Ensuring Employees' IT Compliance: Carrot or Stick?

With reward (carrot) and punishment (stick) widely applied by organizations to regulate mandatory IT usage, it is imperative to understand how these incentives influence employee compliance behavior. Drawing upon control theory and regulatory focus theory, this study investigates the relationships among regulatory focus, reward, punishment, and compliance behavior in mandatory IT settings. Survey data were collected from 186 employees in companies where enterprise resource planning (ERP) compliance was mandated. Analyses reveal that punishment expectancy is a strong determinant of compliance behavior, whereas the main effect of reward expectancy is not significant. Moreover, the relationship between reward expectancy and compliance behavior is moderated by promotion focus and the relationship between punishment expectancy and compliance behavior is moderated by prevention focus. This study provides an in-depth understanding of reward and punishment in mandatory IT settings and suggests that regulatory focus plays an important role in affecting employees' compliance with organizational controls.