Skip to main content

Advertisement

SpringerLink
Log in

Consequences of Unfair Job Promotions in Organizations

  • Original Article
  • Published:
Schmalenbach Business Review Aims and scope

Abstract

We analyze the effect of fair and unfair job promotions on the willingness to cooperate within a group. To investigate how individuals respond to unfair (fair) job promotions, a laboratory experiment was conducted. During the experiment, one of the two persons in each dyad was assigned the role of supervisor and the other one was assigned the role of subordinate. We manipulate two factors: fair and unfair promotion (procedural injustice) as well as the possibility for the subordinate to punish the supervisor. We show that regardless of procedural justice and supported by inequity aversion as well as attribution theory, the willingness to cooperate when supervisors offer low compensation is limited. Paradoxically, supervisors who try to offset their unfair promotion actually benefit from procedural unfairness. We also show that Social Value Orientation (SVO) plays a role in the supervisor’s behavior but does not affect the subordinate’s willingness to cooperate.

This is a preview of subscription content, log in via an institution to check access.

Access this article

Log in via an institution

Price excludes VAT (USA)
Tax calculation will be finalised during checkout.

Instant access to the full article PDF.

Institutional subscriptions

Fig. 1
Fig. 2
Fig. 3

Similar content being viewed by others

Notes

  1. There were no cases where subjects had the same math test score.

  2. The mean allocation for oneself is computed, as is the mean allocation for the other person. Then 50 is subtracted from each of these means to “shift” the base of the resulting angle to the center of the circle (50, 50) rather than having its base start at the Cartesian origin. Finally, the inverse tangent of the ratio between these means is computed, resulting in a single index of a person’s SVO. If a person chooses the option on the circle that maximizes their own outcome, this would refer to an SVO angle of 0, indicating a perfectly individualistic SVO. An angle of 45 would indicate a perfectly cooperative (maximizing joint outcomes) SVO, while an angle of −45 would refer to a perfectly competitive (maximizing relative gain) SVO.

  3. 69 groups (69 supervisors for the treatments with punishment) multiplied by 11 levels of compensation (0, 10, 20 … 100).

  4. There were 12 experimental sessions in total, three sessions for every treatment.

References

  • Acosta, P. 2010. Promotion dynamics the Peter Principle: Incumbents vs. external hires. Labour Economics 17(6):975–986.

    Article  Google Scholar 

  • Adams, J.S. 1963. Toward an understanding of inequity. Journal of Abnormal and Social Psychology 67(5):422–436.

    Article  Google Scholar 

  • Ambrose, M.L., M.A. Seabright, and M. Schminke. 2002. Sabotage in the workplace: the role of organizational injustice. Organizational Behavior and Human Decision Processes 89(1):947–965.

    Article  Google Scholar 

  • Balakrishnan, R., and P. Letmathe. 2017. Knowledge sharing in organizations: Compete or Cooperate? Working Paper. Iowa City: Aachen.

    Google Scholar 

  • Bardsley, N. 2008. Dictator game giving: altruism or artefact? Experimental Economics 11(2):122–133.

    Article  Google Scholar 

  • Bohnet, I., and B.S. Frey. 1999. Social distance and other-regarding behavior in dictator games: comment. The American Economic Review 89(1):335–339.

    Article  Google Scholar 

  • Bolton, G., and A. Ockenfels. 2000. ERC: a theory of equity, reciprocity, and competition. American Economic Review 90(1):166–193.

    Article  Google Scholar 

  • Bolton, G.E., E. Katok, and R. Zwick. 1998. Dictator game giving: rules of fairness versus acts of kindness. International Journal of Game Theory 27(2):269–299.

    Article  Google Scholar 

  • Boudette, N.E. 2018. Elon musk accuses Tesla employee of sabotage. The New York Times. https://www.nytimes.com/2018/06/19/business/elon-musk-tesla-employee-sabotage.html. Accessed: 1 Jan 2018.

    Google Scholar 

  • Brandts, J., and G. Charness. 2011. The strategy versus the direct-response method: a first survey of experimental comparisons. Experimental Economics 14(1):375–398.

