Performance pay or redistribution? Cultural differences in just-world beliefs and preferences for wage inequality

Douglas Frank, Klaus Wertenbroch and William W. Maddux

Organizational Behavior and Human Decision Processes, 2015, vol. 130, issue C, 160-170

Abstract: We identify and test a specific psychological mechanism underlying cross-national differences in preferences for performance-based versus redistributive compensation systems. We posit that individuals’ beliefs in the inherent justness and deservedness of individual outcomes (i.e., just world beliefs: JWBs) can help explain individual and culture-level variation in preferences for these compensation systems. Study 1 demonstrates a general correlation between the JWBs of a culturally diverse sample of former managers and their preferences for performance versus equal pay for an individual task. Study 2 shows that American participants exhibit stronger preferences for individual performance pay versus redistributive pay than do French participants, a difference that is mediated by cultural differences in JWBs. Study 3 holds national culture constant and replicates these effects by experimentally manipulating JWBs, demonstrating the causal nature of JWBs in determining preferences for performance-based versus redistributive compensation systems. Implications for organizational incentive systems, culture, and work motivation are discussed.

Keywords: Culture; Compensation systems; Incentives; Income inequality; Just-world beliefs; Redistribution (search for similar items in EconPapers)
Date: 2015
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Citations: View citations in EconPapers (7)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:jobhdp:v:130:y:2015:i:c:p:160-170

DOI: 10.1016/j.obhdp.2015.04.001

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