A multilevel analysis of the use of individual pay-for-performance systems

Article


Gooderham, P., Fenton-O'Creevy, M., Croucher, R. and Brookes, M. 2018. A multilevel analysis of the use of individual pay-for-performance systems. Journal of Management. 44 (4), pp. 1479-1504. https://doi.org/10.1177/0149206315610634
TypeArticle
TitleA multilevel analysis of the use of individual pay-for-performance systems
AuthorsGooderham, P., Fenton-O'Creevy, M., Croucher, R. and Brookes, M.
Abstract

Compensation systems such as individualized pay for performance (I-PFP) schemes for employees represent an important approach to aligning employer-employee interests. However, the adoption of I-PFP is much less common in many countries than in the USA. Employing a multi-level analysis of over 4,000 firms in 26 countries, we explore determinants of its adoption. At the country level we distinguish between cultural and institutional (labor regulation institutions) influences. At the firm level, we distinguish firms that view HR as strategically important and firms that are foreign-owned. On the one hand, our findings indicate that both cultural and institutional effects at country level significantly influence the adoption of I-PFP. On the other hand, senior managers’ agency counts. We find the effect of labor regulation on I-PFP to be mediated by its effects on labor union influence and we find the effects of culture on I-PFP to be entirely mediated by labor regulation and (country level) union influence.

KeywordsCompensation, Bonuses, and Benefits; Culture; Institutional Theory
LanguageEnglish
PublisherSAGE Publications
JournalJournal of Management
ISSN0149-2063
Electronic1557-1211
Publication dates
Online21 Oct 2015
Print01 Apr 2018
Publication process dates
Deposited23 Oct 2015
Accepted14 Oct 2015
Output statusPublished
Publisher's version
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Accepted author manuscript
Copyright Statement

Paul Gooderham, Mark Fenton-O’Creevy, Richard Croucher, Michael Brookes, A Multilevel Analysis of the Use of Individual Pay-for-Performance Systems, Journal of Management,Vol 44, Issue 4, pp. 1479 - 1504. Copyright © The Author(s) 2015. Reprinted by permission of SAGE Publications.

Additional information

Acknowledgements: the authors would like to acknowledge the helpful comments on previous versions of this manuscript provided by David Wilson, Patrick Wright (editor) and two anonymous reviewers. They also acknowledge the efforts and expertise of members of the CRANET network in collecting the data on which this study relied.
Published online before print October 21, 2015

Digital Object Identifier (DOI)https://doi.org/10.1177/0149206315610634
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