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CMA Foundation · Fundamentals of Business Economics and Management · Leadership and Motivation - Concepts and Theories

Ravi works hard and completes more projects than a colleague, but both receive the same bonus. He feels unfairly treated and reduces his effort. Which theory best explains his reaction?

Adams' equity theory explains his reaction. Employees compare their input-to-reward ratio with that of others. Ravi contributes more but receives the same bonus, so he perceives inequity and reduces effort to restore balance. Maslow, McGregor and Alderfer do not focus on this social comparison of rewards.

  1. AAdams' equity theoryCorrect
  2. BMaslow's need hierarchy
  3. CMcGregor's Theory X
  4. DAlderfer's ERG theory

Explanation

Equity theory says people compare the ratio of their inputs to outcomes with that of others. Ravi's input is higher but his outcome is equal, so he perceives inequity and lowers effort to restore balance. The other theories do not centre on such comparison.

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