Document Type
Article
Publication Date
2015
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.
Recommended Citation
Corgnet, B., Martin, L., Ndodjang, P., & Sutan, A. (2015). On the merit of equal pay: When influence activities interact with incentive setting. ESI Working Paper 15-09. Retrieved from http://digitalcommons.chapman.edu/esi_working_papers/158
Comments
Working Paper 15-09