Review of Business and Economics Studies, 2014, том 2, № 1

Review of  
Business and 
Economics  
Studies

EDITOR-IN-CHIEF
Prof. Alexander Ilyinsky
Dean, International Finance Faculty, 
Financial University, Moscow, Russia
ailyinsky@fa.ru 

EXECUTIVE EDITOR
Dr. Alexander Kaffka

EDITORIAL BOARD

Dr. Mark Aleksanyan
Adam Smith Business School, 
The Business School, University 
of Glasgow, UK

Dr. Edoardo Croci
Research Director, IEFE Centre for 
Research on Energy and Environmental 
Economics and Policy, Università 
Bocconi, Italy

Prof. Moorad Choudhry
Dept.of Mathematical Sciences, Brunel 
University, UK

Prof. David Dickinson 
Department of Economics, Birmingham 
Business School, University of 
Birmingham, UK

Prof. Chien-Te Fan
Institute of Law for Science and 
Technology, National Tsing Hua 
University, Taiwan

Prof. Wing M. Fok
Director, Asia Business Studies, College 
of Business, Loyola University New 
Orleans, USA

Prof. Konstantin P. Gluschenko
Faculty of Economics, Novosibirsk State 
University, Russia

Prof. George E. Halkos
Associate Editor in Environment and 
Development Economics, Cambridge 
University Press; Director of Operations 
Research Laboratory, University of 
Thessaly, Greece

Prof. S. Jaimungal
Associate Chair of Graduate 
Studies, Dept. Statistical Sciences 
& Mathematical Finance Program, 
University of Toronto, Canada

Prof. Bartlomiej Kaminski
University of Maryland, USA; 
Rzeszow University of Information 
Technology and Management,  
Poland

Prof. Vladimir Kvint 
Chair of Financial Strategy, Moscow 
School of Economics, Moscow State 
University, Russia

Prof. Alexander Melnikov 
Department of Mathematical and 
Statistical Sciences, University of 
Alberta, Canada

Prof. George Kleiner
Deputy Director, Central Economics and 
Mathematics Institute, Russian Academy 
of Sciences, Russia

Prof. Kwok Kwong
Director, Asian Pacific Business 
Institute, California State University, Los 
Angeles, USA

Prof. Dimitrios Mavrakis
Director, Energy Policy and 
Development Centre, National and 
Kapodistrian University of Athens, 
Greece

Prof. Steve McGuire
Director, Entrepreneurship Institute, 
California State University, Los Angeles, 
USA

Prof. Rustem Nureev
Head of the Department of 
Macroeconomics, Financial University, 
Russia

Dr. Oleg V. Pavlov
Associate Professor of Economics and 
System Dynamics, Department of Social 
Science and Policy Studies, Worcester 
Polytechnic Institute, USA

Prof. Boris Porfiriev
Deputy Director, Institute of Economic 
Forecasting, Russian Academy of 
Sciences, Russia

Prof. Svetlozar T. Rachev
Professor of Finance, College of 
Business, Stony Brook University, USA

Prof. Boris Rubtsov
Chair of Financial Markets and Financial 
Engineering, Financial University, Russia

Dr. Minghao Shen
Dean, Center for Cantonese Merchants 
Research, Guangdong University of 
Foreign Studies, China

Prof. Dmitry Sorokin
Deputy Director, Institute of Economy, 
Russian Academy of Sciences, Head of 

the Department of Macroeconomics 
Regulation, Financial University, Russia

Prof. Robert L. Tang
Vice Chancellor for Academic, De La 
Salle College of Saint Benilde, Manila, 
The Philippines

Dr. Dimitrios Tsomocos 
Saïd Business School, Fellow in 
Management, University of Oxford; 
Senior Research Associate, Financial 
Markets Group, London School 
of Economics, UK

Prof. Sun Xiaoqin
Dean, Graduate School of Business, 
Guangdong University of Foreign 
Studies, China

REVIEW OF BUSINESS 
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ISSN 2308-944X

Вестник 
исследований 
бизнеса и  
экономики

ГЛАВНЫЙ РЕДАКТОР
А.И. Ильинский, профессор,  
декан Международного финансового факультета Финансового университета 

ВЫПУСКАЮЩИЙ РЕДАКТОР
А.В. Каффка

РЕДАКЦИОННЫЙ СОВЕТ

М. М. Алексанян, профессор Бизнесшколы им. Адама Смита, Университет 
Глазго (Великобритания)

К. Вонг, профессор, директор Института азиатско-тихоокеанского бизнеса 
Университета штата Калифорния, 
Лос-Анджелес (США)

К. П. Глущенко, профессор Экономического факультета Новосибирского 
госуниверситета

С. Джеимангал, профессор Департамента статистики и математических финансов Университета Торонто 
(Канада)

Д. Дикинсон, профессор Департамента экономики Бирмингемской бизнесшколы, Бирмингемский университет 
(Великобритания)

Б. Каминский, профессор,  
Мэрилендский университет (США); 
Университет информационных 
технологий и менеджмента в Жешове 
(Польша)

В. Л. Квинт, заведующий кафедрой 
финансовой стратегии Московской 
школы экономики МГУ, профессор 
Школы бизнеса Лассальского университета (США)

Г. Б. Клейнер, профессор, член-корреспондент РАН, заместитель директора Центрального экономико-математического института РАН

Э. Крочи, директор по научной работе Центра исследований в области 

энергетики и экономики окружающей 
среды Университета Боккони (Италия)

Д. Мавракис, профессор, директор 
Центра политики и развития энергетики Национального университета 
Афин (Греция)

С. Макгвайр, профессор, директор 
Института предпринимательства 
Университета штата Калифорния, 
Лос-Анджелес (США)

