On the Effectiveness of Incentive Pay: Exploring Complementarities and Substitution between Management Control System Elements in a Manufacturing Firm
Posted: 4 Oct 2014
Date Written: October 3, 2014
Abstract
Extant research already emphasises that complementarities and substitution involving incentive pay and other elements of an organisation’s management control system play an important role in terms of explaining the effectiveness of incentive systems. Despite this awareness calls continue for more research addressing the need to better understand how interdependencies arise among management control system elements and how they affect organizational effectiveness. Based on an in-depth case study on the implementation of a new incentive system in a manufacturing firm, we seek to provide more research and insight into how incentive pay features in complementary and substitutional relationships in an individual organisational setting. Greater insight can help illustrate how complementary and substitutional relationships unfold in even more complex ways than current research indicates as well as how the effectiveness of the incentive system in the individual organizational setting is determined by these relationships.
Keywords: Management control systems, case study, piece-rate, incentive pay, complementarities, substitution, manufacturing
JEL Classification: M40, M52, M10
Suggested Citation: Suggested Citation