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Wage Dispersion and Team Performance - An Empirical Panel Analysis

Author

Listed:
  • 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.

Suggested Citation

  • Egon Franck & Stephan Nüesch, 2007. "Wage Dispersion and Team Performance - An Empirical Panel Analysis," Working Papers 0073, University of Zurich, Institute for Strategy and Business Economics (ISU).
  • Handle: RePEc:iso:wpaper:0073
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    Cited by:

    1. 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.
    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, 2009. "Bonus, effort, costs, market size and teams' performance," MPRA Paper 16989, University Library of Munich, Germany.
    4. Papahristodoulou, Christos, 2012. "A NLIP Model on Wage Dispersion and Team Performance," MPRA Paper 39149, University Library of Munich, Germany.
    5. Papahristodoulou, Christos, 2008. "Wage Differences, Bonus and Team Performances: A parametric non-linear integer programming model," MPRA Paper 8719, University Library of Munich, Germany.

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    More about this item

    Keywords

    wage dispersion; team performance; relative deprivation; tournament theory;
    All these keywords.

    JEL classification:

    • D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
    • L83 - Industrial Organization - - Industry Studies: Services - - - Sports; Gambling; Restaurants; Recreation; Tourism
    • M52 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Personnel Economics - - - Compensation and Compensation Methods and Their Effects

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