Wage Negotiation, Employee Effort, and Firm Profit under Output-Based versus Fixed-Wage Incentive Contracts

• 成果类型: Article
• 署名作者: Kuang, Xi (Jason); Moser, Donald V.
• 署名单位: University System of Georgia; Georgia Institute of Technology; Pennsylvania Commonwealth System of Higher Education (PCSHE); University of Pittsburgh
• 刊物名称: CONTEMPORARY ACCOUNTING RESEARCH
• ISSN/ISSBN: 0823-9150
• DOI: 10.1111/j.1911-3846.2010.01050.x
• 发表日期: 2011
• 页码: 616-+
• 关键词: participative decision-making; information asymmetry; gift exchange; Agency theory; auditor; RECIPROCITY; principal; performance; aspiration; IMPACT

摘要

We experimentally examine the effects of wage negotiation on employee effort and firm profit under an output-based contract versus a fixed-wage contract. With no information asymmetry in our setting, agency theory predicts that negotiation will have no benefit or cost for the firm under either contract. However, the participative management literature presumes that engaging employees in wage determination will increase their satisfaction and thus their effort and firm profit. Drawing on the reciprocity literature, we expand the participative management view by providing evidence that the effects of negotiation depend on whether the firm-employee interactions during the process induce positive or negative reciprocity. Specifically, employees form an aspiration level when making a counteroffer and then respond positively when their aspiration level is met, but negatively when it is not. We also provide evidence that, because firms that can offer an output-based contract have more effort-inducing power, they feel less need to negotiate and to accept an employee's counteroffer than firms that can only offer a fixed-wage contract. The difference in acceptance of counteroffers leads to lower employee effort and firm profit with negotiation than without negotiation under the output-based contract, but no difference in employee effort and firm profit with or without negotiation under the fixed-wage contract. The implications of our findings for negotiation and other forms of participative management in accounting settings are discussed.