Abstract
Abstract The purpose of this study is to examine empirically whether managerial pay of small-firm executives is more closely related to profitability or generation of sales. Conventional economic doctrine supports the hypothesis that chief executives are paid primarily to advance profitability. The contrary hypothesis, given impetus by Baumol [2] and Galbraith [8], asserts a closer relationship between compensation and sales. Previous studies of large corporations have produced conflicting results. Regression analysis of the 78 small firms in this study reveals managers receiving compensation correlating fairly closely with both profitability and sales. The cumulative forces at work in these firms impacting upon managerial pay appear to have wrought a linkage conductive toward motivating managers to be both “bottom line” and marketing oriented.
Sign-in/Register to access full text options 
Talk to us
Join us for a 30 min session where you can share your feedback and ask us any queries you have
Schedule a callDisclaimer: All third-party content on this website/platform is and will remain the property of their respective owners and is provided on "as is" basis without any warranties, express or implied. Use of third-party content does not indicate any affiliation, sponsorship with or endorsement by them. Any references to third-party content is to identify the corresponding services and shall be considered fair use under The CopyrightLaw.
