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Why do firms adopt collective incentives? An analysis of family and non-family firms

Meysam Salimi (IÉSEG School of Management, UMR 9221 – LEM – Lille Économie Management, Lille, France)
Edoardo Della Torre (University of Milan, Milan, Italy)
Raffaele Miniaci (University of Brescia, Brescia, Italy)

Employee Relations

ISSN: 0142-5455

Article publication date: 7 February 2023

Issue publication date: 21 March 2023

189

Abstract

Purpose

By combining structural contingency theory and socio-emotional wealth (SEW) theory, this study aims to identify the organizational determinants of collective performance-related pay (PRP) adoption by examining the interplay between a firm's ownership characteristics (i.e. family or non-family ownership) and other organizational characteristics.

Design/methodology/approach

This study adopts a quantitative approach, conducting empirical analyses of a longitudinal dataset of 4,222 Italian companies in the manufacturing sector for 2009–2017. The probability of adopting collective PRP schemes is estimated using the average marginal effects of the probit and linear probability models (LPMs).

Findings

The results show that family firms are less likely to adopt collective PRP schemes than non-family firms. Moreover, ceteris paribus, firm characteristics such as size, age and past (firm and labor) productivity are important determinants of firms' adoption of collective incentive pay; however, the significance and magnitude of their effects vary depending on a firm's ownership structure.

Originality/value

This analysis has two major elements of novelty. First, it increases the knowledge of how organizational contingencies differ in family versus non-family contexts regarding pay decisions. Second, it brings new theoretical perspectives to the pay debate by combining structural contingency theory and SEW theory, thus developing new and fertile theoretical grounds for advancing our understanding of the pay determinants. To the best of authors' knowledge, this is one of the first (if any) studies to shed light on collective PRP in family and non-family firms.

Keywords

Acknowledgements

The paper is based on data collected for a project funded by the Industrial Association of Brescia (AIB), entitled “Labor contracts, incentives for productivity and innovation: theoretical and empirical analysis.”

Citation

Salimi, M., Della Torre, E. and Miniaci, R. (2023), "Why do firms adopt collective incentives? An analysis of family and non-family firms", Employee Relations, Vol. 45 No. 3, pp. 721-742. https://doi.org/10.1108/ER-10-2021-0453

Publisher

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Emerald Publishing Limited

Copyright © 2023, Emerald Publishing Limited

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