We propose six hypotheses that relate employee, internal, and external inequities to changes in performance. We test these hypotheses with a sample of 362 Major League Baseball players. The findings showed that overpayment (as measured by actual employee and external inequities) is a significant predictor of positive performance changes, underpayment is a significant predictor of negative performance changes, and employee equity is a greater predictor of change in performance than internal equity.
BRETZ, R. D., Jr., & THOMAS, S. L.Perceived equity, motivation, and final-offer arbitration in Major League Baseball. Journal of Applied Psychology, 1992, 77, 280-287.
6.
CAMPBELL, J. P., & PRITCHARD, R. D.Motivation theory in industrial and organizational psychology. In M. Dunnette (Ed.), Handbook of industrial and organizational psychology. Chicago: Rand McNally, 1976.
7.
COFF, R. W.Human assets and management dilemmas: Coping with hazards on the road to resource-based theory. Academy of Management Review, 1997, 22, 374-402.
8.
COHEN, S. G., CHANG, L., & LEDFORD, G. E., Jr.The hierarchical construct of self-management leadership and its relationship to quality of work life and perceived work group effectiveness. Personnel Psychology, 1997, 50, 275-308.
9.
COOK, T. D., CROSBY, F., & HENNIGAN, K. M.The construct validity of relative depri-vation. In Suls, J. M. et al. (Eds.), Social comparison processes. Hemisphere Publishing Corporation: Washington D. C., 1977.
10.
COSIER, R. A., & DALTON, D. R.Equity theory and time: A reformulation. Academy of Management Review, 1983, 8, 311-319.
11.
COWHERD, D. M., & LEVINE, D. I.Product quality and pay equity between lower-level employees and top management: An investigation of distributive justice theory. Admin-istrative Science Quarterly, 1992, 37, 302-320.
12.
DANSEREAU, F., ALUTTO, J. A., & YAMMARINO, F. J.Theory testing in organizational behavior: The Variant Approach. Englewood Cliffs, NJ: Prentice-Hall, 1984.
13.
DAVIS, J. H.The future of salary surveys when jobs disappear. Compensation and Benefits Review, 1997, 29(1), 18-26.
14.
DUCHON, D., & JAGO, A. G.Equity and the performance of Major League Baseball play-ers: An extension of Lord and Hohenfeld. Journal of Applied Psychology, 1981, 66, 728-732.
15.
DYER, L., SCHWAB, D. P., & THERIAULT, R. D.Managerial perceptions regarding salary increase criteria. Personnel Psychology, 1976, 29, 233-242.
16.
FESTINGER, L. A.A theory of cognitive dissonance. Evanston, IL: Row, Peterson, 1957.
17.
FINN, R. H., & LEE, S. M.Salary equity: Its determination, analysis and correlates. Journal of Applied Psychology, 1972, 56, 283-292.
18.
FOK, L. Y., HARTMAN, S. J., VILLERE, M. F., FREIBERT, R. C. III. A study of the impact of cross cultural differences on perceptions of equity and organizational citizenship behavior. International Journal of Management, 1996, 13, 3-14.
19.
FREEDMAN, S. M., & MONTANARI, J. R.An integrative model of managerial reward allocation. Academy of Management Review, 1980, 5, 381-390.
20.
GLASS, R. S., & WOOD, W. A.Situational determinants of software piracy: An equity theory perspective. Journal of Business Ethics, 1996, 15, 1189-1198.
21.
GOODMAN, P. S., & FRIEDMAN, A.An examination of Adams' theory of unequity. Ad-ninistrative Science Quarterly, 1971, 16, 271-288.
22.
GREENBERG, J.Approaching equity and avoiding inequity in groups and organizations. In J. Greenberg and R. L. Cohen (Eds.), Equity and justice in social behavior. New York: Academic Press, 1982.
23.
GREENBERG, J., & ORNSTEIN, S.High status job title as compensation for underpayment: A test of equity theory. Journal of Applied Psychology, 1983, 68, 295-297.
24.
HARDER, J. W.Play for pay: Effects of inequity in a pay-for-performance context. Admin-istrative Science Quarterly, 1992, 37, 321-335.
25.
HAYS, W. L.Statistics (4th ed.). Fort Worth, TX: Holt, Rinehart and Winston, 1988.
26.
HENEMAN, H. G. III, SCHWAB, D. P., STANDAL, J. T., & PETERSON, R. B.Pay com-parisons: Dimensionality and predictability. Academy of Management Proceedings, 1980, 38, 211-215.
27.
HILL, J. R., & SPELLMAN, W.Pay discrimination in baseball: Data from the seventies. Industrial Relations, 1984, 23, 103-112.
28.
HILLS, F. S.The relevant other in pay comparisons. Industrial Relations, 1980, 19, 345-351.
29.
HOLLANDER, Z. (Ed.). The complete handbook of baseball. New York: Penguin, 1993.