    Article  Google Scholar 

  • Brandts, J., W. Güth, and A. Stiehler. 2006. I Want YOU! An experiment studying motivational effects when assigning distributive power. Labour Economics 13(1):1–17.

    Article  Google Scholar 

  • Camerer, C.F. 2003. Behavioral game theory: experiments in strategic interaction. Princeton: Princeton University Press.

    Google Scholar 

  • Camerer, C., and R.H. Thaler. 1995. Anomalies: ultimatums, dictators and manners. The Journal of Economic Perspectives 9(2):209–219.

    Article  Google Scholar 

  • Charness, G., and M. Rabin. 2002. Understanding social preferences with simple tests. Quarterly Journals of Economics 117(3):817–869.

    Article  Google Scholar 

  • Chen, K.P. 2003. Sabotage in promotion tournaments. Journal of Law, Economics, and Organization 19(1):119–140.

    Article  Google Scholar 

  • Cherry, T.L., P. Frykblom, and J.F. Shogren. 2002. Hardnose the Dictator. American Economic Review 92(4):1218–1221.

    Article  Google Scholar 

  • Cohen-Charash, Y., and P.E. Spector. 2001. The role of justice in organizations: a meta-analysis. Organizational Behavior and Human Decision Processes 86(2):278–321.

    Article  Google Scholar 

  • Colquitt, J.A. 2001. On the dimensionality of organizational justice: a meta-analysis. Organizational Behavior and Human Decision Processes 86(2):278–321.

    Article  Google Scholar 

  • Crawley, M.J. 2012. The R Book. Chichester: John Wiley & Sons.

    Book  Google Scholar 

  • De Cremer, D., and P.A.M. Van Lange. 2001. Why prosocials exhibit greater cooperation than proselfs: The roles of social responsibility and reciprocity. European Journal of Personality 15(1):5–18.

    Article  Google Scholar 

  • Delaney, J.T., and M.A. Huselid. 1996. The impact of human resource management practices on perceptions of organizational performance. Academy of Management Journal 39(4):949–969.

    Google Scholar 

  • De Dreu, C.K.W., and T.L. Boles. 1998. Share and share alike or winner take all? The influence of social value orientation upon choice and recall of negotiation heuristics. Organizational Behavior and Human Decision Process 76(3):253–276.

    Article  Google Scholar 

  • Dickinson, D.L., and M.C. Villeval. 2012. Job allocation rules and sorting efficiency. Experimental outcomes in a Peter principle environment. Southern Economic Journal 78(3):842–859.

    Article  Google Scholar 

  • Eek, D., and T. Gärling. 2008. A new look at the theory of social value orientations: prosocials neither maximize joint outcome nor minimize outcome differences but prefer equal outcomes. In New Issues and Paradigms in Research on Social Dilemmas, ed. A. Biel, D. Eek, T. Gärling, and M. Gustafson, 10–26. New York: Springer.

    Chapter  Google Scholar 

  • Eguchi, K. 2004. Trainers’ dilemma of choosing between training and promotion. Labour Economics 11(6):765–783.

    Article  Google Scholar 

  • Ekstrom, R.B., J.W. French, H.H. Harman, and D. Dermen. 1976. Manual for kit of factor-referenced cognitive tests. Princeton: Educational Testing Service.

    Google Scholar 

  • Engel, C. 2011. Dictator games: a meta study. Experimental Economics 14(4):583–610.

    Article  Google Scholar 

  • Falk, A., and U. Fischbacher. 2006. A theory of reciprocity. Games and Economic Behavior 54(2):293–315.

    Article  Google Scholar 

  • Falk, A., E. Fehr, and U. Fischbacher. 2005. Driving forces behind informal sanctions. Econometrica 73(6):2017–2030.

    Article  Google Scholar 

  • Fehr, E., and S. Gächter. 2000a. Cooperation and punishment in public goods experiments. American Economic Review 90(4):980–994.

    Article  Google Scholar 

  • Fehr, E., and S. Gächter. 2000b. Fairness and retaliation: the economics of reciprocity. Journal of Economic Perspective 14(3):159–181.

    Article  Google Scholar 

  • Fehr, E., and K.M. Schmidt. 1999. A theory of fairness, competition, and cooperation. The Quarterly Journal of Economics 114(3):817–868.

