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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. Papahristodoulou, Christos, 2008. "Wage Differences, Bonus and Team Performances: A parametric non-linear integer programming model," MPRA Paper 8719, University Library of Munich, Germany.
  2. 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.
  3. Papahristodoulou, Christos, 2012. "A NLIP Model on Wage Dispersion and Team Performance," MPRA Paper 39149, University Library of Munich, Germany.
  4. 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.
  5. Papahristodoulou, Christos, 2009. "Bonus, effort, costs, market size and teams' performance," MPRA Paper 16989, University Library of Munich, Germany.

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