Contracting for success in the era of globalisation: aligning the supply chain manager’s compensation contract with the company’s supply chain strategy

Abstract

Research into compensation strategy has aimed at identifying the relationship between compensation design and firm performance. The relationship between CEO compensation and firm performance has been among the most widely investigated. Barkema and Gomez-Mejia (1998) have identified over 300 studies analyzing top management compensation, spanning more than 70 years of research. However, relatively little attention has been dedicated to the compensation of other managers (Barkema and Gomez-Mejia, 1998; Tosi et al., 2000) and its link to functional performance. Our chapter attempts to address this knowledge gap by focusing on compensation design at the functional management level and how it impacts a firm’s functional performance. Because of its growing importance our analysis will be centered on the functional area of supply chain management.