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An Empirical Analysis of Sales-Force Compensation Plans

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  • Coughlan, Anne T
  • Narasimhan, Chakravarthi
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    Abstract

    Among the array of direct and indirect methods of motivation and control available to the sales manager is sales-force compensation. In this article, the authors summarize theoretical predictions from the economics, marketing, finance, and accounting literatures on the structure of optimal sales-force compensation plans. Guided by these insights, they then construct empirical models to quantify the effect of various sales-force factors, firm and product factors, and market factors on compensation. Using data from 286 firms in 39 industries, the authors examine determinants of incentive components and total pay and the optimal horizon for incentive pay. Copyright 1992 by University of Chicago Press.

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    Bibliographic Info

    Article provided by University of Chicago Press in its journal Journal of Business.

    Volume (Year): 65 (1992)
    Issue (Month): 1 (January)
    Pages: 93-121

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    Handle: RePEc:ucp:jnlbus:v:65:y:1992:i:1:p:93-121

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    Web page: http://www.journals.uchicago.edu/JB/

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    Cited by:
    1. Thomas Steenburgh, 2008. "Effort or timing: The effect of lump-sum bonuses," Quantitative Marketing and Economics, Springer, vol. 6(3), pages 235-256, September.
    2. Canice Prendergast, 1996. "What Happens Within Firms? A Survey of Empirical Evidence on Compensation Policies," NBER Working Papers 5802, National Bureau of Economic Research, Inc.
    3. John Rust & Richard Staelin, 2011. "Rust’s and Staelin’s Comments on: “A structural model of sales force compensation dynamics: estimation and field implementation” by Sanjog Misra and Harikesh Nair," Quantitative Marketing and Economics, Springer, vol. 9(3), pages 259-265, September.
    4. Joaquim Vergés, 2010. "Incentive schemes for executive officers when forecasts matter," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 31(5), pages 339-352.
    5. Foss, Nicolai J. & Laursen, Keld, 2005. "Performance pay, delegation and multitasking under uncertainty and innovativeness: An empirical investigation," Journal of Economic Behavior & Organization, Elsevier, vol. 58(2), pages 246-276, October.
    6. Albers, Sonke, 1996. "Optimization models for salesforce compensation," European Journal of Operational Research, Elsevier, vol. 89(1), pages 1-17, February.
    7. David B. Balkin & Jérôme Côté & Michel Tremblay, 1998. "Explaining Sales Pay Strategy Using Agency, Transaction Cost and Resource Dependence Theories," CIRANO Working Papers 98s-28, CIRANO.
    8. Todd R. Zenger & Sergio G. Lazzarini, 2004. "Compensating for innovation: Do small firms offer high-powered incentives that lure talent and motivate effort?," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 25(6-7), pages 329-345.
    9. Murali Mantrala & Sönke Albers & Fabio Caldieraro & Ove Jensen & Kissan Joseph & Manfred Krafft & Chakravarthi Narasimhan & Srinath Gopalakrishna & Andris Zoltners & Rajiv Lal & Leonard Lodish, 2010. "Sales force modeling: State of the field and research agenda," Marketing Letters, Springer, vol. 21(3), pages 255-272, September.
    10. Jozée Lapierre & Bernard Sinclair-Desgagné, 2004. "An Empirical Investigation of Perceptual Incongruence Between Sales Managers and Salespeople as to Sales Force Control System Application," CIRANO Working Papers 2004s-10, CIRANO.
    11. Banker, Rajiv D. & Lee, Seok-Young & Potter, Gordon, 1996. "A field study of the impact of a performance-based incentive plan," Journal of Accounting and Economics, Elsevier, vol. 21(2), pages 195-226, April.

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