Pay for performance in Korean companies : Explanations from institutional and motivation theories

Pay for performance in Korean companies : Explanations from institutional and motivation theories

  A multilevel, or “meso” approach has been advocated for enhanced understanding of organizational practices and processes, but empirical studies have been rare. The current research examines the spread and the effects of the pay-for-performance practice in Korean companies with a multilevel frame. With data collected from 635 individual employees from 30 companies in Korea, premises from institutionalism and motivation theories were largely supported. Company utilization of pay-for-performance practices was significantly explained by the industry rate and company age. Industry rate, company utilization of the practice, and size of the company predicted employees’ perception of instrumentality of the pay practice, which in turn, predicted the work effort level of employees.