    Article  Google Scholar 

  • Fischbacher, U. 2007. z‑Tree: Zurich toolbox for ready-made economic experiments. Experimental Economics 10(2):171–178.

    Article  Google Scholar 

  • Gilliland, S.W. 1994. Effects of procedural and distributive justice on reactions to a selection system. Journal of Applied Psychology 79(5):691–701.

    Article  Google Scholar 

  • Gneezy, U., and J.A. List. 2006. Putting behavioral economics to work: testing for gift exchange in labor markets using field experiments. Econometrica 74(5):1365–1384.

    Article  Google Scholar 

  • Greenberg, J. 1987. Reactions to procedural injustice in payment distributions: do the means justify the ends? Journal of Applied Psychology 72(1):55–61.

    Article  Google Scholar 

  • Greenberg, J. 1990. Organizational justice: yesterday, today and tomorrow. Journal of Management 16(2):399–432.

    Article  Google Scholar 

  • Güth, W., R. Schmittberger, and B. Schwarze. 1982. An experimental analysis of ultimatum bargaining. Journal of Economic Behavior & Organization 3(4):367–388.

    Article  Google Scholar 

  • Harbring, C., and B. Irlenbusch. 2011. Sabotage in tournaments: evidence from a laboratory experiment. Management Science 57(4):611–627.

    Article  Google Scholar 

  • Heider, F. 1958. The psychology of interpersonal relations. New Jersey: Psychology Press.

    Book  Google Scholar 

  • Heinz, M., S. Jeworrek, V. Mertins, H. Schumacher, and M. Sutter. 2017. Measuring indirect effects of unfair employer behavior on worker productivity—A field experiment. CESifo Working Paper Series No. 6760.

    Book  Google Scholar 

  • Hennig-Schmidt, H., Z. Li, and C. Yang. 2008. Why people reject advantageous offers—Non-monotonic strategies in ultimatum bargaining. Journal of Economic Behavior and Organization 65(2):373–384.

    Article  Google Scholar 

  • Hoffman, E., K.A. McCabe, and V.L. Smith. 1996. On expectations and the monetary stakes in ultimatum games. International Journal of Game Theory 25(3):289–301.

    Article  Google Scholar 

  • Houser, D., and E. Xiao. 2010. Inequality-seeking punishment. Economics Letters 109(1):20–23.

    Article  Google Scholar 

  • Huberman, B.A., C.H. Loch, and A. Önçüler. 2004. Status as a valued resource. Social Psychology Quarterly 67(1):103–114.

    Article  Google Scholar 

  • Hui, C., and S.S.K. Lam. 2000. Instrumental values of organizational citizenship behavior for promotion: a field quasi-experiment. Journal of Applied Psychology 85(5):822–828.

    Article  Google Scholar 

  • Johnson, D., and T.C. Salmon. 2016. Sabotage vs. discouragement: which dominates post promotion tournament behavior? Southern Economic Journal 82(3):673–696.

    Article  Google Scholar 

  • Kahneman, D., J.L. Knetsch, and R.H. Thaler. 1986. Fairness and the assumptions of economics. Journal of Business 59(4):285–300.

    Article  Google Scholar 

  • Kosteas, V.D. 2011. Job satisfaction and promotions. Industrial Relations: A Journal of Economy and Society 50(1):174–194.

    Google Scholar 

  • Ku, H., and T.C. Salmon. 2012. The incentive effects of inequality: an experimental investigation. Southern Economic Journal 79(1):46–70.

    Article  Google Scholar 

  • Kwon, I., and E.M.M. Milgrom. 2014. The significance of firm and occupation specific human capital for hiring and promotions. Labour Economics 31(C):162–173.

    Article  Google Scholar 

  • Lemons, M.A., and C.A. Jones. 2001. Procedural justice in promotion decisions: using perceptions of fairness to build employee commitment. Journal of Managerial Psychology 16(4):268–281.

    Article  Google Scholar 

  • Liebe, U., and A. Tutic. 2010. Status groups and altruistic behaviour in dictator games. Rationality and Society 22(3):353–380.

    Article  Google Scholar 

  • Loewenstein, G., M. Bazerman, and L. Thompson. 1989. Social utility and decision making in interpersonal contexts. Journal of Personality and Social Psychology 57(3):426–441.

