تاثیر اعتماد بر طرح های جبران خدمت مبتنی بر تشویق، عدم تقارن اطلاعات و تعهد سازمانی روی عملکرد مدیریتی

This study examines the effects of information asymmetry and organisational commitment on the relation between the extent of reliance on incentive-based compensation schemes and managerial performance. The responses of 109 managers, drawn from a cross-section of Australian manufacturing companies, to a questionnaire survey, were analysed by using a multiple regression technique. The results provide evidence of higher managerial performance for managers with low organisational commitment and a high reliance on incentive-based compensation schemes in high information asymmetry situations. On the other hand, the results show that the performance level of managers with high organisational commitment is unaffected regardless of the degree of information asymmetry and the extent of reliance on incentive-based compensation schemes.

Incentive-based compensation schemes are used by organisations to align the interests of employees with owners (see Baker et al., 1988). The primary reason why organisations use an incentive-based compensation scheme is to ensure that their employees’ efforts can be channeled toward activities that facilitate the achievement of organisational objectives ( Flamholtz et al., 1985, Banker et al., 1996a, Banker et al., 1996b, Banker et al., 2001 and Gibbs et al., 2004).1 Most of the research examining the control system effects of compensation schemes is based on an agency theory framework. Agency theory suggests that an agent is capable of engaging in dysfunctional behaviours known as adverse selection and moral hazard ( Arrow, 1985, Baiman, 1982 and Baiman, 1990).2 The dysfunctional behaviours arise when the agent and the principal have different risk preferences and conflicting goals.3 This is because agents, who possess more private information about their task environment than their superior, are assumed to use this private information to make decisions in their self-interests. The existence of private information is an illustration of information asymmetry ( Baiman and Evans, 1983, Penno, 1984, Coughlan and Schmidt, 1985 and Dunk, 1993), which refers to subordinates who possess more private information than their superior relating to their area of responsibility (Dunk, 1993). Thus, it is argued that when information asymmetry is high, dysfunctional behaviours are more likely to occur than when information asymmetry is low (see Eisenhardt, 1985 and Pratt and Zeckhauser, 1985). Agency theorists posit that the principal can minimise moral hazard problems by developing an incentive-based compensation scheme (a control subsystem), which aligns the interests of principal and agent (Eisenhardt, 1988, Eisenhardt, 1989 and Kaplan and Atkinson, 1998, p. 681). A fundamental objective of an incentive-based compensation scheme is to motivate individuals to exert effort to improve performance. A recent study by Sprinkle (2000) found that the reliance on an incentive-based compensation scheme improves individuals’ performance by motivating them to increase both the duration and intensity of their effort. He found that incentives not only motivate individuals to work longer on a task, but also serve to enhance the quality of attention individuals devote to the task. Previous incentive-contracting studies (Chow, 1983; Waller and Chow, 1985 and Chow et al., 1988) have proposed the use of incentive-based compensation schemes for motivating truthful reporting by subordinates. Specifically, these studies found that the reliance on incentive-based compensation schemes can enhance individual performance. However, Waller (1994) criticises these studies for investigating economic incentive without explicitly considering other behavioural factors. Frederickson (1992) also argues that conclusions drawn from agency theory-based models that ignore behavioural factors should be interpreted cautiously. In addition, numerous studies ( Baker et al., 1988, Kachelmeier, 1994, Kachelmeier, 1996, Luft, 1997, Evans et al., 2001 and Merchant et al., 2003) argued that better insights may be gained if the results of agency and behavioural studies are integrated. For example, it has been asserted that a manager's level of organisational commitment (a behavioural factor at the individual level) is as important as the extent of reliance on an incentive-based compensation scheme for motivating effort (see Simon, 1991). Prior studies (e.g. Mathieu and Zajac, 1990, Randall, 1990 and Nouri and Parker, 1998) argued that organisational commitment may have the potential for improving work outcomes such as subordinates’ performance. Furthermore, it has been found that subordinates with high levels of organisational commitment are more likely to use their private information to pursue organisational goals, while subordinates with low levels of organisational commitment are more likely to use their private information largely to pursue self-interest (see Nouri and Parker, 1996). Thus, it seems likely that the effects of the extent of reliance on incentive-based compensation schemes on performance may depend not only on the degree of information asymmetry present, but also on the manager's level of organisational commitment. While these linkages have been recognised in the literature, there have been no studies that attempt to evaluate the three-way interactive effects between the degree of information asymmetry, subordinates’ levels of organisational commitment and the extent of reliance on incentive-based compensation schemes affecting managerial performance. This gap in the accounting literature, which remains unexplored, constitutes the motivation for this paper. This paper is organised as follows. In the next section, the theoretical framework underlying the study is developed. This leads to the statement of hypotheses. Subsequent sections address the method, results, discussions, and limitations of the study.

