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Top Managers’ Compensation, Strategic Orientations, and Firm Performance: Empirical Evidence from Spanish Firms

Top Managers’ Compensation, Strategic Orientations, and Firm Performance: Empirical Evidence from... This paper analyzes the links among executive compensation, a firm’s strategic orientation, and firm performance. A number of key questions relative to the relationships among these elements remain unanswered because prior research on this subject has reported mixed results, and, moreover, has been confined almost exclusively to U.S. firms. We develop a framework that draws on arguments from agency theory to identify such links. A research design with both archival and survey data is used to test hypotheses in a sample of 253 Spanish companies. We found that top managers’ compensation systems are linked with a firm’s strategic orientations, but in a different form than that of previous studies. Results show two differentiated groups of firms: (1) prospective firms that adapt their managerial compensation systems to the requirements of strategic context, consequently obtaining positive performance effects; and (2) conservative firms that design managerial compensation systems independent of strategic context, consequently not obtaining additional performance benefits. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Management Research The Journal of the Iberoamerican Academy of Management Emerald Publishing

Top Managers’ Compensation, Strategic Orientations, and Firm Performance: Empirical Evidence from Spanish Firms

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References (70)

Publisher
Emerald Publishing
Copyright
Copyright © 2003 MCB UP Ltd. All rights reserved.
ISSN
1536-5433
DOI
10.1108/15365430380000516
Publisher site
See Article on Publisher Site

Abstract

This paper analyzes the links among executive compensation, a firm’s strategic orientation, and firm performance. A number of key questions relative to the relationships among these elements remain unanswered because prior research on this subject has reported mixed results, and, moreover, has been confined almost exclusively to U.S. firms. We develop a framework that draws on arguments from agency theory to identify such links. A research design with both archival and survey data is used to test hypotheses in a sample of 253 Spanish companies. We found that top managers’ compensation systems are linked with a firm’s strategic orientations, but in a different form than that of previous studies. Results show two differentiated groups of firms: (1) prospective firms that adapt their managerial compensation systems to the requirements of strategic context, consequently obtaining positive performance effects; and (2) conservative firms that design managerial compensation systems independent of strategic context, consequently not obtaining additional performance benefits.

Journal

Management Research The Journal of the Iberoamerican Academy of ManagementEmerald Publishing

Published: Apr 1, 2003

Keywords: Executive compensation; Spain; Strategic orientation; Performance

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