We conjecture that a firm's organization capital (OC) has a substitution effect on its executive pay-for-performance sensitivity (PPS) and empirically document a robust and significant substitution effect of OC on executive PPS. We use state-level unemployment insurance benefits as an instrumental variable for OC and show that the documented OC-PPS substitution effect is likely causal. Results are also robust to a stacked difference-in-differences estimation approach based on a quasi-natural experiment of exogenous CEO turnovers due to health-related issues. Our findings strongly suggest that greater OC substitutes for costly executive incentive compensation to sustain firm productivity and increase shareholder wealth.

我们推测，公司的组织资本（OC）对其高管绩效绩效敏感度（PPS）具有替代作用，并凭经验证明OC对高管PPS具有强大而显着的替代作用。我们使用州级失业保险金作为OC的工具变量，并证明了有记录的OC-PPS替代效应可能是因果关系。对于基于健康相关问题的外部CEO流动率的准自然实验，该结果对于堆叠的差异差异估计方法也很可靠。我们的发现有力地表明，更大的企业公民组织可以代替昂贵的高管人员激励薪酬，以维持公司的生产力并增加股东财富。