Pay disparities within top management groups: Evidence of harmful effects on performance of high-technology firms

Pay disparities within top management groups: Evidence of harmful effects on performance of high-technology firms

0.00 Avg rating0 Votes
Article ID: iaor20061101
Country: United States
Volume: 16
Issue: 3
Start Page Number: 259
End Page Number: 274
Publication Date: May 2005
Journal: Organization Science
Authors: ,
Keywords: management, organization
Abstract:

This study examines the interactive effect of technological intensiveness and top management group (TMG) pay disparity on firm performance. Drawing on two literatures – task interdependence and group rewards – we argue that: (a) technological intensiveness imposes a considerable requirement for multiway information processing and collaboration among senior executives of a firm, and (b) collaboration is diminished when large pay disparities exist. Hence, TMG pay disparity should be more detrimental to subsequent performance of high-technology firms than low-technology firms. We construct seven different measures of executive pay disparity based on three major types of pay disparity (vertical, horizontal, and overall) and use a proprietary data set to test our hypotheses. The results provide consistent support for our hypotheses, thereby suggesting important implications for scholars and designers of executive compensation.

Reviews

Required fields are marked *. Your email address will not be published.