А. Мельников, профессор Департа мента математических и статистических исследований Университета провинции Альберта (Канада)

Р. М. Нуреев, профессор, заведующий 
кафедрой «Макроэкономика» Финансового университета

О. В. Павлов, профессор Депар тамента по литологии и полити ческих 
исследований Ворчестерского политехнического института (США) 

Б. Н. Порфирьев, профессор,  
член-корреспондент РАН, заме ститель 
директора Института народнохозяйственного прогнозирования РАН

С. Рачев, профессор Бизнес-колледжа 
Университета Стони Брук (США) 

Б. Б. Рубцов, профессор, заведующий 
кафедрой «Финансовые рынки и финансовый инжиниринг» Финансового 
университета

Д. Е. Сорокин, профессор, членкорреспондент РАН, заместитель 
директора Института экономики РАН, 
заведующий кафедрой «Макроэкономическое регулирование» Финансового университета

Р. Тан, профессор, проректор Колледжа Де Ла Саль Св. Бенильды (Филиппины) 

Д. Тсомокос, Оксфордский университет, старший научный сотрудник 

Лондонской школы экономики (Великобритания)

Ч. Т. Фан, профессор, Институт 
права в области науки и технологии, 
национальный университет Цин Хуа 
(Тайвань)

В. Фок, профессор, директор по исследованиям азиатского бизнеса Бизнесколледжа Университета Лойола (США)

Д. Е. Халкос, профессор, Университет 
Фессалии (Греция)

М. Чудри, профессор, Университет 
Брунеля (Великобритания)

Сун Цяокин, профессор, декан Высшей школы бизнеса Гуандунского 
университета зарубежных исследований (КНР)

М. Шен, декан Центра кантонских 
рыночных исследований Гуандунского университета (КНР)

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CONTENTS

A Multi-Modality Approach to Examine Reward Satisfaction amongst Mid-Level 
Managers
Alvise Favotto, Georgios Kominis, Clive R. Emmanuel . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5

Time-Varying Term Structure of Risk Premium, Estimated with Credit Default 
Swaps
Victoria Kostyuk . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21

Do Workers’ Remittances Induce Inflation? The Case of Vietnam, 1996–2012
To Ngoc Hung, Nguyen Khac Minh . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39

Integrated Performance Management – Strategy, Risk and Sustainability 
Management
Wilfried Lux  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49

Carbon Dioxide Emissions from Indian Manufacturing Industries: Role of Energy 
and Technology Intensity
Santosh Kumar Sahu, K. Narayanan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60

A Principle of Equitable Access to Sustainable Development – Internalizing 
Externalities in the Global Climate Talks
Ariel Macaspac Hernandez  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 74

Using Simulation Models for Green Economy Policy Making: A Comparative 
Assessment
Andrea M. Bassi . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 88

Design and Economics of a Hybrid Desalination System Applied to an Offshore 
Platform
Nikitas Nikitakos, Afrokomi-Afroula Stefanakou . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .100

Review of  
Business and 
Economics  
Studies

Volume 2, Number 1, 2014

CОДЕРЖАНИЕ

Многомодальный подход к анализу удовлетворенности вознаграждениями 
среди менеджеров среднего звена
Алвизе Фавотто, Георгиос Коминис, Клайв Имменюэл . . . . . . . . . . . . . . . . . . . . . . . . . . . . .5

Временная динамика премии за риск, рассчитанной с использованием 
кредитных дефолтных свопов
Виктория Костюк . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .21

Стимулируют ли инфляцию денежные переводы граждан, работающих 
за границей? (на примере Вьетнама 1996–2012 гг.)
То Нгок Хынг, Нгуен Хак Минь . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .39

Комплексное управление эффективностью: управление стратегией, рисками, 
устойчивостью
Вилфрид Лукс  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .49

Зависимость уровня выбросов углекислого газа в индийской 
обрабатывающей промышленности от энергетических технологий
Cантош Кумар Саху, К. Нараянан . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .60

Роль принципа справедливого доступа к устойчивому развитию 
в переговорах по изменению климата
Ариэль Макаспак Эрнандес . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .74

Использование имитационных моделей принятия решений в области 
«зеленой экономики»: сравнительная оценка
Андреа Басси . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .88

Технико-экономические аспекты проекта гибридной системы опреснения 
для применения на морской платформе
Никитас Никитакос, Афрокоми-Афрула Стефанаку  . . . . . . . . . . . . . . . . . . . . . . . . . . . 100

Вестник 
исследований 
бизнеса и  
экономики

№ 1, 2014

Review of Business and Economics Studies  
 
Volume 2, Number 1, 2014

A Multi-Modality Approach to Examine 
Reward Satisfaction amongst Mid-Level 
Managers*

Alvise FAvotto
School of Social and Political Sciences, University of Glasgow, UK
alvise.favotto@glasgow.ac.uk 

Georgios Kominis
Adam Smith Business School, University of Glasgow, UK
Georgios.Kominis@glasgow.ac.uk

Clive R. EmmAnuEl 
Adam Smith Business School, University of Glasgow, UK

Abstract. Limited research addresses the perceptions of mid-level managers as recipients of desirable rewards. 
In contrast to CEO “tailor-made” compensation schemes, mid-level manager reward schemes are treated as 
homogeneously acceptable to motivate individuals. However, in large corporations, mid-level managers are organized in 
several echelons where size of business unit, functions or geographic locations create an organizational hierarchy. Data 
from 1,771 mid-level managers across five echelons in a single company are analysed to discover reward satisfaction 
employing instrumental, affective and cognitive modalities (Elizur, 1984). Our findings reveal systematic patterns in 
satisfaction with different rewards across managers from different organisational echelons. Significant differences in 
managerial perceptions are identified for satisfaction with work conditions and pay (instrumental modality), relations 
with co-workers, superior managers and direct supervisors, supervisory behaviour, recognition and esteem (affective 
modality), and opportunities for authority/responsibility, personal growth, use of ability and knowledge, job interest, 
meaningfulness of work and pride to work for the organization (cognitive modality). All in all, the multi-modality 
approach adopted in this study appears effective in identifying echelons of managers for which different rewards have 
different perceived value and therefore different motivational force. With this extended approach to capturing reward 
satisfaction, patterns of desirable incentives emerge that can help specify the design of schemes for mid-level managers.

