Social Ties and Purpose of Work in the Principal-Agent Relationship

Abstract

This paper investigates the effect of strengthening social ties and purpose of work on motivation in the principal-agent relationship. We hypothesise that by building social ties to employees and give them purpose of work, the employees' motivation will increase and their effort and productivity will rise and lead to higher results. Our theory has three mechanisms supporting our hypothesis; reciprocity, belonging and meaning. To investigate this, we performed a small real-effort experiment with the help of students at the University of Stavanger during the spring of 2017. Our results suggest that the purpose of work treatment has a significant negative effect on effort, both alone and combined with the strengthening social ties treatment. However, strengthening social ties alone has no significant effect, and the difference has no significant effect when looking at purpose with and without ties, and vice versa. This means that neither treatments had the wanted effect on motivation.