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Why are Small Firms Different? Managers' Views

  • Jonas Agell

Do incentives differ between large and small organizations? Results from a representative survey of compensation managers are used 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 after controlling 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. Copyright The editors of the "Scandinavian Journal of Economics", 2004 .

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Article provided by Wiley Blackwell in its journal The Scandinavian Journal of Economics.

Volume (Year): 106 (2004)
Issue (Month): 3 (October)
Pages: 437-452

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Handle: RePEc:bla:scandj:v:106:y:2004:i:3:p:437-452
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