The purpose of this study was to investigate the interactive effects of the degree of information asymmetry, managers’ levels of organisational commitment and the extent of reliance on incentive-based compensation schemes on managerial performance. The results of this study demonstrated that two contingent variables, namely information asymmetry and organisational commitment, can be usefully examined jointly. The results indicate that whether reliance on incentive-based compensation schemes enhances managerial performance depends on whether subordinates’ behaviour can be easily and readily motivated. This in turn depends upon their level of organisational commitment, as organisational commitment affects the level of effort subordinates will exert on the job.13 Specifically, the results of our study reveal that the performance level of managers with low levels of organisational commitment was high when the extent of reliance on incentive-based compensation schemes and the degree of information asymmetry were both high (see hypothesis HA1). This result lends support to standard agency theory predictions which assumed that individuals are: (1) effort-averse and risk-averse; (2) possess low levels of organisational commitment; and (3) are motivated solely by self-interest. It is noteworthy that when the assumptions of standard agency theory are relaxed, the role of an incentive-based compensation scheme is not important. For example, the results of hypothesis HA2 reveal that the performance level of managers with high levels of organisational commitment remained relatively unaffected by the degree of information asymmetry and the extent of reliance on incentive-based compensation schemes. Taken together, the results of this study contribute to the management accounting literature by responding to calls (e.g. Eisenhardt, 1988, Waller, 1994, Waller, 1995 and Merchant et al., 2003) to integrate theories, such as agency theory and behavioural theory, to better understand the joint effects of an agency factor (e.g. information asymmetry) and a behavioural factor (e.g. organisational commitment) on the relation between the extent of reliance on incentive-based compensation schemes and managerial performance.14 The results of this paper have practical implications for the selection and placement of managers as well as for the effective design of incentive-based compensation schemes. An organisation is only as strong as the people it comprises. Thus, decisions made about whom to select and who to reject for organisational membership are critical to the company's ability to derive competitive advantage through its human resources. Bowen et al. (1991), for example, argue that firms should look at individuals in terms of their long-term potential to contribute to the organisation, as opposed to a short-term focus on meeting the requirements of one specific job. As such, the emphasis should be on matching the potential employees’ personal attributes and characteristics to those of the organisational culture. In addition, the results of this paper indicate that not all individuals are positively affected by a high reliance on incentive-based compensation schemes. The results suggest that a high reliance on an incentive-based compensation scheme is an appropriate motivational tool for managers with low levels of organisational commitment under high information asymmetry situations, but is dysfunctional for such managers under low information asymmetry conditions. Further, a company should consider the use of policies that increase the commitment of its managers to the company's goals and values; as such policies are also important to the effective implementation of appropriate control tools such as incentive-based compensation schemes. A number of limitations of this study should be noted. First, this study did not consider other variables which might be significant to the design of effective incentive-based compensation systems and their impact on managers’ performance. For example, at the organisational (macro)-level, the potential variables that might affect incentive-based compensation scheme design and managerial performance include the organisation's strategies (Fisher and Govindarajan, 1993, Chong and Chong, 1997 and Langfield-Smith, 1997), and the external environment (Chong and Chong, 1997, Mia and Clarke, 1999 and Chong and Rundus, 2004). At the individual (micro)-level, the potential variables include decision-makers’ cognitive styles (Awasthi and Pratt, 1990) and personality traits (Chong and Eggleton, 2003). Second, this study focused only on the extent of the use of incentive-based compensation schemes by organisations to address their agency problem (i.e. moral hazard). It has been suggested that monitoring systems, which provide information about the agent's behaviour, is another alternative approach available to the principal to address the agency problem (see Eisenhardt, 1989). Conlon and Parks (1990) suggest investigating whether theoretical matches between incentive-based compensation schemes and monitoring systems produce better performance than mismatches between these variables. Milgrom and Roberts (1992), on the other hand, propose that both incentive-based compensation schemes and monitoring systems can be used either as substitutes or complements.15 Thus, it is plausible that incentive-based compensation schemes and monitoring systems could interact to affect an agent's performance. In addition, prior studies (see e.g. Fatseas and Hirst, 1992) have examined the types of compensation schemes (such as fixed-pay and piece-rate) on individuals’ performance. Future research to explore the joint and interactive effects of incentive-based compensation schemes, monitoring systems, and types of compensation schemes on performance would be worthwhile. Third, the sample comprised only senior-level managers drawn from large manufacturing companies in the Perth and Sydney metropolitan areas; consequently, the results are potentially generalisable to the Australian managerial populations, but are restricted to a similar level of management. In particular, generalising the results to non-manufacturing industries should be viewed with caution. Future research may extend and replicate this work focusing on other industries, such as the financial services sector, and retailing industries. Fourth, the use of self-rating scales to measure perceptions are likely to have higher mean values (higher leniency error) and a restricted range (lower variability error) in the observed score compared to more objective methods (Prien and Liske, 1962 and Thornton, 1968). Future research might usefully incorporate superiors’ ratings of their managers to compare with the managers’ self-ratings as a means of assessing the validity of the construct. Finally, this paper relied on the standard principal-agent theory model which consists of a single-period and single-agent phenomena. Such a model has been criticised for its simplicity and narrowness (see e.g. McKean, 1975, Collard, 1978, Noreen, 1988, Baiman, 1990 and Indjejikian, 1999). Thus, future research can extend this study by relying on experimental design methodology to explore the impact of the reliance on incentive-based compensation schemes on performance in multi-period and multi-agent settings. Despite the above limitations, this study developed and tested an interactive model of incentive-based compensation system design, an important and complex area of management accounting research. Most importantly, the results of this paper contribute and extend the existing knowledge of the management accounting literature in the area of management control systems design, and provide a useful basis for subsequent theoretical development in the field and related empirical analyses.