Аннотация. Немного исследований посвящены тому, как менеджеры среднего звена воспринимают 
вознаграждения. В отличие от индивидуально «настроенных» компенсационных пакетов генеральных директоров 
предприятий, считается, что схемы вознаграждения менеджеров среднего звена приемлемы в равной степени 
для мотивации всех сотрудников. Однако в крупных корпорациях  менеджеры среднего звена  подразделяются на 
несколько эшелонов, в которых размер бизнес-единицы, функции или географическое расположение определяют 
создание собственной организационной иерархии. Наши результаты раскрывают систематические закономерности 
в удовлетворенности различными видами вознаграждений среди менеджеров из разных организационных 
эшелонов. Найдены значительные различия в восприятии менеджерами удовлетворенности условиями труда 
и заработной платы (инструментальная модальность), отношений с коллегами, менеджерами более высокого 
уровня и прямыми руководителями, признания и уважения (эмоциональная модальность), факторов власти,  
ответственности, личного роста, использования способностей и знаний, интереса к работе, значимости работы, 
гордости от работы на данном предприятий (когнитивная модальность). В целом многомодальный подход, 
примененный в этом исследовании, показал свою эффективность в выявлении эшелонов менеджеров, для которых 
ценность различных вознаграждений воспринимается по-разному и, следовательно, имеет различную силу 
мотивации.  При таком расширенном подходе к определению удовлетворенности вознаграждением возникают 
модели стимулирования, которые помогают оптимизировать  схемы вознаграждения менеджеров среднего звена.

Key words: mid-level management, organizational level, reward system design, reward satisfaction.

* Многомодальный подход к анализу удовлетворенности вознаграждениями среди менеджеров среднего звена.

Review of Business and Economics Studies  
 
Volume 2, Number 1, 2014

1. INTROduCTION

Management control systems (MCS) are intended to 
provide motivation for organizational members to take 
actions and make decisions that will accomplish the 
organization’s objectives (Merchant and Van der Stede, 
2012). Since the pivotal works of Hopwood (1974) and 
Otley (1987), researchers in management accounting 
have acknowledged that reward systems are one of 
the main mechanisms through which an organization 
can persuade managers to exert themselves toward organizational goals (Emmanuel et al., 1990). When direct 
control is hindered by the distance between supervisors and mid-level managers who have access to more 
relevant and up-to-date decision information, reward 
schemes are essential to achieve goal congruence (Merchant, 1989). In such contexts, motivational contracts 
(that is, written and unwritten promises of rewards 
for the attainment of pre-set performance results) are 
intended to bridge the a priori conflict of interests between managers and the organization itself. In this 
respect, the significance of rewards for management 
control purposes has been recently reaffirmed (Otley, 
1999; Malmi and Brown, 2008; Ferreira and Otley, 2009).
This study relates to prior research that investigates the design and impact of reward systems for 
mid-level managers. Management control scholars 
have long recognized that managers who are highly 
motivated are more likely to be high performers (Ferris, 1977; Rockness, 1977; Brownell and McInnes, 
1986). This is in line with a well-established stream of 
organizational behaviour literature (Lawler and Porter, 1967a; Porter and Lawler, 1968). At the same time, 
empirical studies based on expectancy-valence theory 
consistently demonstrate that different types of rewards contribute to increase managers’ work motivation (Ronen and Livingstone, 1975; Jiambalvo, 1979; 
Kominis and Emmanuel, 2007). Merchant (1989) adds 
another relevant dimension to the provision of rewards to mid-level managers. He argues that the ideal 
motivational contract for these managers should offer 
rewards that are desirable to recipients. It follows that 
effective reward system design should take into account the rewarded manager’s perspective in order to 
determine patterns of preferences for different types 
of inducements. Provision of a more satisfactory set 
of rewards, in turn, is likely to affect managers’ performance positively. However, much of the literature in 
management control takes the standpoint of incentive 
scheme designers (Merchant and Otley, 2007), while 
substantially “… disregarding how managers effectively 
react to rewards’ provision within performance evaluation schemes” (Ahn et al., 2010, p. 390). To date, little 
is known about the desirable design features of reward 

