Research Papers in Economics, Department of Economics, Stockholm University
Why are Small Firms Different? Managers' Views
Abstract: Do incentives in small organizations differ from those in
large ones? This paper uses a representative survey of compensation
managers to shed light on the issues. I find that (i) small establishments
rely less on pecuniary incentives, and have a significantly more hostile
attitude towards incentive schemes based on competition and relative
rewards; (ii) large units are more vulnerable to mechanisms of efficiency
wages, effects that remain even as I control for differences in monitoring
ability; (iii) large units are more prone to indicate that negative
reciprocity is important, and that their employees care about relative pay.
I argue that these findings fit with behavioral stories of incentives and
motivation, in particular those stressing group interaction effects,
inequity aversion and gift exchange.
Keywords: firm-size effect; motivation; relative pay; field-survey; matched data; (follow links to similar papers)
JEL-Codes: J30; J41; (follow links to similar papers)
22 pages, August 25, 2003
Before downloading any of the electronic versions below
you should read our statement on
for viewing Postscript files and the
Acrobat Reader for viewing and printing pdf files.
Full text versions of the paper:
Questions (including download problems) about the papers in this series should be directed to Sten Nyberg ()
Report other problems with accessing this service to Sune Karlsson ()
or Helena Lundin ().
Design by Joachim Ekebom