A MODEL OF PERSON-PAY INTERACTION: HOW EXECUTIVES VARY IN THEIR RESPONSES TO COMPENSATION ARRANGEMENTS

• 成果类型: Article
• 署名作者: Wowak, Adam J.; Hambrick, Donald C.
• 署名单位: Pennsylvania Commonwealth System of Higher Education (PCSHE); Pennsylvania State University; Pennsylvania State University - University Park
• 刊物名称: STRATEGIC MANAGEMENT JOURNAL
• ISSN/ISSBN: 0143-2095
• DOI: 10.1002/smj.839
• 发表日期: 2010
• 页码: 803-821
• 关键词: Executive compensation; UPPER ECHELONS; Agency theory; CEOS

摘要

A wealth of research indicates that both executive characteristics and incentive compensation affect organizational outcomes, but the literatures within these two domains have fib wed distinct, separate paths. Our paper provides a framework for integrating these two perspectives. We introduce a new model that specifies how executive characteristics and incentives operate in tandem to influence strategic decisions and firm performance. We then illustrate our model by portraying how executive characteristics interact with a specific type of pay instrument stock options to affect executive behaviors and organizational outcomes. Focusing on three individual-level attributes (executive motives and drives, cognitive frame, and self-confidence), we develop propositions detailing how executives will vary in their risk-taking behaviors in response to stock options. We further argue that stock options will amplify the implications of executive ability, such that option-heavy incentive schemes will increase the performance of talented executives but worsen the performance of low-ability executives. Our framework and propositions are meant to provide a starting point for future theorizing and empirical testing of the interactive effects of executive characteristics and incentive compensation on strategic decisions and organizational performance. Copyright (C) 2010 John Wiley & Sons, Ltd.