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Toward a contingency theory of compensation strategy

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  • David B. Balkin
  • Luis R. Gomez‐Mejia

Abstract

This paper develops several propositions that link compensation strategy and the effectiveness of the compensation system. The underlying argument is that effectiveness at realizing intended pay strategies depends significantly on the existence of a match between compensation strategies, organization and environment. These propositions are tested in a sample of 33 high tech and 72 non‐high tech firms or business units in the Boston Route 128 area. Respondents are managers responsible for compensation policies in these firms or business units. The relationships among compensation strategies, organization characteristics and environment are explored. The findings may help researchers conceptualize, and practitioners manage, the relationship between reward processes and strategy in organizations.

Suggested Citation

  • David B. Balkin & Luis R. Gomez‐Mejia, 1987. "Toward a contingency theory of compensation strategy," Strategic Management Journal, Wiley Blackwell, vol. 8(2), pages 169-182, March.
    • Handle: RePEc:bla:stratm:v:8:y:1987:i:2:p:169-182
    DOI: 10.1002/smj.4250080207
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    Cited by:

    1. Lucianetti, Lorenzo & Chiappetta Jabbour, Charbel Jose & Gunasekaran, Angappa & Latan, Hengky, 2018. "Contingency factors and complementary effects of adopting advanced manufacturing tools and managerial practices: Effects on organizational measurement systems and firms' performance," International Journal of Production Economics, Elsevier, vol. 200(C), pages 318-328.
    2. Keshavarz, Ali Reza & Gölgeci, Ismail, 2023. "The value of the sales function: A multilevel examination of the effect of strategic marketing ambidexterity and industry contingencies," Journal of Business Research, Elsevier, vol. 156(C).
    3. Gomez-Mejia, Luis R. & Mendoza-Lopez, Anabel & Cruz, Cristina & Duran, Patricio & Aguinis, Herman, 2024. "Socioemotional wealth in volatile, uncertain, complex, and ambiguous contexts: The case of family firms in Latin America and the Caribbean," Journal of Family Business Strategy, Elsevier, vol. 15(1).
    4. Sergiy D. Dmytriyev & R. Edward Freeman & Jacob Hörisch, 2021. "The Relationship between Stakeholder Theory and Corporate Social Responsibility: Differences, Similarities, and Implications for Social Issues in Management," Journal of Management Studies, Wiley Blackwell, vol. 58(6), pages 1441-1470, September.
    5. Gillis, William E. & Combs, James G. & Yin, Xiaoli, 2020. "Franchise management capabilities and franchisor performance under alternative franchise ownership strategies," Journal of Business Venturing, Elsevier, vol. 35(1).
    6. Koberg, Christine S. & Uhlenbruck, Nikolaus & Sarason, Yolanda, 1996. "Facilitators of organizational innovation: The role of life-cycle stage," Journal of Business Venturing, Elsevier, vol. 11(2), pages 133-149, March.
    7. Wei, Yinghong (Susan) & Atuahene-Gima, Kwaku, 2009. "The moderating role of reward systems in the relationship between market orientation and new product performance in China," International Journal of Research in Marketing, Elsevier, vol. 26(2), pages 89-96.

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