Pay Disparities Within Top Management Groups: Evidence of Harmful Effects on Performance of High-Technology Firms

Phyllis A. Siegel () and Donald C. Hambrick ()
Additional contact information
Phyllis A. Siegel: Business School, Rutgers University, 240 Janice Levin Building, 94 Rockafeller Road, Piscataway, New Jersey 08854
Donald C. Hambrick: Smeal College of Business Administration, Pennsylvania State University, 440 Beam Business Administration Building, University Park, Pennsylvania 16802

Organization Science, 2005, vol. 16, issue 3, 259-274

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.

Keywords: executive compensation; pay disparity; top management groups; high-tech firms (search for similar items in EconPapers)
Date: 2005
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (105)

Downloads: (external link)
http://dx.doi.org/10.1287/orsc.1050.0128 (application/pdf)

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:inm:ororsc:v:16:y:2005:i:3:p:259-274

Access Statistics for this article

More articles in Organization Science from INFORMS Contact information at EDIRC.
Bibliographic data for series maintained by Chris Asher ().