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.
| Original language | English (US) |
|---|---|
| Pages (from-to) | 259-274 |
| Number of pages | 16 |
| Journal | Organization Science |
| Volume | 16 |
| Issue number | 3 |
| DOIs | |
| State | Published - May 2005 |
All Science Journal Classification (ASJC) codes
- Strategy and Management
- Organizational Behavior and Human Resource Management
- Management of Technology and Innovation