Title: Social ties, group dynamics, and executive compensation: an integrative two-stage framework

Authors: Won-Yong Oh; Rami Jung; Young Kyun Chang

Addresses: Lee Business School, University of Nevada, Las Vegas, 4505 S Maryland Pkwy, Las Vegas, NV 89154, USA ' Department of Business Management, Hansung University, Samseongyo-ro 16-gill, Seongbuk-gu, Seoul, South Korea ' Sogang Business School, Sogang University, 35 Baekbeom-ro, Mapo-gu, Seoul 04107, South Korea

Abstract: While the effect of top executives' social networks on their compensations has received substantial scholarly attention, little effort has been made to integrate segmented views to offer more complete understanding of this effect. In this paper, we propose an integrative two-stage model by taking both economic and socio-political views into account. We theorise that some characteristics of top executive's outside social ties are positively related to firm performance, and those relationships are conditioned by external and internal strategic contexts, such as environmental uncertainty, strategic relevance, and tie strength. We also theorise that firm performance leads to executives' compensations, but this linkage is moderated by the socio-political dynamics among executives (within-group dynamics) as well as between executives and a board of directors (between-group dynamics) inside the firm. Based on our integrative framework, this paper provides the comprehensive understanding of how executives' compensations are determined and highlights the importance of executive's social ties and their implications.

Keywords: social ties; executive compensation; strategic contexts; economic view; socio-political view.

DOI: 10.1504/IJBGE.2024.135077

International Journal of Business Governance and Ethics, 2024 Vol.18 No.1, pp.45 - 63

Received: 18 Apr 2021
Accepted: 24 Jul 2022
Published online: 30 Nov 2023 *