Minimizing Competition? Entry-level Compensation in Japanese Firms

This is the first empirical study of the determinants of pay for entry-level jobs among Japanese firms. Pay data of 1,382 companies obtained from the Nikkei survey was matched with company size, performance, industry, and foreign ownership data from Toyo Keizai’s Japan Company Handbook. We found that unlike the results based on U.S. data, company size is not related to entry-level pay. Firm performance is positively related, but its effect is minimal. Industry membership and foreign ownership are positively related. We believe that these findings highlight the influence of the Japanese employment context and information sharing in Japan. Implications for research and practice are discussed

Strategic Compensation: Does Business Strategy Influence Compensation in High-Technology Firms?

This study examined whether a firm\u27s business strategy influences the firm\u27s compensation systems in high-technology firms. For the firm strategy variable, we used innovation strategy, which is one of the most critical business strategies in the high-technology industry. Our analysis showed that a firm\u27s emphasis on innovation is positively related to the firm\u27s employee pay level, both short-term pay and long-term pay. Moreover, a firm\u27s emphasis on innovation has significant influence on several other aspects of employee compensation management. Innovation is positively associated with the difference in pay level between R&D employees and other employees, time orientation of employee compensation (the relative emphasis on long-term pay to short-term pay), and the length of the stock option vesting period. The influence of innovation is significant after controlling for industry membership

Origin of CEO and Compensation Strategy: Differences between Insiders and Outsiders

Increasingly, U.S. firms are hiring their new CEOs from outside the firms. This study investigates the differences in compensation between outsider CEOs and insider CEOs from three dimensions: pay level, pay and performance link, and pay mix. Our analyses show: (1) outsider CEOs are paid more than insider CEOs, (2) pay and performance link is very weak for outsider CEOs, and (3) compensation package for outsider CEOs emphasizes the use of stock options. While several factors (e.g., firm size, firm performance, CEO tenure, ownership structure) influence insider CEOs\u27 pay, firm size is the only determinant of outsider CEOs\u27 pay. Our results suggest we will be able to understand CEO compensation more accurately if we analyze CEOs from different origins (insiders, outsiders, founders) separately

Organizational Pay Mix: The Implications of Various Theoretical Perspectives for the Conceptualization and Measurement of Individual Pay Components

While pay mix is one of the most frequently used variables in recent compensation research, its theoretical relevance and measurement remains underdeveloped. There is little agreement among studies on the definitions of the various forms of pay that go into pay mix. Even studies that examine the same theories tend to overlook the implications of differences in the measures and meanings of pay mix used in other studies. Our study explores the meaning of pay mix using several theories commonly used in recent compensation research (agency, efficiency wage, expectancy, equity, and person-organization fit). Recent studies generally use a single measure of mix (e.g., bonus/base, or stock options/total, or benefits/base). We argue that to fully understand the effects of employee compensation, the multiple forms of compensation must be taken into account. Therefore, we derived pay mix measures from the theories commonly used in compensation research. We classified the pay mix policies of 478 firms using cluster-analytic techniques. We found that the classification of organizations based on their pay mix depends on the measures used. We suggest that as more realistic measures of pay mix leads to reinterpretation of compensation research and offers directions for theory development

Paying for Performance: An International Comparison

Paying for Performance: An International Comparison. Edited by Michelle Brown and John S. Heywood. Armonk, N.Y.: M.E. Sharpe, 2002. 298 pp. ISBN 0-7656-0752-2, $66.95 (cloth); 0-7656-0753-0,$22.95 (paper)

Diversity in measuring different dimensions of diversity :a literature review

Although organizational researchers have shed light on the topic of diversity and its performance outcomes, the literature has not exclusively studied the various dimensions of diversity researched and the different ways these dimensions have been operationalized. The present paper reviews diversity literature focusing on diversity and organizational performance outcomes from nineteen top-tier journals. We identify the diversity dimensions researched, the way it has been operationalized and methods used to aggregate these diversity dimensions in the literature. The findings of the review indicate that, predominantly, studies have used a single dimension compared to multiple dimensions, and gender, race and age were the top three dimensions researched. Three future research directions are discllssed to encourage diversity research.

Compensation Structure and the Creation of Exploratory Knowledge in Technology Firms

Given the importance of exploration in a firm’s overall innovation program, scholars have sought to understand organizational factors that give rise to exploration-oriented innovations. We propose theory and empirical evidence that relates firms’ use of financial incentives to their exploratory innovation performance. We expect that a larger proportion of long-term incentives in R&D employee compensation should be positively associated with the creation of exploratory innovation in a firm. In addition, we propose that a higher level of horizontal pay dispersion is negatively associated with the creation of exploratory innovation. We examine innovations reflected in the patents of a unique six-year, unbalanced panel dataset of 94 high-technology firms in the U.S. Empirical results confirm that firms with high level of horizontal pay dispersion have less exploratory patent innovations. However, surprisingly, firms that pay their R&D employees a higher proportion of long-term financial incentives in total compensation have lower level of exploratory innovation. This implies the possibility that popular longterm incentive plans in high-technology sectors (e.g., stock option plans) have failed to achieve their intended goals in practice. We discuss factors that might moderate the negative impact of long-term incentives on exploratory innovation