systems for mid-level managers in practice (Uyterhoeven, 1972; Ehrenberg and Milkovich, 1987; Fisher, 
1992). A body of literature explores the performance 
measures that are employed in the bonus contracts 
(Bushman et al., 1995; Keating, 1997; Abernethy et al., 
2004; Bouwens and van Lent, 2007; Abernethy et al., 
2010). Another stream of research examines the link 
between delegation and compensation choices for 
business unit managers (Baiman et al., 1995; Nagar, 
2002). However, only a limited number of studies investigate how middle level managers actually perceive 
different elements of the reward systems they are offered (Vancil, 1979; Kominis and Emmanuel, 2007).
The work of Merchant (1985; 1989) suggests that 
different groups of individuals may react differently 
to the provision of the same reward. Satisfaction with 
different rewards may vary across groups of managers according to contextual characteristics or individual needs and preferences (Lawler and Porter, 1967b; 
Campbell et al., 1970; Lawler, 1994). Prior research in 
management accounting mainly concentrates on compensation schemes for executives, suggesting that executive incentive schemes should be “tailor-made” in 
order to enhance their motivational impact (Pavlik et 
al., 1993; Murphy, 1999). Perhaps more importantly, 
reward choices reflect the hierarchical stratification 
of executives with implications for management control system designs (Widener, 2006). Instead, reward 
preferences of mid-level managers are assumed to 
be essentially homogeneous (Bourguignon, 2004). In 
large corporations, mid-level managers are organized 
in several echelons according to business unit, functions or geographic locations, creating an organizational hierarchy, therefore the design of appropriate 
incentive schemes may be hampered by the layering of 
agency problems down the echelons of the organization (Baker et al., 1988; Indjejikian, 1999). The resultant adoption of a “one-size fits all” reward approach 
for mid-level managers is questionable (Lawler, 2000).
Additionally, much of extant research in management accounting focuses only on a subset of the reward system elements potentially desirable to organizational members (Ittner and Larcker, 2001; Malmi 
and Brown, 2008). Reward systems can encompass 
both financial and non-financial components, but the 
traditional approach of this stream of research concentrates exclusively on financial inducements only 
(Kunz and Pfaff, 2002). Merchant et al. (2003) note 
that much of organizational incentive research disregards the role of an array of intangible rewards such 
as recognition, autonomy or supervisory support as 
those are difficult to measure and to evaluate. It can 
be argued that these difficulties are a consequence 
of the theoretical perspective employed by manage

Review of Business and Economics Studies  
 
Volume 2, Number 1, 2014

ment accounting researchers in order to investigate 
the construct of work outcomes (Kunz and Pfaff, 2002). 
So far, the literature addressing a broader spectrum of 
rewards relies predominantly on the extrinsic/intrinsic 
reward dichotomy, both in theoretical contributions 
(Ansari, 1977; Flamholtz et al., 1985; Malmi and Brown, 
2008) and in empirical studies (Ferris, 1977; Rockness, 
1977; Kominis and Emmanuel, 2007). However, the 
construct validity of this dichotomy has been called 
into question by some commentators suggesting that 
it may be inadequate to gauge the multidimensionality 
of the reward construct in real organizational settings 
(Broedling, 1977; Guzzo, 1979; Elizur, 1984; Kunz and 
Pfaff, 2002). In practice, individuals are likely to fail to 
unambiguously categorize rewards based on this definitional distinction (Dyer and Parker, 1975; Kanungo 
and Hartwick, 1987). In management control literature, 
the influence of extrinsic inducements on work behaviour is seen to be qualitatively different compared with 
that of intrinsic rewards (Flamholtz et al., 1985). It follows that the unequivocal capability to distinguish between different forms of rewards becomes critical for 
the study of the design of desirable reward schemes 
and their effect on managers in organisations.
An alternative approach to work outcomes (Elizur, 
1984), as perceived by mid-level managers, identifies 
instrumental, affective and cognitive modalities. This 
more comprehensive conceptualization aims to capture a range of work values that extends the extrinsic/
intrinsic dichotomy in order that differences and similarities of desirable rewards can be more accurately 
gauged. We intend to examine mid-level manager satisfaction of rewards using this extended identification.
This perception-based research examines whether 
reward satisfaction varies across different layers of the 
mid-level management hierarchy. Evidence from a multinational company operating in the service sector are 
provided by examining the perceptions of 1,771 midlevel managers collected and analysed through a survey 
instrument in 2009. The aim is to detect patterns of reward satisfaction by hierarchical position in the organization. At the same time, this study represents the first 
attempt to provide a more comprehensive picture of 
the array of rewards perceived as potentially desirable 
by mid-level managers by using the “modality” of the 
reward construct elaborated by Elizur, (1984) and Elizur 
et al. (1991). By this means, the possibility of a more 
flexible reward scheme that can gain acceptance across 
echelons of mid-level managers is uncovered.
The remainder of the paper is structured as follows. 
The next section provides a discussion of our theoretical background, while in the third section we review 
the relevant theoretical and empirical research in the 
area of reward satisfaction for mid-level managers 

with the derived hypotheses. Section four presents the 
research setting and the data for this study. Empirical tests and results are reported in section five with a 
concluding discussion presented in section six.

2. ThEORETICAL BACKgROuNd

Desirable rewards are heterogeneous by nature, ranging from expressions of recognition by supervisors 
and senior managers, through provision of autonomy 
in decision-making, to financial rewards and promotion (Merchant et al., 2003). The dominant construct 
of extrinsic/intrinsic in management control is questionable and calls for a more comprehensive approach 
to identifying rewards have been made (Kunz and 
Pfaff, 2002; Ferreira and Otley, 2009). Viewing reward 
schemes as the provision of financial incentives alone 
is partial and incomplete since the design of reward 
systems that encompass non-financial inducements 
has been extensively documented (Merchant, 1989; 
Ezzamel and Willmot, 1998).
Attempts to operationalize the extrinsic/intrinsic 
dichotomy have generated a plethora of alternative 
notions of these constructs, none, however, seems to 
offer a clear differentiation (Guzzo, 1979). As a consequence, studies adopting the extrinsic/intrinsic 
paradigm have somewhat arbitrarily collapsed work 
outcomes such as supervisory support or feelings of 
esteem and recognition, to either of these two categories, leading to inconsistent classifications, which have 
subsequently led to confounding results. For reward 
scheme designers, independent assessment of rewards 
within an organization using an unequivocal classificatory scheme becomes necessary, since distinctive 
design choices need to be made according to the type 
of rewards the organization intends to offer to managers (Ansari, 1977).
An alternative conceptualization of the reward construct may be needed to allow a broader and more accurate approach to reward recognition. A multifaceted 
approach to work values provides the main theoretical basis for the research reported here (Elizur, 1984; 
Elizur et al., 1991). Elizur (1984) conceptually established and tested a structure for the construct of work 
values based on two independent facets: the modality 
of work outcomes and the relation with task performance. Independence of facets (Elizur, 1984) allows 
us to focus this research on the first facet, that is, the 
modality of work outcomes. Desirable work outcomes 
for managers are classified into: instrumental-material, affective-social, or cognitive-psychological (Elizur, 
1984; Elizur and Sagie, 1999). Under the first classification, outcomes relate to material aspects of work, 
including pay, benefits and work conditions. The sec

