Social Exchange and the Effects of Employee Stock Options

[We’re pleased to welcome authors Peter Cappelli of the University of Pennsylvania, Martin Conyon of Bentley University, David Almeda of Kronos Incorporated. They recently published an article in the ILR Review entitled “Social Exchange and the Effects of Employee Stock Options,” which is currently free to read for a limited time. Below, they describe the motivation for this research.

The interesting thing about our paper is that both the practice and the research on topics like compensation and rewards is centered on the idea that incentives are the key to motivation. We design rewards to make this happen.

What we investigate is a different motivation, and that is the sense of obligation we might feel to an organization for doing something good for you. In this case it is the granting of stock options to lower-level managers, which the company presents as a way to share in the success of the company’s performance. We can sort out that effect from the effect of incentives, and we find that this obligation has a much bigger effect on employee performance than the effect of an incentive to help the business so the employees will see a bigger payoff from stock options.

The point of this is that companies may be going about this all wrong. Doing nice things for employees can be a terrific way to get them to perform better.

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This entry was posted in Labor and tagged , , , by Cynthia Nalevanko, Senior Editor, SAGE Publishing. Bookmark the permalink.

About Cynthia Nalevanko, Senior Editor, SAGE Publishing

Founded in 1965, SAGE is the world’s leading independent academic and professional publisher. Known for our commitment to quality and innovation, SAGE has helped inform and educate a global community of scholars, practitioners, researchers, and students across a broad range of subject areas. With over 1500 employees globally from principal offices in Los Angeles, London, New Delhi, Singapore, Washington DC, and Melburne, our publishing program includes more than 1000 journals and over 900 books, reference works and databases a year in business, humanities, social sciences, science, technology and medicine. Believing passionately that engaged scholarship lies at the heart of any healthy society and that education is intrinsically valuable, SAGE aims to be the world’s leading independent academic and professional publisher. This means playing a creative role in society by disseminating teaching and research on a global scale, the cornerstones of which are good, long-term relationships, a focus on our markets, and an ability to combine quality and innovation. Leading authors, editors and societies should feel that SAGE is their natural home: we believe in meeting the range of their needs, and in publishing the best of their work. We are a growing company, and our financial success comes from thinking creatively about our markets and actively responding to the needs of our customers.

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