Yes, managers should be paid like bureaucrats

Corporate scandals, reflected in excessive management compensation and fraudulent accounts, cause considerable damage. Agency theory's insistence on linking the compensation of managers and directors as closely as possible to firm performance is a major reason for these scandals. They cannot be overcome by improving variable pay for performance, as selfish extrinsic motivation is reinforced. Based on the common pool approach to the firm, institutions are proposed which serve to raise intrinsically motivated corporate virtue. More importance is to be attributed to fixed pay and strengthening the legitimacy of authorities by procedural fairness, relational contracts and organizational citizenship behavior.

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Year of publication:	2005
Authors:	Frey, Bruno S. ; Osterloh, Margit
Publisher:	Munich : Center for Economic Studies and Ifo Institute (CESifo)
Subject:	Führungskräfte \| Leistungsorientierte Vergütung \| Agency Theory \| Motivation \| Anreizvertrag \| Unternehmenskultur \| Theorie \| intrinsic motivation \| agency theory \| crowding theory \| management compensation \| pay for performance \| organizational citizenship

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Series:	CESifo Working Paper ; 1379
Type of publication:	Book / Working Paper
Type of publication (narrower categories):	Working Paper
Language:	English
Other identifiers:	479117683 [GVK] hdl:10419/18743 [Handle]
Classification:	D23 - Organizational Behavior; Transaction Costs; Property Rights ; D21 - Firm Behavior ; L20 - Firm Objectives, Organization, and Behavior. General ; J33 - Compensation Packages; Payment Methods
Source:	EconStor