employment.

Extrinsic Motivation: In the context of this study, extrinsic motivation refers to external factors and rewards provided by employers to employees in small businesses. These motivators can include bonuses, salary increases, promotions, recognition, fringe benefits, and other tangible rewards aimed at enhancing employee performance.

Performance: Performance in this study refers to the level of productivity, job effectiveness, and task accomplishment demonstrated by employees in small businesses in the Minna metropolis. It encompasses the quality and quantity of work output, meeting deadlines, fulfilling job responsibilities, and achieving organizational goals.

Small Business: Small business refers to enterprises operating within the Minna metropolis that are characterized by limited resources, a relatively small number of employees, and a focus on providing goods or services to meet local market demands. These businesses may include startups, family-owned businesses, microenterprises, or small-scale ventures.