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A Multilevel Analysis of the Use of Individual Pay-for-Performance Systems

Gooderham, Paul; Fenton-O'Creevy, Mark; Croucher, Richard and Michael, Brookes (2018). A Multilevel Analysis of the Use of Individual Pay-for-Performance Systems. Journal of Management, 44(4) pp. 1479–1504.

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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.

Item Type: Journal Item
Copyright Holders: 2015 The Authors
ISSN: 1557-1211
Keywords: compensation; bonuses; benefits; culture; institutional theory
Academic Unit/School: Faculty of Business and Law (FBL) > Business > Department for People and Organisations
Faculty of Business and Law (FBL) > Business
Faculty of Business and Law (FBL)
Item ID: 44438
Depositing User: Mark Fenton-O'Creevy
Date Deposited: 17 Nov 2015 15:56
Last Modified: 11 Dec 2019 16:21
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