This study explores the effect of employee organizational identity on developing effective compensation contracts to improve organizational performance. We adopt the economic identity theory to mathematically model and test this model using data from a Japanese listed firm that uses an...

This study adopts behavioral contract theory through a mathematical model and clarifies the situation in which a fixed–salary contract is preferable to incentives–based one for the principal. Theoretically, the expected utility for the principal is higher under an incentives–based contract...