Publication Date

March 1990


Agency theory, leading edge, and administrative life cycle perspectives all predict that organizations having high levels of Research and Development (R&D) intensity will follow different compensation strategies than organizations that are less R&D intensive. Using data from 110 organizations over a 5 year period, and controlling for organization differences in employee and job characteristics, we found support for this general prediction. Specifically, high R&D intensity organizations tended to have higher relative base pay, higher relative bonus pay, and greater relative eligibility for long-term incentive payments. We discuss the importance of further research into compensation decisions in R&D intensive firms, particularly the effects of such decisions on firms' competitiveness.


Suggested Citation
Milkovich, G. T., Gerhart, B., & Hannon, J. (1990). The effects of research and development intensity on managerial compensation in large organizations (CAHRS Working Paper #90-09). Ithaca, NY: Cornell University, School of Industrial and Labor Relations, Center for Advanced Human Resource Studies.