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- Title
Selection Benefits of Below-Market Pay in Social-Mission Organizations: Effects on Individual Performance and Team Cooperation.
- Authors
Chen, Clara Xiaoling; Pesch, Heather L.; Wang, Laura W.
- Abstract
Many organizations whose core purpose is to advance a social mission pay employees below-market wages. We investigate two under-appreciated benefits of below-market pay in these social-mission organizations. In a series of experiments, we predict and find that, holding employees' outside opportunities constant, those attracted to social-mission organizations that pay below-market wages perform better individually and cooperate more effectively in teams than those attracted to social-mission organizations that pay higher wages. The individual performance effect arises because below-market pay facilitates the selection of value-congruent employees who are naturally inclined to work hard for the organizational mission. The team cooperation effect arises because employees expect team members who have selected a social-mission job that pays below market to be more value-congruent and, therefore, more cooperative than those who have selected a social-mission job that pays higher wages. Collectively, we demonstrate that in social-mission organizations, offering below-market pay can yield selection benefits.
- Subjects
WAGES &; labor productivity; NONPROFIT organization finance; NONPROFIT organization management; SOCIAL responsibility of business; JOB performance
- Publication
Accounting Review, 2020, Vol 95, Issue 1, p57
- ISSN
0001-4826
- Publication type
Article
- DOI
10.2308/accr-52416