Seminar paper from the year 2018 in the subject Leadership and Human Resources - Employee Motivation, Employee Satisfaction, grade: 1,3, University of Mannheim, language: English, abstract: The purpose of this paper is to investigate the effects of intrinsic and extrinsic motivation on work performance within the R&D environment and provide practical recommendations. Substantial research has been conducted to investigate the construct of motivation and to validate its impact on core business outcomes within varying environments. According to Rani and Lenka (2012), the motivational process affects an individual’s strength and persistence of behaviour. Thus, motivated individuals are activated to behave in a more creative, productive and persistent way. Prevailing literature validates this positive effect. For example, Deci and Ryan (2008a) argue that there is a significant link between motivation and positive work-related outcomes, such as psychological well-being and work performance. Considering this convincing evidence, further research tried to investigate this relationship within varying settings. An area that has aroused major attention is the R&D environment. Within this context managers face several obstacles in establishing high levels of motivation. Clarke (2002) mentions, for example, the differing values and expectations of R&D specialists, the uncertainty of outcomes and the difficulty in measuring the results. For high levels of motivation and performance to occur, managers need to respond to the needs of the R&D professionals without losing sight of the company’s major objectives. Based on the work of Deci, Vallerand, Pelletier and Ryan (1991) and their distinction between intrinsic and extrinsic motivation, studies in the R&D management literature validate the importance of both motivational constructs within this context. However, in practice, organizations like BMW may be incentivized to primarily focus on extrinsic rewards. Extrinsic incentive systems, such as salary increases or bonuses, can easily be established, fairly measured and provide a clear link between the employees’ monetary motives and the organizations objectives. Further, intrinsic motivation may be neglected due to difficulties and increased efforts of implementing such incentives. As a result of this neglect of their workers' intrinsic needs and desires, the motivation within the R&D department and in turn the work performance may decline.