Organizational constitution, organizational identification, and executive pay: Executive controls in the USA and Japan

The purpose of this paper is to provide insights from the upper echelon, agency, and organizational identification literatures to help explain cross-cultural differences in top management team pay.

This is a theoretical paper building upon the executive compensation literature examining US and Japanese pay schemes.

The paper presents three propositions relating to the influence of organizational constitution and organizational identification on the level of pay, as well as the allocation of pay in top management team compensation schemes.

There is relatively little research focusing on why there are cross-cultural pay differences. This paper uses US and Japanese studies to highlight mechanisms that can foster principal-agent goal alignment in different contexts.