Management Fashion Pay-for-Performance
32 Pages Posted: 11 Nov 2007
Date Written: September 11, 2007
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