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ond modality pertains to interpersonal relations and 
social features of work, such as feelings of esteem as 
a person, recognition for performance and relations 
with colleagues and supervisors. Finally, the cognitive 
modality encompasses several psychological aspects 
associated with the work itself, such as interest, responsibility, or a sense of achievement.
Using this multi-modality framework, identification 
of an assortment of desirable work outcomes grounded 
conceptually on five content theories of work motivation informs this study (Elizur et al., 1991). Content theories of motivation concentrate on “the specific identity of what it is within an individual or his 
environment that energizes and sustain behaviour”. 
Therefore, these perspectives attempt to define specific entities within a general class of variables such as 
work rewards (Campbell et al., 1970). The assumption 
is that people will behave in ways that they think will 
satisfy their underlying needs and motives. Instrumental outcomes are derived from the works of Maslow 
(1954), Herzberg (1966), and Alderfer (1972). Affective 
and cognitive modalities draw on these three theories 
and a further selection of outcomes based on McClelland (1961) and Hackman and Oldham (1980). There 
is a common thread linking the five content theories 
adapted from the work of Elizur. Lower-order needs 
correspond to existence and affiliation or relatedness 
needs and to hygiene factors (including pay). Higherorder needs relate to growth and achievement needs, 
and to the job content factors identified by Herzberg, 
Hackman, and Oldham. Even though content theories 
appear to share some common shortcomings, they appear appropriate to address the use of managerial policies in handling issues relating to control systems and 
human resources, since they are concerned with motivational aspects of groups of individuals (Shields, 2007).
Drawing on content perspectives, Elizur (1984) 
identifies a set 21 valuable work outcomes, that are 
later extended to encompass 24 outcomes (Elizur et al., 
1991). Pay, hours of work, security, benefits and work 
conditions are classified as instrumental. Relations 
with supervisors, co-workers, recognition, esteem 
and opportunity to interact with people are categorized as affective, while responsibility, use of ability, 
advancement, achievement, influence, interest, feedback, meaningful work, independence, pride to work 
for the company, status and contribution to society are 
classed as cognitive.
Structural correspondence between the proposed 
approach and some existing extrinsic/intrinsic classification was established both theoretically and empirically by Borg (1990). Intrinsic outcomes are included 
in the cognitive modality, whereas extrinsic rewards 
are either instrumental or affective, however the mo
dality facet allows reconciliation of the ambiguous 
classification of certain outcomes within the extrinsic/
intrinsic dichotomy. Thus, it appears to be more generalizable as demonstrated by further validation in different national and cultural settings (Borg, 1986; Elizur et al., 1991) and with reference to different groups 
of organizational members (Elizur and Sagie, 1999). In 
addition, the proposed structure expands the array of 
potentially desirable rewards, reducing the risk that 
important outcomes are overlooked. For these reasons, 
the multi-modality approach is employed in this study 
to investigate the relationship between preferences for 
different work outcomes and relevant personal and organizational characteristics.

3. RELEvANT LITERATuRE ANd hypOThESES

The development of motivational contracts that are 
capable of directing mid-level managers’ effort and behaviour towards organizational objectives entails the 
identification of those work outcomes that are more 
desirable to recipients (Merchant, 1989). When reward 
packages are to be tailored, organizations assume a 
diagnostic stance with respect to their members’ rewards preferences, selecting a set of rewards that is 
perceived as desirable and structuring the reward 
scheme accordingly (Lawler, 1994). If the perceived desirability of rewards is overlooked, the reward scheme 
is unlikely to contribute to motivation (Merchant and 
Van der Stede, 2012). Should the organization develop reward packages that concentrate on areas of less 
importance to managers, the efficiency of the reward 
scheme is compromised and reduces managerial effort.
When organizations make decisions about which 
MCS and reward schemes to adopt, their choices typically reflect the values and the preference of those in 
charge of designing those control systems. There is, 
however, little guarantee that those choices are similarly valued by all managers subject to such systems, 
as demonstrated in previous studies in the performance measurement and incentive compensation areas (Shields and White, 2004; Bento and White, 2006). 
Such discrepancies between the rewards effectively desired by organizational members and those top-management considers desirable and includes in the company’s reward package become a distinct possibility.
The work motivation literature provides rationales 
for differences in reward perception by exploring the 
importance of human needs or motives relative to the 
design and implementation of reward schemes. According to the content perspective of motivation (Maslow, 1954; McClelland, 1961), reward effectiveness 
strongly depends on whether the reward is valued and 
desirable to the recipient. As Lawler (1994) points out, 

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large differences among groups of individuals exist in 
the importance assigned to different work outcomes as 
need-satisfiers. These differences relate in meaningful 
ways to a number organizational factors, most notably 
management level. Organizational level is found to be 
associated with reward level, reward satisfaction, and 
managerial perceptions of the satisfaction with rewards relative to those of subordinates and superiors 
(Porter and Lawler, 1965).

