Revenue drift, incentives, and effort allocation in social enterprises

Vladasel, Theodor; Parker, Simon C.; Sloof, Randolph; van Praag, Mirjam

doi:http://dx.doi.org/10.1111/jems.12590

Revenue drift, incentives, and effort allocation in social enterprises

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Citation

Vladasel T, Parker SC, Sloof R, van Praag M. Revenue drift, incentives, and effort allocation in social enterprises. J Econ Manag Strategy. 2024 Fall;33(3):630-51. DOI: 10.1111/jems.12590

Abstract

Revenue drift, whereby insufficient attention is given to economic, relative to social, goals, threatens social enterprise performance and survival. We argue that financial incentives can address this problem by redirecting employee attention to commercial tasks and attracting workers less inclined to fixate on social tasks. In an online experiment with varying incentive levels, monetary rewards succeed in directing worker effort to commercial tasks; high-powered incentives attract less prosocial employees, but low-powered incentives do not alter workforce composition. Social enterprises combining monetary rewards with a social mission not only attract more workers but are also able to guard against revenue drift.