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Wage Dispersion and Team Performance - An Empirical Panel Analysis

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  • Egon Franck

    ()

  • Stephan Nüesch

    ()
    (Institute for Strategy and Business Economics, University of Zurich
    Institute for Strategy and Business Economics, University of Zurich)

Abstract

The impact of intra-team pay dispersion on team productivity is a highly discussed issue. On one hand, wage differentials provide incentives for higher employee effort. On the other hand, pay inequality discourages cooperation among team members, which reduces performance. Analyzing non-linear effects of wage dispersion in professional team sports, we find empirical evidence that an initial increase of intra-team inequity reduces team performance, but at some point the relation reverses. In addition, we show that the pay structure of a team clearly affects the teamÕs playing style.

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File URL: http://repec.business.uzh.ch/RePEc/iso/ISU_WPS/73_ISU_full.pdf
File Function: Revised version, October 2008
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Bibliographic Info

Paper provided by University of Zurich, Institute for Strategy and Business Economics (ISU) in its series Working Papers with number 0073.

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Length: 25 pages
Date of creation: 2007
Date of revision:
Handle: RePEc:iso:wpaper:0073

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Keywords: wage dispersion; team performance; relative deprivation; tournament theory;

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References

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Citations

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Cited by:
  1. Egon Franck & Stephan Nüesch & Jan Pieper, 2011. "Specific Human Capital as a Source of Superior Team Performance," Schmalenbach Business Review (sbr), LMU Munich School of Management, vol. 63(4), pages 376-392, October.
  2. Papahristodoulou, Christos, 2012. "A NLIP Model on Wage Dispersion and Team Performance," MPRA Paper 39149, University Library of Munich, Germany.
  3. Papahristodoulou, Christos, 2008. "Wage Differences, Bonus and Team Performances: A parametric non-linear integer programming model," MPRA Paper 8719, University Library of Munich, Germany.
  4. Papahristodoulou, Christos, 2009. "Bonus, effort, costs, market size and teams' performance," MPRA Paper 16989, University Library of Munich, Germany.
  5. Stephan Nüesch, 2009. "A note on the endogeneity of the pay-performance relationship in professional soccer," Economics Bulletin, AccessEcon, vol. 29(3), pages 1850-1855.

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