Microlevel Opportunity Structures as Determinants of Non-CEO Executive Pay

Abstract

We develop a theory wherein the pay of non-CEO executives can be explained by micro-level opportunity structures—the intersection of functional position, CEO background, human capital, and firm strategic resource allocation decisions. Our theory suggests a positive association between pay and a position made visible by resource allocation decisions, a functional background similar to that of the CEO, and a position that helps the firm manage strategic resource allocations. A unique longitudinal data set that combines survey and archival data on the four highest echelons of senior executives in large U.S. firms provided support for this multilevel framework.