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The Role of Country and the Effectiveness of Compensation Strategies in Technology-Intensive Firms

The purpose of this study was to examine the role of country and technological intensity in the choice of compensation policies, and the influence of such policies on market performance and turnover in high and low technological intensity firms. Using a survey of 602 large firms in three countries (Canada, France, Great Britain), we show that country plays a more predominant role than technology in understanding compensation policies. A second survey of 128 Canadian organizations shows that several compensation strategies are better adapted to firms in high technology environments. More specifically, we found that greater pay bonuses and emphasis on group performance incentive plans are positively associated with organizational market performance in high tech firms. Results show that extensive use of individual performance pay plans in high tech firms increases the rate of turnover, whereas the use of group incentive plans decreases the rate of turnover.
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