1 Introduction
What motivates workers on their job? For certain type of workers, besides extrinsic rewards, an
important drive is a concern towards the social cause pursued by the organization they work for,
or a sense of altruism towards the welfare of a third party that is the recipient of the good or
service being produced in their workplace. Such workers are willing to make labor donations, by
providing on-the-job effort beyond what is contractually required of them. There is mounting
empirical evidence that this type of labor donations are important in organizations engaging in the
provision of education, health care, child-care, and social services as well as in charities and NGOs
that advance all sorts of social missions.1
A recent burgeoning theoretical literature in economics recognizes the important role of workers’
pro-social motivations and examines their implications for the design of incentive contracts, the
selection of workers, the provision of effort and organizational design, see for instance, Besley and
Ghatak (2005), Delfgaauw and Dur (2007, 2008), Dixit (2002), Francois (2000, 2007), Glazer (2004),
Murdock (2002). Typically, two alternative views of altruism have been considered (a) Action-
oriented altruism: the worker derives direct nonpecuniary benefits from the act of contributing to
a cause she cares about2 and (b) Output-oriented altruism: the worker is concerned about the actual
impact of her actions or the well-being of others.3 The two key implications of these approaches
are that (1) An altruistic worker will provide more effort, and, (2) An altruistic worker requires less
monetary compensation, see for instance Besley and Ghatak (2005). In addition, papers that have
taken the output-oriented approach, see for instance Francois (2000, 2007), have shown that this
way of modelling pro-social preferences has implications for organizational design, as organizations
without residual claimants may have an advantage in eliciting workers’ altruistically motivated
contributions to the organizations output. On the contrary, this would not be the case with
action-oriented workers. Therefore, this distinction has important policy implications, for instance
regarding the debate over the privatization of public services delivery. The two approaches have
also implications for the motivation of workers in corporations that pursue social ends via corporate
social responsibility (CSR) policies. In particular, the exact nature of workers’ pro-social motivation
1Most notable is the recent evidence in the paper by Gregg et al. (2009) who study the incidence of donated labor
in the U.K., measured by unpaid overtime, and find that it is more likely to occur in the not-for-profit sector than in
the for-profit sector.
2There may be various psychological underpinnings for this, including the receipt of social recognition that improves
self-respect or pride (Benabou and Tirole 2006, Ellingsen and Johannesson 2008), which has been the focus of some
recent experimental studies (Ariely et al. 2009).
3These two conceptualizations of workers’ altruism are the logical counterparts of ‘warm glow’ and ‘pure altruism’,
the two motives that in economics have been associated with charitable giving and the private provision of public
goods, see Andreoni (1989, 1990).