3.1. INSTRuMENTAL OuTCOMES

Content theories of work motivation postulate that 
individuals at different levels in the organisational hierarchy are driven by different needs. Those in higher 
positions are more likely to be motivated by higher order needs, whereas those in lower situations tend to 
be more concerned with the satisfaction of lower order 
needs, such as physical or security needs (Porter, 1961, 
1962, 1963; Slocum, 1971). This is consistent with the 
notion of a hierarchical order of prepotency according 
to which higher-order needs become important only 
after the lower-order needs have been satisfied.
The provision of instrumental rewards, such as pecuniary inducements, perquisites, and favourable work 
conditions, are generally associated with the satisfaction of the latter group of needs (Porter, 1961). It is 
argued that as individuals attain lower-order extrinsic 
rewards, the importance attached to and the motivational impact of such rewards tend to decrease (Porter 
and Lawler, 1965; Herman and Hulin, 1972, 1973). Individuals in higher-level positions consistently appear 
to report a higher level of perceived gratification with 
instrumental rewards than managers at lower organizational levels (Rosen and Weaver, 1960). This is even 
more visible when pecuniary inducements are considered (Lawler and Porter, 1963, 1966). Similar studies 
based on the motivation/hygiene perspective suggested by Herzberg et al. (1959) find that instrumental outcomes, such as pay and work conditions are of 
major concern for individuals at lower echelons in the 
company (e. g., Lahiri and Srivastva, 1967).
Mid-level managers comprise a potentially diverse 
group, although each may have subordinates reporting to him/her and responsibility for a clearly delineated sub-unit or function within the organization. 
Within mid-level management, the size of sub-unit 
and level of responsibility varies making it necessary 
to identify different echelons. The higher echelon of 
mid-level managers expect to be provided with higher 
instrumental rewards and to be more satisfied with 
those rewards compared with their lower echelon 
counterparts for whom lower level needs appear to be 
more urgent (Porter and Lawler, 1965). Departing from 

Maslow’s need-hierarchy concept, Herman and Hulin 
(1972; 1973) demonstrate that different groups of midlevel managers from a single organizational setting 
are significantly different in their perception of pay 
and benefits with higher-level managers being comparatively more satisfied with instrumental rewards in 
comparison with lower echelon managers and first line 
supervisors. In a similar vein, Rosen (1961) surveyed 
satisfaction with a number of work outcomes — except 
monetary inducements — reported by managers from 
four echelons in a single plant. Significant differences 
among managers at different organizational levels are 
found for a number of items connected with work conditions and organization of work.
The above discussion leads us to propose the following hypothesis (stated in the null form):
H1: There is no association between hierarchical 
level in the organization and level of satisfaction with 
instrumental outcomes.
Consistent with Elizur et al. (1991) instrumental 
outcomes encompass: (a) pay, (b) work conditions, (c) 
convenient hours of work and (d) benefits.

3.2. AffECTIvE OuTCOMES

The conceptualization of work outcomes has become 
more differentiated over time and more specific dimensions of the rewards of work have emerged. Some researchers identify a number of affective elements that 
are generated by the interaction with other individuals 
in the workplace (Katz and Van Maanen, 1977; Mottaz, 
1985). Others distinguish intrinsic rewards from altruistic and social concomitants (Rosenberg, 1957; Pryor, 
1987). Affective outcomes are of concern in the design 
of the reward system, especially for managers at the 
mid-level, since the effective enactment of their role 
appears to be mediated by their socialization process 
in the organization (Vancil, 1979; Gomez-Mejia et al., 
1985). Proponents of content theories of work motivation conceive affective outcomes as lower-order needs’ 
satisfiers (Maslow, 1954; McClelland, 1961; Alderfer, 
1972). Borg (1990) illustrates the substantial correspondence between the affective modality identified 
by Elizur (1984), Alderfer’s relatedness and Maslow’s 
esteem and affiliation needs.
Extant research does not provide, however, a univocal proposition as to the relationship between perception of affective outcomes and managers’ level in 
the organization. The perception of some affective 
outcomes, such as relations with peers and opportunities to help others while at work, seems not to be 
influenced by the hierarchical level of managers (Porter, 1962; Porter and Lawler, 1964). On the other hand, 
the perceived importance of esteem and recognition 

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obtained for doing a good job varies depending on the 
hierarchical level of the individual. For example, there 
is evidence to suggest that hierarchical ascent is characterized by greater recognition that contributes to 
individual satisfaction (Porter, 1962; Porter and Lawler, 1964; Rinehart et al., 1969; Slocum, 1971). Lower 
echelon managers and first-line supervisors may feel 
that the disapproval of relevant-others in the company 
for their results jeopardizes their opportunity to stay 
with or advance within the firm. The need to obtain 
recognition for work done, compared with managers 
at higher levels who are in more established positions 
becomes a more pressing need and presumably a more 
powerful motivator. Similarly, relations with superiors 
are perceived differently by managers at different echelons (Rosen and Weaver, 1960; Rosen, 1961; Saleh 
et al., 1975), possibly as a consequence of differences 
in tasks and responsibility of managers and different 
styles of leadership (Gomez-Mejia et al., 1985).
The above leads to the following hypothesis (stated 
in the null form):
H2: There is no association between hierarchical 
level in the organization and level of satisfaction with 
affective outcomes.
Consistent with Elizur et al. (1991) affective outcomes encompass: (a) relations with co-workers, (b) 
opportunity to interact with people at work, (c) supervisory support, (d) recognition, (e) esteem.

