Agency- and Institutional-Theory Explanations: The Case of Retail Sales Compensation

Abstract

This research evaluated when organizations use salary compensation and when they use compensation that is based on performance. Variables from agency- and institutional-theory perspectives were used to explore the sales-compensation policies of 54 retail specialty stores. The programmability of a job, span of control, uncertainty, type of merchandise, and the age of a store chain were strong predictors of compensation policy. Overall, the results suggest that both perspectives are necessary for a good description of compensation policies.