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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. 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, 2009. "Bonus, effort, costs, market size and teams' performance," MPRA Paper 16989, 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. 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, 2012. "A NLIP Model on Wage Dispersion and Team Performance," MPRA Paper 39149, 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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