Non monetary incentives in knowledge-intensive firms. Is it just a fad? Some evidence from small and medium enterprises in Italy

Current research on reward management stress the importance of non-monetary aspects of remuneration and suggests that knowledge workers are driven by an intrinsic motivation. In managerial practice, non-monetary schemes are becoming increasing popular while still academic research is needed proving the effectiveness of this kind of rewarding schemes. The purpose of this article is to understand if, as we hypothesize, non-monetary incentives characterize knowledge intensive firms (i.e. firms with high percentage of knowledge workers) and whether they are truly effective in favouring organizational performance or risk to simply be a “dangerous” fad. Results of a regression analysis on a sample of 95 small and medium enterprises in different industries in Italy show a larger use of non-monetary incentives among knowledge intensive firms, compared to non knowledge intensive firms. Further, our results demonstrate that the overuse of non-monetary rewards may produce adverse effects.