Così Fan Tutte? Adoption and Rejection of Performance-Related Pay in Italian Municipalities: A Cross-Sector Test of Isomorphism

Abstract

Using data from Italian municipalities, nonprofits, and business firms, this article explores two sets of relationships. First, sectoral differences in the exposure to institutional forces triggering the adoption of performance-related pay are investigated. Second, this study estimates sectoral differences in the sensitivity to those isomorphic pressures. Coercive pressure is the strongest on municipalities and the weakest on for-profits. Exposition to mimetic pressure tends to be stronger for business establishments compared with both municipalities and nonprofits. For-profits generally face weaker normative forces relative to municipalities and nonprofits. Coercive pressure increases the probability that an organization adopts performance-related pay schemes more in business firms than in nonprofits and more in nonprofits than in municipalities. The effect of normative pressure on the probability of adoption is higher in both municipalities and nonprofits compared with for-profit establishments. Coercive pressure increases the percentage of performance-related pay more in business firms than in nonprofits and more in nonprofits than in municipalities.