In this paper, we conducted to verify effectiveness of performance-based compensation system ran by
SME and classified into four aspects according to FGI(Focus Group Interview) such as economic vs. non-economic and direct vs. indirect, also we examined that the effects of these factors on task
performance and contextual performance, and the effects of intrinsic·extrinsic motivation among them. For
this study, a total of 205 questionnaires were distributed to 12 small and medium manufacturer workers in
Daejeon and Sihwa Industrial Complex and then, frequency analysis, descriptive statistic analysis, regression
analysis, and 3-step mediated regression analysis were carried out. It was found that the four performance
compensation factors was positively influenced intrinsic·extrinsic motivation respectively, and
intrinsic·extrinsic motivation also positively influenced task performance and contextual performance
respectively. And intrinsic·extrinsic motivation was full and partial mediation effect among them
respectively. This result shows that for improving performance through choice and concentration in SME,
non-economic/direct factors should be reinforced more, and research on diverse variables for promoting
intrinsic·extrinsic motivation is required. Moreover, this implies that in addition to a consideration of
effective extrinsic compensation factors, there is a need to provide working environments(atmospheres) for
increasing productivity, leaders should constantly support and company operation policies have to be shared
to improve and boost overall atmospheres of SMEs.