The idea behind goal- setting theory is setting ambitious but attainable goals can motivate workers and improve performance, if the goals are accepted, accompanied by feedback, and facilitated by organizational conditions.
In 1960's, Edwin Locke put forward the Goal-setting theory of motivation. This theory states that goal setting is essentially linked to task performance. It states that specific and challenging goals along with appropriate feedback contribute to higher and better task performance.
MBO helps implement the idea in the way that it helps employees motivate themselves using goals. Managers formulate goals in cooperation with everyone in the organization to commit the employees to their goals, and to monitor results and award accomplishment.
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