3.3. COgNITIvE OuTCOMES

Higher-order needs are likely to emerge when satisfaction of lower-order needs is achieved by individuals 
(Maslow, 1954). Managers at different organizational 
levels are found to attribute different importance to 
their high-order needs. McClelland (1961) observes that 
lower echelon managers tend to be primarily motivated 
by the need for achievement, while the need for power 
becomes more prominent at higher echelons of the hierarchy. Managers attribute growing importance to different types of cognitive outcomes, such as autonomy, 
responsibility and opportunities for personal growth 
and for being influential in the work context (Lahiri 
and Srivastva, 1967). This may be attributed to the fact 
that as managers move up the organisational ladder, 
they tend to perform substantially different functions 
with increasing emphasis on administrative and external monitoring responsibilities compared to the more 
technical tasks performed at lower levels of management (Gomez-Mejia et al., 1985). The heterogeneous 
nature of tasks and skills inherent in these occupations 
may generate different opportunities for managers to 
satisfy certain higher-order needs, thus impacting on 
the perceived satisfaction of those outcomes.

A number of studies based on the pivotal work of 
Porter (1961) demonstrate that organizational level is 
related to the amount of perceived deficiencies in need 
fulfilment, with lower echelon managers being more 
dissatisfied than middle echelon managers in attempting to fulfil higher-order needs such as autonomy and 
self-actualization, presumably because higher cognitive outcomes are more attainable at higher echelons 
(Porter, 1961, 1962; Haire et al., 1963; Porter and Lawler, 
1964; Slocum, 1971). As a consequence, higher echelon 
managers are likely to be more satisfied with several 
cognitive dimensions such as, the opportunity for personal growth and for exerting their influence in the organization, as well as with the amount of responsibility 
and the possibility of using their abilities and knowledge in their job (Porter, 1962; Porter and Lawler, 1964). 
All in all, these studies suggest a trend where satisfaction with higher-order outcomes increases at higher 
echelons of hierarchy. This is seen as a consequence of 
the decreasing difference between what is desired and 
what is obtained in reality. Porter’s (1961; 1962) results 
are in line with those reported by Rosen and Weaver 
(1960) and Rosen (1961) who identified the same trend 
in relation to two other cognitive dimensions, namely 
feedback and pride of being employed by the company.
The above discussion leads to the following hypothesis (stated in the null form):
H3: There is no association between hierarchical 
level in the organization and level of satisfaction with 
cognitive outcomes.
Consistent with Elizur et al. (1991) cognitive outcomes encompass: (a) pride to work for the company, 
(b) work meaningfulness, (c) feedback, (d) opportunity 
for personal growth, (e) influence in work, (f) advancement, (g) responsibility, (h) use of ability and knowledge, (i) job interest.

4. METhOdS

4.1. RESEARCh SETTINg ANd SAMpLE

Data for this research were collected in an overseas 
subsidiary of a large US-based corporation operating 
in the service sector. Since its establishment in Italy 
(where deregulation of the industry occurred in 1997), 
the organization experienced stable profit and revenue growth in all years and did not incur any major 
restructurings. Its workforce grew steadily by an average of 15.5% per annum since 2000.
The perceptions of 1,771 mid-level managers 
across five echelons from the subsidiary were collected from the company’s annual survey questionnaire. Management layers were identified according 
to the job title of the respondent reflecting their responsibility.

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The choice of a single research setting is advantageous for the present study as comparable responses 
were obtained in terms of the reward package offered 
to employees and the environmental conditions to 
which they were exposed (Bourguignon, 2004; Kominis and Emmanuel, 2007). Preliminary investigations 
confirmed that all managers were subject to common 
human resources policies and management control 
practices such as training and performance appraisal.
The material reward package offered to mid-level 
managers comprises of three major components: a 
fixed-pay component, an individual cash bonus determined by the performance review and other non-cash 
benefits related to the performance of the business unit 
the manager works in. Base pay differs across mid-level 
managers. Base pay stratification encompasses seven 
pay levels, which correspond closely to the echelons of 
the company’s hierarchy. The performance-related cash 
bonus is intended to foster the attainment of pre-set 
performance targets and is linked to the performance 
review, which is conducted on a trimester basis. At the 
time of the research, this review was based on a set of 
three financial measures derived from the company’s 
and business unit’s financial statements. The process of 
measurement and the remuneration rules was the same 
for all the respondents. Provision of non-cash bonuses 
was based on the attainment of specific non-financial 
objectives (for example, acquisition of a pre-set number 
of new clients within a given time period) and it took 
the form of “competitions” between business units. In 
2009, base pay was the only means through which the 
material reward system distinguished among groups 
of managers at different echelons. Mid-level managers in the sample could reach their position either 
through career advancement within the organization 
or through selective recruitment. Preliminary fieldwork 
demonstrated that, irrespective of the career pathway, 
all managers were subject to formal induction courses 
and on-the-job induction training, which took place 
within the first three months after employment.
The organization conducts an employee opinion 
survey annually; the present research is based on the 
analysis of the survey questionnaire employed in 2009, 
referred to as EOS-09. EOS-09 is directed only to those 
mid-level managers with at least three months of tenure: 1925 managers in total. Our preliminary discussions with executives from the company indicated that 
EOS-09 was used by the headquarters to compare different national settings. The questionnaire intended 
to gather middle managers’ perceptions in three areas, 
namely the reward system in use, the perceived supervisory and peer support and a broad set of dimensions 
collected under the umbrella term of “engagement” 
that encompasses items such as “job interest” and 

“meaningfulness of work”. The original questionnaire 
includes 97 items, which gauge managers’ perceptions 
using a five-point Likert response format (ranging 
from “strongly agree = 5” to “strongly disagree =1”).
The content of the survey was defined by top management, although discretion was allowed to national 
divisions to include further items for special purposes. 
Respondents returned their completed questionnaires 
through the organization’s internal mail service. Completed questionnaires were returned by 1771 managers, 
which represents a return rate of 92%. Eighty percent of 
the sample was female, and 20% male. The majority of 
those who responded were aged 35 or less (71%), while 
29% were more than thirty-five years old. All respondents in the sample came from five echelons of the organization’s mid-level management. It is noted that the 
sample of this research is not random in the strict statistical sense. In order to assure comparability of the results, the sample includes those managers who: (1) were 
identified as mid-level managers (Mangaliso, 1995); (2) 
received the EOS-09; and (3) had at least 3 months of 
tenure in their managerial position. Table 1 offers an 
overview of the sample.

