Management Fashion Pay-for-Performance

Rost, Katja; Osterloh, Margit

doi:10.2139/ssrn.1028753

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Management Fashion Pay-for-Performance

32 Pages Posted: 11 Nov 2007

See all articles by Katja Rost

Katja Rost

University of Zurich - Institute for Organization and Administrative Science

Margit Osterloh

University of Basel; Professor (em.) University of Zurich

Date Written: September 11, 2007

Abstract

Management fashions promise solutions for allegedly urgent problems. Pay-for-Performance appears to be such a fashion. It seems to guarantee a more effective monitoring of the management considering the failure of the board of directors. We show theoretically and empirically that Pay-for-Performance, like many fashions, did not reach the intended task, but leads to the contrary. The example Pay-for-Performance shows that many fashions rather aggravate problems that they pretend to solve. Nethertheless they are able to persist until a new fashion takes over.

Keywords: Pay-for-Performance, Management fashion, Crowding-out

JEL Classification: J33, D23, M52

Suggested Citation: Suggested Citation

Rost, Katja and Osterloh, Margit, Management Fashion Pay-for-Performance (September 11, 2007). Available at SSRN: https://ssrn.com/abstract=1028753 or http://dx.doi.org/10.2139/ssrn.1028753