TMT Horizontal Pay Dispersion and Corporate Misconduct: An Intrinsic Motivation View

Abstract

Executive pay dispersion has emerged as an important and significant predictor of corporate misconduct. However, extant upper echelon research on corporate misconduct mainly relies on economic man assumption but fails to capture psychological complexity of executives. In this article, we draw on behavioral agency model to underscore individual’s underlying intrinsic motivation and develop a dynamic theoretical model of (1) the horizontal pay dispersion acts as an extrinsic incentive to suppress TMT members’ intrinsic motivation to different levels, and (2) the emerging process by which TMT member’s different emotions, motivations, and cognitions interact and evolve to corporate misconduct. Our model has theoretical and practical implications for scholarship concerning TMT horizontal pay dispersion, intrinsic motivation, emergent states, and corporate misconduct.