Compensation strategy: does business strategy influence compensation in high-technology firms?

Abstract

Drawing on the strategic employee group concept, this study empirically examines whether a firm's innovation strategy influences compensation systems for strategic employee groups in the high-technology industry. We focus on compensation packages for R&D employees who play a critical role in successful implementations of innovation strategy. Using compensation data for middle-level managers and professional employees from 237 firms in the high-technology industry, we found that a firm's strategic intention to pursue innovation has a significant influence on the relative pay level, compensation time horizon, and stock option vesting period lengths of this strategic employee group.

The impact of firm strategy on performance measures used in executive compensation

“…Balkin et al (2000) finds that compensation is related to innovation within the firm (as measured by a composite index made up of the number of patents, investments in innovation and R&D expenditure). Yanadori and Marler (2006) find that within technology firms, R&D employees have different pay structures than non R&D employees. Looking at firms in the metal mining industry, Singh and Agarwal (2002) find that CEOs of prospector firms (growth firms associated with greater risk) receive significantly greater long term compensation, than CEOs of defender firms (stable firms trying to maintain market share).…”

The moderating role of reward systems in the relationship between market orientation and new product performance in China

“…Reward systems entail the deliberate use of the pay system to guide and direct the behavior and efforts of various individuals and departments toward achieving a firm's goals (Gomez-Mejia & Balkin, 1987). Reward systems are a crucial contributor to strategy implementation (Yanadori & Marler, 2006) and to a firm's effectiveness and competitive advantage (GomezMejia & Welbourne, 1988;Shaw, Gupta, & Delery, 2001). Thus, it is not surprising that the impact of reward systems on the evaluation and control of performance has been ranked a top-tier research priority (e.g., Hauser, Tellis, & Griffin, 2006;Marketing Science Institute, 2004.…”

Hotel Compensation Strategies: Perceptions of Top Industry Executives

“…Studies include those done in the financial industries (Boyd & Salamin, 2001), high-technology industry (Yanadori & Marler, 2006), the chemical industry (Jerez-Gomez, Cespedes-Lorente, & Valle-Cabrera, 2007) among others. Furthermore, many studies have concentrated on only a key number of employees, such as those working in research and development, company executives, and so on.…”

“…Yanadori and Marler (2006) studied a company's efforts towards research and development and the compensation strategies adopted in favor of such efforts. The researchers emphasized the need for companies to adopt various strategies for different employees and that "strategic employees" should be compensated in a different form, with greater emphasis on long-term incentives.…”