How symbolic remuneration contributes to the legitimacy of the company

An institutional explanation

Bibliographic Data

ID9890113
AuthorsMariluz Fernandez-Alles (Cadiz University, Spain), María de la Luz Fernández Alles (0000-0003-2897-9954, Universidad de Cádiz, corresponding author), Gloria Cuevas-Rodríguez (Universidad Pablo de Olavide), Gloria Cuevas‐Rodríguez (0000-0003-1092-5587, Universidad Pablo de Olavide, corresponding author), Ramón Valle Cabrera (0000-0003-0900-4289, Universidad Pablo de Olavide, corresponding author), Ramon Valle-Cabrera (Universidad Pablo de Olavide)
Year2006
Volume59
Issue7
Pages961-992
Publication date2006-07-01
Open AccessYes
TypeARTICLE
VenueHuman Relations (JOURNAL)
Journal identifiersISSN: 0018-7267 • E-ISSN: 1741-282X
PublisherSAGE Publications (PUBLISHER • US)
DOI10.1177/0018726706067598
OpenAlexW2102754864
LanguageEN
Citations received3
References cited55

This research analyzes whether variable compensation is designed as an economically rational incentive to increase organizational performance, or whether it also responds to other factors such as the search for legitimacy. A case study demonstrates how the design of the variable compensation system, at both managerial and lower levels, takes into account the company's adoption of popular management practices that increase its legitimacy but not necessarily its performance.The results show that,in the design of their compensation policies, organizations do not always seek financial objectives, as agency theory maintains, but often have other social objectives such as the search for legitimacy, as institutional theory suggests. The management of incentives not only is used to align the interests of principal and agent, but also has a symbolic character, insofar as it signals that the company belongs to a particular social context

Agency (philosophy · Business · Compensation (psychology · Context (archaeology · Corporate governance · Economics · Incentive · Institutional theory · Legitimacy · Management · Microeconomics · Political science · Principal–agent problem · Public relations · Remuneration · Social science · Sociology · Variable (mathematics · Accounting and Organizational Management · Corporate Finance and Governance · Finance · Law · Management and Organizational Studies · Psychology · Social Psychology

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