The Effect of Merit Pay on Organizational Productivity in Small and Mid-Sized Firms:
- Title
- The Effect of Merit Pay on Organizational Productivity in Small and Mid-Sized Firms:
- Other Titles
- 중소기업들의 누적식 연봉제 도입이 조직 생산성에 미치는 영향: 잠재성장모형 접근
- Author
- 나일환
- Alternative Author(s)
- 나일환
- Advisor(s)
- 유규창
- Issue Date
- 2017-02
- Publisher
- 한양대학교
- Degree
- Master
- Abstract
- Since the 1997-98 Asian financial crisis, Korean firms started to
change their management systems following practices of large western
companies based in North America. One of the major changes was the
adoption of a pay-for-performance plan called merit pay. Not only Korean
conglomerates but also a few small and medium-sized enterprises have
adopted merit pay to survive in the increasing uncertainty inherent in
the business environment. But the effects of this practice are
controversial even in the home, North America; both the positive and
negative theory-driven arguments conflict with each other, a few
empirical pieces of evidence have shown insignificant results with
respect to a longitudinal aspect. Therefore, I examined the effect of
merit pay adoption in the small and medium-sized enterprises on
organizational productivity over time after the financial crisis.
Theoretically, I took advantage of marginal productivity theory of wages
to propose the positive relationship between merit pay implementation
and organizational productivity (hypothesis 1). Next, I drew on strength
of the HRM system theory in terms of consistency and two psychological theories (i.e., expectancy theory and reinforcement theory) to suggest
the effect of merit pay over time (hypothesis 2). In methodology, the
first Human Capital Corporate Panel survey conducted in 2005 was the
data; among 454 firms, I sorted firms based on two criteria: small and
medium-sized enterprises and firms that adopted one of several types of
Yeonbong-je, including merit pay, in 2000. The remained samples were 32.
I used organizational-level productivity data such as revenue per
employee, ordinary income per employee, and net income per employee for
four to six years as organizational productivity. I used latent growth
modeling to capture the initial status right after the adoption of merit
pay, and the changes in organizational productivity. The results showed
that adoption of merit pay negatively influenced on organizational
productivity after a year from the adoption, i.e., ordinary income per
employee and net income per employee, respectively (rejected hypothesis
1). Since then, the increasing linear growth pattern occurred at least
for three years (supported hypothesis 2).
- URI
- https://repository.hanyang.ac.kr/handle/20.500.11754/125195http://hanyang.dcollection.net/common/orgView/200000429797
- Appears in Collections:
- GRADUATE SCHOOL[S](대학원) > BUSINESS ADMINISTRATION(경영학과) > Theses (Master)
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