Explaining Sales Pay Strategy Using Agency, Transaction Cost and Resource Dependence Theories

32 Pages Posted: 20 Oct 2003

See all articles by Michel Tremblay

Michel Tremblay

HEC-Montreal School of Business

Jerome Cote

University of Montreal

David B. Balkin

University of Colorado at Boulder - Leeds School of Business

Abstract

The purpose of this study is to investigate, using data gathered from 325 French-Canadian organizations, the influence of key constructs related to agency, transaction cost and resource dependence theories on the proportion of salary in sales compensation. Usefulness analysis showed that performance information (9 per cent), uncertainty (8 per cent) and dependence resource (5 per cent) constructs have a significant incremental contribution to sales compensation. Regarding specific hypothesis tests, results of full model show that the capacity to observe behaviour, team sales and financial resources offered are associated with an increased use of salary pay. In contrast, adaptability of product/service-related resources, sales force experience and high marginal sales force productivity are associated with decreased use of the salary component. However, the results of full model have failed to support the direction or influence of relationships between programmability, span of control, market and selling uncertainty, the predominance of salespeople and TCA measures on proportion of salary. The results support the argument that integration of multiple theoretical perspectives better explains pay policy.

Suggested Citation

Tremblay, Michel and Cote, Jerome and Balkin, David B., Explaining Sales Pay Strategy Using Agency, Transaction Cost and Resource Dependence Theories. Available at SSRN: https://ssrn.com/abstract=452792

Michel Tremblay (Contact Author)

HEC-Montreal School of Business ( email )

3000, Chemin de la Côte-Sainte-Catherine
Montreal, Quebec H3T 2A7
Canada

Jerome Cote

University of Montreal

C.P. 6128, succursale Centre-Ville
Montreal, Quebec H3C 3J7
Canada

David B. Balkin

University of Colorado at Boulder - Leeds School of Business ( email )

Boulder, CO 80309-0419
United States
303-492-5780 (Phone)

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