On the Merit of Equal Pay: When Influence Activities Interact with Incentive Setting

Brice Corgnet, Ludivine Martin, Peguy Ndodjang and Angela Sutan
Additional contact information
Peguy Ndodjang: Luxembourg Institute of Socio-Economic Research

Working Papers from Chapman University, Economic Science Institute

Abstract: Influence costs models predict that organizations should limit managerial discretion to deter organizational members from engaging in wasteful politicking activities. We test this conjecture in a controlled, yet realistic, work environment in which we allow employees to influence managers’ decisions about rewards. We find that influence activities are pervasive and significantly lower organizational performance. Organizational performance suffers because principals offer weaker incentives when influence activities are allowed than when they are not. Importantly, we show that equal pay incentive schemes perform better when influence activities are available than when they are not. Our results thus support the idea that prevalent politicking activities may account for the widespread use of bureaucratic, and apparently inefficient, compensation rules in organizations.

Keywords: Influence activities; incentive theory; theory of the firm; organizational economics (search for similar items in EconPapers)
JEL-codes: C91 D23 D86 M52 (search for similar items in EconPapers)
Date: 2015
New Economics Papers: this item is included in nep-bec, nep-cta, nep-exp and nep-hrm
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
http://www.chapman.edu/research-and-institutions/e ... f-equal-pay-2015.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:chu:wpaper:15-09

Access Statistics for this paper

More papers in Working Papers from Chapman University, Economic Science Institute Contact information at EDIRC.
Bibliographic data for series maintained by Megan Luetje ().