In economics, we assume incentives promote effort and performance, and a lot of empirical evidences suggest they often do. Initiating extrinsic motivation is commonly used to provide incentive in modern enterprises. Nonetheless, some well-established enterprises run into problems with the use of extrinsic rewards. Some psychological researchers call this the “undermining effect” of extrinsic motivation on intrinsic motivation. Other researchers have a different view and question whether undermining effect really exists or not, and this debate becomes a core issue for organizations and researchers. The effective way of clarifying this debate should be an appropriate classification of extrinsic motivation. Based on the self-determination theory, firstly, the present study explored the relationships between intrinsic motivation and three types of extrinsic motivations ——external, introjected and identified regulations which differ in their degree to internalization. This study would then explore the relationship between internalization of extrinsic motivation and autonomy support.

In order to understand the dynamic of motivation, a two-time-point longitudinal method was used in the present study. By interviewing the managers of enterprises, we found that the performance appraisal cycles were usually one year, half a year and one month, while the performance goal had to be achieved usually in a month. So the kind of work employees would not change within this one month period. The task and content during the investigation period should be controlled in order that the change of work passion caused by the change in the kind of work could be eliminated. Therefore, one month was chosen to be the time interval for this longitudinal study. We sampled 165 employees from several companies in Beijing and Shandong. Employees filled in the questionnaires to measure their demographics, work motivation and perceived autonomy support in both Time 1 and 2.

Results of multiple regression on Time 1 and 2 constructs showed that external and introjected regulations in Time 1 negatively predicted the change of intrinsic motivation between Time 1 and 2. In contrast, identified regulation in Time 1 positively predicted the change of intrinsic motivation between Time 1 and 2. Furthermore, autonomous support in Time 1 positively predicted the change of identified regulation between Time 1 and 2. These results revealed that external and introjected regulations as controlled or uninternalized motivation would undermine intrinsic motivation of employees; while idendified regulation as autonomous or internalized motivation would promote and protect intrinsic motivation rather than undermining it. Analyses further showed that autonomous support would enhance the internalization of extrinsic motivation (increase in identified motivation) and thus reducing the undermining effect of extrinsic motivation on intrinsic motivation. Implications for management were discussed．

On the basis of the self-determination theory, the present study explored the undermining effect of extrinsic motivation as well as the relationship between internalization of extrinsic motivation and autonomy support. The findings of this study facilitate our understanding of the undermining effect of extrinsic motivation on intrinsic motivation in workplace, enrich the empirical literature of internalization of extrinsic motivation in Chinese organizations, and extend the scope of applications of the self-determination theory in organizations in a cross-cultural setting. The study brings some management implications as well. It is necessary for managers to distinguish and choose the appropriate type of extrinsic incentive methods. Autonomy support can be used to promote internalization of extrinsic motivation of employees and identified regulation can be enhanced by training.