How Economic Incentives May Destroy Social, Ecological and Existential Values: The Case of Executive Compensation

Journal of Business Ethics 123 (2):1-8 (2014)

Authors
Lars Pedersen
University of Copenhagen
Abstract
Executive compensation has long been a prominent topic in the management literature. A main question that is also given substantial attention in the business ethics literature—even more so in the wake of the recent financial crisis—is whether increasing levels of executive compensation can be justified from an ethical point of view. Also, the relationship of executive compensation to instances of unethical behavior or outcomes has received considerable attention. The purpose of this paper is to explore the social, ecological, and existential costs of economic incentives, by discussing how relying on increasing levels of executive compensation may have an adverse effect on managerial performance in a broad sense. Specifically, we argue that one-dimensional economic incentives may destroy existential, social, and systemic values that influence the manager’s commitment to ensure responsible business conduct, and have negative spillover effects that may reduce the manager’s performance. There are well-documented findings that demonstrate that reliance on sources of extrinsic motivation (such as economic incentives) may displace intrinsic motivation. Our perspective is a holistic one, in the sense that we will explore the influence of sources of extrinsic motivation on the manager’s intrinsic commitment to different types of values. We will in particular investigate how it may influence the manager’s ethical reflection and behavior or lack thereof
Keywords Executive compensation  Holistic perspective  Incentives  Motivation  Value-dimensions of managerial performance
Categories (categorize this paper)
Reprint years 2014
ISBN(s)
DOI 10.1007/s10551-013-1844-6
Options
Edit this record
Mark as duplicate
Export citation
Find it on Scholar
Request removal from index
Revision history

Download options

Our Archive


Upload a copy of this paper     Check publisher's policy     Papers currently archived: 47,330
External links

Setup an account with your affiliations in order to access resources via your University's proxy server
Configure custom proxy (use this if your affiliation does not provide a proxy)
Through your library

References found in this work BETA

Moral Luck.B. A. O. Williams & T. Nagel - 1976 - Proceedings of the Aristotelian Society, Supplementary Volumes( 50:115-151.
A Theory of Human Motivation.A. H. Maslow - 1943 - Psychological Review 50 (4):370-396.

View all 16 references / Add more references

Citations of this work BETA

Add more citations

Similar books and articles

A Moral and Economic Defense of Executive Compensation.John Dobson - 2011 - Business and Professional Ethics Journal 30 (1-2):59-70.
CEO Incentives and Corporate Social Performance.Jean McGuire, Sandra Dow & Kamal Argheyd - 2003 - Journal of Business Ethics 45 (4):341 - 359.
Executive Compensation and Earnings Persistence.Allan S. Ashley & Simon S. M. Yang - 2004 - Journal of Business Ethics 50 (4):369-382.
A Model Capturing Ethics and Executive Compensation.Waymond Rodgers & Susana Gago - 2003 - Journal of Business Ethics 48 (2):189-202.
The Ethics of Hedging by Executives.Lee M. Dunham & Ken Washer - 2012 - Journal of Business Ethics 111 (2):157-164.
A Fair Wage? Capping Executive Compensation.Julian Friedland - 2010 - Journal of Business Ethics Education 7:129-139.

Analytics

Added to PP index
2013-12-12

Total views
38 ( #241,356 of 2,291,029 )

Recent downloads (6 months)
11 ( #74,544 of 2,291,029 )

How can I increase my downloads?

Downloads

My notes

Sign in to use this feature