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The Role of Firm Size and Performance Pay in Determining Employee Job Satisfaction Brief: Firm Size, Performance Pay, and Job Satisfaction

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  • Benjamin Artz

Abstract

. Job satisfaction reflects the on‐the‐job utility of workers and has been found to influence both the behavior of workers and the productivity of firms. Performance pay remains popular and widely used to increase worker productivity and more generally align the objectives of workers and firms. Yet, its impact on job satisfaction is ambiguous. Whereas the increased earnings increase job satisfaction, the increased effort and risk decreases job satisfaction. This paper finds empirical evidence that on net performance pay increases job satisfaction but does so largely among union workers and males in larger firms.

Suggested Citation

  • Benjamin Artz, 2008. "The Role of Firm Size and Performance Pay in Determining Employee Job Satisfaction Brief: Firm Size, Performance Pay, and Job Satisfaction," LABOUR, CEIS, vol. 22(2), pages 315-343, June.
    • Handle: RePEc:bla:labour:v:22:y:2008:i:2:p:315-343
    DOI: 10.1111/j.1467-9914.2007.00398.x
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    References listed on IDEAS

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    1. Richard B. Freeman & Morris M. Kleiner & Cheri Ostroff, 2000. "The Anatomy of Employee Involvement and Its Effects on Firms and Workers," NBER Working Papers 8050, National Bureau of Economic Research, Inc.
    2. Thomas Dohmen & Armin Falk, 2011. "Performance Pay and Multidimensional Sorting: Productivity, Preferences, and Gender," American Economic Review, American Economic Association, vol. 101(2), pages 556-590, April.
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    Cited by:

    1. K. Pouliakas & I. Theodossiou, 2009. "Confronting Objections To Performance Pay: The Impact Of Individual And Gain‐Sharing Incentives On Job Satisfaction," Scottish Journal of Political Economy, Scottish Economic Society, vol. 56(5), pages 662-684, November.
    2. Nis Lydiksen & Andreas Gotfredsen & Jacob Ladenburg & Helle Stenbro, 2023. "Job satisfaction and firm earnings—Evidence from matched survey and register data," LABOUR, CEIS, vol. 37(2), pages 197-221, June.
    3. Ondřej Dvouletý, 2022. "Factors impacting the Czech employees' job satisfaction," Acta Universitatis Bohemiae Meridionalis, University of South Bohemia in Ceske Budejovice, Faculty of Economics, vol. 25(3), pages 16-28.
    4. Hadziabdic, Sinisa & Kohl, Sebastian, 2024. "Firm size and society: The link between firm size, job outcomes, and political attitudes," MPIfG Discussion Paper 24/9, Max Planck Institute for the Study of Societies.
    5. Minh Tri Nguyen & Xuan Vinh & Hoang Tuan Dinh Vu & Vu Thinh Pham, 2024. "Research on Factors Affecting Employee Motivation at Commercial Banks," International Journal of Economics, IPRJB, vol. 9(3), pages 21-31.
    6. Yuen, Kum Fai & Thai, Vinh V. & Wong, Yiik Diew & Wang, Xueqin, 2018. "Interaction impacts of corporate social responsibility and service quality on shipping firms’ performance," Transportation Research Part A: Policy and Practice, Elsevier, vol. 113(C), pages 397-409.
    7. Tao, Hung-Lin, 2015. "Multiple earnings comparisons and subjective earnings fairness: A cross-country study," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 57(C), pages 45-54.
    8. Benjamin Artz, 2010. "Fringe benefits and job satisfaction," International Journal of Manpower, Emerald Group Publishing Limited, vol. 31(6), pages 626-644, September.
    9. Zivkovic, Sanja & Hudson, Darren & Johnson, Phillip & Park, John, 2016. "A Study in Attitudes Shaping Cooperative Leadership," 2016 Annual Meeting, February 6-9, 2016, San Antonio, Texas 229588, Southern Agricultural Economics Association.
    10. Patrice Laroche, 2016. "A Meta-Analysis of the Union–Job Satisfaction Relationship," British Journal of Industrial Relations, London School of Economics, vol. 54(4), pages 709-741, December.
    11. Nuria Sánchez-Sánchez & Adolfo C. Fernández Puente, 2021. "Public Versus Private Job Satisfaction. Is there a Trade-off between Wages and Stability?," Public Organization Review, Springer, vol. 21(1), pages 47-67, March.
    12. Eva, Nathan & Sendjaya, Sen & Prajogo, Daniel & Madison, Karryna, 2021. "Does organizational structure render leadership unnecessary? Configurations of formalization and centralization as a substitute and neutralizer of servant leadership," Journal of Business Research, Elsevier, vol. 129(C), pages 43-56.
    13. Okemena Onemu, 2014. "Social Relations, Incentives, and Gender in the Workplace," Tinbergen Institute Discussion Papers 14-009/VII, Tinbergen Institute.
    14. Heywood, John S. & Nießen, Anna, 2025. "Performance Appraisal and Quits: Does Performance Pay Add Anything?," GLO Discussion Paper Series 1687, Global Labor Organization (GLO).
    15. Ebshoy Mikhaeil & Adam Okulicz-Kozaryn, 2024. "Public-private Job Satisfaction Differential: The Case of Egypt," Public Organization Review, Springer, vol. 24(4), pages 1125-1146, December.
    16. Nikolai Botev, 2015. "Could Pronatalist Policies Discourage Childbearing?," Population and Development Review, The Population Council, Inc., vol. 41(2), pages 301-314, June.
    17. Chongryol Park & Ronald McQuaid & Jiwoon Lee & Seungjin Kim & Insuk Lee, 2019. "The Impact of Job Retention on Continuous Growth of Engineering and Informational Technology SMEs in South Korea," Sustainability, MDPI, vol. 11(18), pages 1-19, September.
    18. Mark Gius, 2013. "The effects of merit pay on teacher job satisfaction," Applied Economics, Taylor & Francis Journals, vol. 45(31), pages 4443-4451, November.
    19. Romina Gambacorta & Maria Iannario, 2013. "Measuring Job Satisfaction with CUB Models," LABOUR, CEIS, vol. 27(2), pages 198-224, June.
    20. Lai, Yanqing & Saridakis, George & Blackburn, Robert & Johnstone, Stewart, 2016. "Are the HR responses of small firms different from large firms in times of recession?," Journal of Business Venturing, Elsevier, vol. 31(1), pages 113-131.
    21. Ehlers, Annika & Rumble, Ryan & Binz Astrachan, Claudia & Baù, Massimo, 2024. "Fulfillment or status: Job seekers’ reward expectations towards family and non-family employers," Journal of Family Business Strategy, Elsevier, vol. 15(4).
    22. Simone Gounder & Patsy Govender, 2018. "The Moderating Effect of Work-Life Balance on Job Satisfaction," Journal of Economics and Behavioral Studies, AMH International, vol. 10(2), pages 63-73.
    23. Marco Clemens, 2024. "Bonuses, Profit-sharing and Job Satisfaction: the More, the Better?," IAAEU Discussion Papers 202406, Institute of Labour Law and Industrial Relations in the European Union (IAAEU).

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