    Article  Google Scholar 

  • Murphy, R.O., K.A. Ackermann, and M.J.J. Handgraaf. 2011. Measuring social value orientation. Judgment and Decision Making 6(8):771–781.

    Google Scholar 

  • Roe, B.E., and R.J. Just. 2009. Internal and external validity in economics research: Tradeoffs between experiments, field experiments, natural experiments, and field data. American Journal of Agricultural Economics 91(5):1266–1271.

    Article  Google Scholar 

  • Roth, A. 1995. Bargaining experiments. In Handbook of experimental economics, ed. J. Kagel, A. Roth, 253–348. Princeton: Princeton University Press.

    Google Scholar 

  • Roth, A.E., V. Prasnikar, M. Okuno-Fujiwara, and S. Zamir. 1991. Bargaining and market behavior in Jerusalem, Ljubljana, Pittsburgh, and Tokyo: an experimental study. American Economic Review 81(5):1068–1095.

    Google Scholar 

  • Rousu, M.C., and S.J. Baublitz. 2011. Does perceived unfairness affect charitable giving? Evidence from the dictator game. The Journal of Socio-Economic 40(4):364–367.

    Article  Google Scholar 

  • Ruffle, B.J. 1998. More is better, but fair is fair: tipping in dictator and ultimatum games. Games and Economic Behavior 23(2):247–265.

    Article  Google Scholar 

  • Schurter, K., and B.J. Wilson. 2009. Justice and fairness in the dictator game. Southern Economic Journal 76(1):130–145.

    Article  Google Scholar 

  • Selten, R. 1967. Die Strategiemethode zur Erforschung des eingeschränkt rationalen Verhaltens im Rahmen eines Oligopolexperiments. In Beiträge zur experimentellen Wirtschaftsforschung, ed. H. Sauermann, 136–168. Tübingen: Mohr.

    Google Scholar 

  • Thibaut, J., and L. Walker. 1975. Procedural justice: a psychological analysis. Hillsdale: Lawrence Erlbaum.

    Google Scholar 

  • Tutic, A., and U. Liebe. 2009. A theory of status-mediated inequity aversion. The Journal of Mathematical Sociology 33(3):157–195.

    Article  Google Scholar 

  • Tzafrir, S., and S. Hareli. 2009. Employees’ emotional reactions to promotion decisions: the role of causal attributions and perceptions of justice. Career Development International 14(4):351–371.

    Article  Google Scholar 

  • Van Lange, P.A.M., D. De Cremer, E. Van Dijk, and M. Van Vugt. 2007. Self-interest and beyond. Basic principles of social interaction. In Social psychology: handbook of basic principles, ed. A.W. Kruglanski, E.T. Higgings, 540–561. New York: Guilford.

    Google Scholar 

Download references

Author information

Authors and Affiliations

  1. Faculty of Business and Economics, RWTH Aachen University, Templergraben 64, 52062, Aachen, Germany

    Peter Bußwolder, Swetlana Dregert & Peter Letmathe

Authors
  1. Peter Bußwolder
    View author publications

    You can also search for this author in PubMed Google Scholar

  2. Swetlana Dregert
    View author publications

    You can also search for this author in PubMed Google Scholar

  3. Peter Letmathe
    View author publications

    You can also search for this author in PubMed Google Scholar

Corresponding author

Correspondence to Swetlana Dregert.

Additional information

Publisher’s Note

Springer Nature remains neutral with regard to jurisdictional claims in published maps and institutional affiliations.

Appendix

Appendix

 

Table 5 Descriptive statistics of questionnaire
Full size table

Rights and permissions

Reprints and permissions

About this article

Check for updates. Verify currency and authenticity via CrossMark

Cite this article

Bußwolder, P., Dregert, S. & Letmathe, P. Consequences of Unfair Job Promotions in Organizations. Schmalenbach Bus Rev 71, 3–26 (2019). https://doi.org/10.1007/s41464-019-00068-9

Download citation

  • Received:

  • Accepted:

  • Published:

  • Issue Date:

  • DOI: https://doi.org/10.1007/s41464-019-00068-9

Keywords

Search

Navigation