Good leaders understand that people absolutely can be and are motivated by fear. They also understand that motivating by fear is incredibly destructive. When people are afraid, they literally can't think and can't be depended on to do the right thing. Good leaders do all they can to drive out fear. They understand that when a manager manages with fear, it's because he is afraid.
Fear is the enemy.
Good leaders then tap into the intrinsic positive motivation that people have to make the world a better place to live and they do everything they can to drive out fear. Good leaders also understand that the way we make the world a better place to live is through service of others. In business, we serve our customers. In a hospital, the staff serves the patients. In a university, the teachers and the administration serve the students.