Why are Small Firms Different? Managers' Views

26 Pages Posted: 13 Nov 2003

See all articles by Jonas Agell

Jonas Agell

Stockholm University - Department of Economics; CESifo (Center for Economic Studies and Ifo Institute)

Multiple version iconThere are 2 versions of this paper

Date Written: November 2003

Abstract

Do incentives in small organizations differ from those in large ones? This paper uses a representative survey of compensation managers 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 as I control 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. field-survey, matched data

Keywords: firm-size effect, motivation, relative pay,

JEL Classification: J30, J41

Suggested Citation

Agell, Jonas, Why are Small Firms Different? Managers' Views (November 2003). Available at SSRN: https://ssrn.com/abstract=466560 or http://dx.doi.org/10.2139/ssrn.466560

Jonas Agell (Contact Author)

Stockholm University - Department of Economics ( email )

Universitetsvägen 10 A
House A, floor 4 and 7
Frescati, Stockholm
Sweden

CESifo (Center for Economic Studies and Ifo Institute)

Poschinger Str. 5
Munich, DE-81679
Germany

HOME PAGE: http://www.CESifo.de

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