4.2. RESEARCh INSTRuMENT

The data employed in this study was derived from a 
subset of 50 items included in the EOS-09. The choice 
of these items and their classification to work outcomes was based on the comparison between the 
items included in EOS-09 vis-à-vis the 24 work outcomes forming the “work values questionnaire” (WVQ) 
used by Elizur et al. (1991).
In order to meaningfully classify the items contained 
in the EOS-09 into work outcome modalities, the rationale behind the construction of the WVQ was preliminary 
investigated. It appeared that each item in the WVQ was 
identified as a need satisfier in (at least) one of the content theories on which the framework is grounded. For 
instance, Elizur et al. (1991) reports that “the job characteristic model of Hackman and Oldham (1980) is represented by items like: variety, use of ability, meaningful 

Table 1. Overview of the sample

Occupational 
group
Absolute 
Number
% of Total 
Sample

Level 1 Managers
23
1,30%

Level 2 Managers
66
3,73%

Level 3 Managers
286
16,14%

Level 4 Managers
301
17,0%

Level 5 Managers
1.095
61,83%

Total n. = 1,771

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work, independence, feedback, recognition”. Therefore, 
correspondence between the items defined by Elizur et 
al. (1991) and a number of statements/questions appearing in the EOS-09 questionnaire underlying the five 
content perspectives could be established. The items 
included in the EOS-09 were also compared with those 
adopted by Maslow (1954), McClelland (1961), Herzberg 
(1966) and Alderfer (1972). For instance, we could establish a correspondence between the item: “My compensation is satisfactory since it is competitive with similar jobs in other companies” in EOS-09 and the item: 
“Compared with similar jobs in other places my pay is 
poor (disagree)” in the Existence-Relatedness-Growth 

(E.R.G.) questionnaire used by Alderfer (1972). The next 
step included identifying carefully and grouping together items from the EOS-09 questionnaire in terms of the 
three modalities of work outcome identified by Elizur et 
al. (1991). For example, since Elizur et al. (1991) derived 
the item “pay, the amount of money you receive” from 
the work of Alderfer (1972) and classified it as instrumental by Elizur et al. (1991), we also labelled the item 
“my compensation is satisfactory since it is competitive 
with similar jobs in other companies” in the EOS-09 
questionnaire as “instrumental” and grouped it together 
with other work outcomes of similar instrumental nature. Table 2 summarizes the process of classification.

Table 2. Classification of items in the EOS-09: abbreviated illustration

EOS-09 Item
Comparable Item in the Original 
Instrument
underlying 
Content Theory of 
Work Motivation

Item 
description 
(Elizur et al., 
1991)

Modality of 
Outcome 
(Elizur et al., 
1991)

My compensation is 
satisfactory since it is 
competitive with similar 
jobs in other companies

Compared to similar jobs in other places, 
my pay is poor (disagree)
ERG Theory 
(Alderfer 1972)
Pay, the 
amount of 
money you 
receive

Instrumental

I am satisfied with the 
pay I received last year 
since I was adequately 
compensated for the work 
I was required

Considering the work required, the pay for 
my job is what it should be (agree)
ERG Theory 
(Alderfer 1972)
Pay, the 
amount of 
money you 
receive

Instrumental

I am satisfied with the 
equipment and materials I 
receive to do my job

Working conditions. This category was 
used for stories in which the physical 
conditions of work, the amount of work or 
the facilities available for doing the work 
were mentioned […]

MotivationHygiene Theory 
(Herzberg 1966)

Work 
Conditions
Instrumental

I am proud of working in 
this organization since 
here people help each 
other when they are in 
need

I can count on my co-workers to give me a 
hand when I need it
Achievement 
motivation theory 
(McClelland 1961)

Co-workers
Affective

I feel satisfied of the way 
in which my manager 
coaches and mentors my 
development

Supervision-technical. […] Statements 
about the supervisor’s willingness or 
unwillingness to delegate responsibility, or 
his willingness or unwillingness to teach, 
would be classified under this category

MotivationHygiene Theory 
(Herzberg 1966)

Supervisor, 
a fair and 
considerate 
boss

Affective

I am happy when I do a 
good job since I receive 
praise and recognition 
from my Manager

My boss gives me credit when I do good 
work (agree)
ERG Theory 
(Alderfer 1972)
Recognition 
for doing a 
good job

Affective

Overall I am satisfied with 
my present job
Generally speaking I am very satisfied with 
this job
Job Characteristics 
Model (Hackman 
and Oldham 
1980)

Meaningful 
Work
Cognitive

I find my work challenging 
and fulfilling
Work itself. This category was used when 
the respondent mentioned the actual 
doing of the job or the tasks of the job as 
source of good or bad feelings about it

MotivationHygiene Theory 
(Herzberg 1966)

Job Interest
Cognitive

I am satisfied with 
the opportunities my 
organization offers to 
meet my career goals

Advancement. This category was used […] 
when there was an actual change in the 
person’s status or position in the company

MotivationHygiene Theory 
(Herzberg 1966)

Advancement 
changes for 
promotion

Cognitive