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YES, MANAGERS SHOULD BE PAID LIKE BUREAUCRATS
Corporate scandals, reflected in excessive management compensation and fraudulent accounts, cause considerable damage. Agency theory?s insistence on linking the compensation of managers and directors as closely as possible to firm performance is a major reason for these scandals. They cannot be overcome by improving variable pay for performance, as selfish extrinsic motivation is reinforced. Based on the common pool approach to the firm, institutions are proposed which serve to raise intrinsically motivated corporate virtue. More importance is to be attributed to fixed pay and strengthening the legitimacy of authorities by procedural fairness, relational contracts and organizational citizenship behavior.
Autor
Prof. Dr. rer. pol. Margit Osterloh
Prof. Dr. Bruno S. Frey
 
ArtikelFachbereichFachrichtung
2005BetriebswirtschaftslehreManagement/Organisation
 
Schlagwörter
agency theory, crowding theory, intrinsic motivation, management compensation, organizational citizenship, pay for performance