Contextualizing human capital theory in a non-Western setting: Testing the pay-for-performance assumption

Mario Hayek, Christopher H. Thomas, Milorad M. Novicevic and Daniel Montalvo

Journal of Business Research, 2016, vol. 69, issue 2, 928-935

Abstract: Human capital theory is the dominant theoretical framework used to explain objective intra-organizational career success. However, the economic assumption that human capital development results in greater pay due to enhanced performance is challenged in non-Western contexts. Therefore, this study examines how the components of human capital influence pay in a non-Western setting where local companies commonly face salient socio-cultural and institutional pressures. In this vein, a formal model including performance evaluation as a partial mediator between human capital components and pay in a Latin American setting is developed and tested. The findings indicate that human capital development influences pay, but not due to enhanced performance as posited by human capital theory, suggesting that social and institutional pressures seem to influence the relationships. Furthermore, pay-for-performance compensation mechanisms appear to work only at the general employee level but not at the managerial level.

Keywords: Intra-organizational career success; Human capital; Latin America; Pay-for-performance (search for similar items in EconPapers)
Date: 2016
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (4)

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S0148296315002702
Full text for ScienceDirect subscribers only

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eee:jbrese:v:69:y:2016:i:2:p:928-935

DOI: 10.1016/j.jbusres.2015.06.039

Access Statistics for this article

Journal of Business Research is currently edited by A. G. Woodside

More articles in Journal of Business Research from Elsevier
Bibliographic data for series maintained by Catherine Liu ().