30.
HOWARD, L. W., & MILLER, J. L.Fair pay for fair play: Estimating pay equity in profes-sional baseball with data envelopment analysis. Academy of Management Journal, 1992, 36, 882-894.
31.
HUSEMAN, R. C., HATFIELD, J. D., & MILES, E. W.A new perspective on equity theory: The equity sensitivity construct. Academy of Management Review, 1987, 12, 222-234.
32.
KING, W. C., Jr., MILES, E. W., & DAY, D. D.A test and refinement of the equity sensitivity construct. Journal of Organizational Behavior, 1993, 14, 301-317.
33.
KLEIN, S. M.Pay factors as predictors to satisfaction: A comparison of reinforcement, equity, and expectancy. Academy of Management Journal, 1973, 16, 598-610.
34.
LAWLER, E. E.Managers' attitudes toward how their pay is and should be determined. Journal of Applied Psychology, 1966, 50273-279.
35.
LAWLER, E. E.Pay and organizational development. Reading, MA: Addison-Wesley, 1981.
36.
LORD, R. G., & HOHENFELD, J. A.Longitudinal field assessment of equity effects on the performance of Major League Baseball players. Journal of Applied Psychology, 1979, 64, 19-26.
37.
MARKHAM, S. E.Pay-for-performance dilemma revisited: Empirical example of the impor-tance of group effects. Journal of Applied Psychology, 1988, 73, 172-180.
38.
MARTIN, J. E., & PETERSON, M. M.Two-tier wage structures: Implications for equity the-ory. Academy of Management Journal, 1987, 30, 297-315.
39.
MIDDLEMIST R. D., & PETERSON, R. B.Test of equity theory by controlling for com-parison co-workers' efforts. Organizational Behavior and Human Performance, 1976, 15, 335-354.
40.
MOORMAN, R. H.Relationship between organizational justice and organizational citizenship behaviors: Do fairness perceptions influence employee citizenship?Journal of Applied Psy-chology, 1991, 76, 845-855.
41.
MOWDAY, R. T.Equity theory predictions of behavior in organizations. In R. M. Steers and L. W. Porter (Eds.), Motivation and work behavior (3rd Ed.). New York: McGraw-Hill, 1983, pp. 91-113.
42.
PAYTEN, T. H.Pay: Employee compensation and incentive plans. New York: The Free Press, 1977.
43.
PFEFFER, J., & DAVIS-BLAKE, A.Salary dispersion, location in the salary distribution, and turnover among college administrators. Industrial and Labor Relations Review, 1992, 45753-763.
44.
PFEFFER, J., & LANGTON, N.The effect of wage dispersion on satisfaction, productivity, and working collaboratively: Evidence from College and University faculty. Administrative Science Quiarterly, 1993, 38382-407.
45.
PRITCHARD, R. D.Equity theory: A review and critique. Organizational Behavior and Hu- man Performance, 1969, 4, 176-211.
46.
ROBERTS, J. A., & CHONKO, L. B.Pay satisfaction and sales force turnover: The impact of different facets of pay on pay satisfaction and its implications for sales force manage-ment. Journal of Managerial Issues, 1996, 8, 154-169.
47.
ROCK, M. L.Handbook of wage and salary administration. New York: McGraw Hill, 1984.
48.
ROMANOFF, K., BOEHM, K., & BENSON, E.Pay equity: Internal and external considera-tions. Compensation and Benefits Review, 1986, 18(3), 17-25.
49.
RONEN, S.Equity perceptions in multiple comparisons: A field study. Human Relations, 1986, 4, 333-346.
50.
SIMPSON, A., & BERARDINO, M. (Eds.). Baseball America's 1993 Almanac. Boston: Base-ball America, 1986.
51.
STOUFFER, S. A., SUCHMAN, E. A., DeVINNEY, L. C., STAR, S. A., & WILLIAMS, R. M., Jr.The American soldier: Adjustment dtring army life. Princeton, NJ: Princeton Uni-versity Press, 1949.
52.
THORN, J., & PALMER, P. (Eds.). Total baseball. New York: Harper Collins, 1993.
53.
WEICK, K. E., BOUGON, M. G., & MARUYAMA, G.The equity context. Organizational Behavior and Hiuman Performance, 1976, 15, 32-65.
54.
XIN, K. R., & PEARCE, J. L.Guanxi: Connections as substitutes for formal institutional support. Academy of Management Journal, 1996, 39, 1641-1658.
55.
YAMMARINO, E. J., & DUBINSKY, A. J.Superior-subordinate relationships: A multiple levels of analysis approach. Human Relations, 1992, 45, 575-600.
56.
YOUNDT, M. A., SNELL, S. A., DEAN, J. W, Jr., & LEPAK, D. P.Human resource man-agement, manufacturing strategy, and firm performance. Academy of Management Journal, 19"6, 39, 836-866.