Political Sensitivity and Compensation for Senior Managers: An Analysis of the Mediating and Moderating Role of Political Networking and Institutional Pressure in State Ministries in Iran

Document Type : Research Paper


1 Prof., Department of Public Administration, Faculty of Economic Sciences, Lorestan University, Khorramabad, Iran

2 PhD Candidate, Department of Public Administration, Faculty of Economic Sciences, Lorestan University, Khorramabad, Iran.

3 Phd Candidate, Department of Public Administration, Faculty of Economic Sciences, Lorestan University, Khorramabad, Iran


Objective:Compensation for sensitive political careers has always been a topic of discussion for academicians, policymakers and social activists. The subject of this article is the assumption that the parameters affecting the compensation of such services are based on an equality-based or equity-based approach and are the result of the risks or responsibilities underlying within the organizational positions. Therefore, the purpose of this study is to investigate the impact of political sensitivity on the compensation of senior managers in Iranian state ministries with the mediating role of political networking and the moderating role of institutional pressure.
Methods: The present study is applied in terms of purpose and correlational descriptive in terms of data collection. In this study, 471 senior managers of 18 state ministries were considered as the statistical population at the level of Deputy Minister or Chief of General Staff and then 234 senior managers were selected based on simple stratified sampling method using Cochran formula.
Results: Political sensitivity has a significant direct impact on compensation for senior managers' services. It is also proved effective indirectly and through the mediating variable of political networking in which sensitive political office holders manage stakeholders and participate in power and coalition network which will finally affect their service compensation. However, the institutional pressure resulted from social norms moderates the relationship between political sensitivity and compensation.
Conclusion: Political sensitivity is one of the most important factors affecting the compensation of senior managers that affect the compensation of senior managers either directly or through political networking and forced, imitative and normative institutional pressures. Research results in the areas of political sensitivity, institutional pressures, and political networking develop theoretical innovations and help managers, institutions, and executive parties understand how political sensitivity affects senior managers' compensation emphasizing political networking and institutional pressure.


Main Subjects

Aghababaei Dehaghani, Z.,  Memarzadeh Tehran, Gh., Ehsan Nikjoo, A. (2015). Organizational Factors Affecting the Compensation of Services of Specialist Physicians Working in State-run Hospitals in Tehran, Process Development & management, 27 (1), 133-157.
(in Persian)
Aguinis, H., Martin, G. P., Gomez-Mejia, L. R., O’Boyle Jr, E. H., & Joo, H. (2018). The two sides of CEO pay injustice: a power law conceptualization of CEO over and underpayment. Management Research: Journal of the Iberoamerican Academy of Management, 16(1), 3-30.
Akrami, S. R. (2017). A Review on the Role of Accounting Executives in Performance Based Budgeting. Report of the Study Plan of the Ministry of Economic Affairs and Finance, 1-172. (in Persian)
Aslan, H., & Grinstein, Y. (2012). Political contributions and CEO Pay. University of Houston and Cornell University. Working paper, available at Research Gate: http://www.researchgate.net/publication/228160641. 
Belz, T., von Hagen, D., & Steffens, C. (2019). Taxes and firm size: Political cost or political power? Journal of Accounting Literature, 42, 1-28.
Berrone, P., & Gomez-Mejia, L. R. (2009). Environmental performance and executive compensation: An integrated agency-institutional perspective. Academy of Management Journal, 52(1), 103-126.
Brodmann, J., Unsal, O., & Hassan, M. K. (2019). Political lobbying, insider trading, and CEO compensation. International Review of Economics & Finance, 59, 548-565.
Carrothers, A. G. (2019). The impact of public scrutiny on executive compensation. Journal of Financial Regulation and Compliance, 10(20), 1-48
Chen, X., Yi, N., Zhang, L., & Li, D. (2018). Does institutional pressure foster corporate green innovation? Evidence from China’s top 100 companies. Journal of Cleaner Production, 188, 304–311.
Cheng, K. T. (2015). Public service motivation and job performance in public utilities: An investigation in a Taiwan sample. International Journal of Public Sector Management, 28(4/5), 352-370.
Chu, Z., Wang, L., & Lai, F. (2019). Customer pressure and green innovations at third party logistics providers in China: The moderation effect of organizational culture. The International Journal of Logistics Management, 30(1), 57-75.
D’Andreamatteo, A., Ianni, L., Rangone, A., Paolone, F., & Sargiacomo, M. (2019). Institutional pressures, isomorphic changes and key agents in the transfer of knowledge of Lean in Healthcare. Business Process Management Journal, 25(1), 164-184.
Darrough, M. N., Pourjalali, H., & Saudagaran, S. (1998). Earnings management in Japanese companies. The International Journal of Accounting, 33(3), 313-334.
De Luca, L. M., & Atuahene-Gima, K. (2007). Market knowledge dimensions and cross-functional collaboration: Examining the different routes to product innovation performance. Journal of Marketing, 71(1), 95-112.
Divandari, A., Nazari, M., Seyed Javadin, S., Haji Karimi, A., Rayej, H. (2018). Investigating the Effect of Compensation on Individual Performance: A Study on the Mediating Role of Internal Motivation and the Moderating Role of Self-efficacy and Reward Expectancy. Journal of Business Management, 10(3), 673-694. (in Persian)
Dubey, R., Gunasekaran, A., Childe, S. J., Papadopoulos, T., & Helo, P. (2019). Supplier relationship management for circular economy: influence of external pressures and top management commitment. Management Decision, 57(4), 767-790.
Dyck, I.J.A., & Zingales, L. (2002). The corporate governance role of the media. CRSP Working Paper No. 543. Available at SSRN: https://ssrn.com/abstract=335602. 
Ferris, G. R., Treadway, D. C., Kolodinsky, R. W., Hochwater, W. A., Kacmar, C. J., Douglas, C., &Frink, D. D. (2005). Development and Validation of the Political Skill Inventory. Journal of Management, 31(1), 126-152.
Ferris, G. R., Treadway, D. C., Perrewe, P. L., Brouer, R. L., Douglas, C., Lux, S. (2007). Political Skill in Organizations. Journal of Management, 33(3), 290-320.
Forret, M. L., & Dougherty, T. W. (2004). Networking behaviors and career outcomes: Differences for men and women? Journal of Organizational Behavior, 25, 419-437.
Gull, S., & Zaidi, A.A. (2012). Impact of Organizational Politics on Employees’ Job Satisfaction in the Health Sector of Lahore Pakistan. Interdisciplinary Journal of Contemporary Research in Business, 4, 156-170.
Hadley, B. (2016). Executive compensation and political sensitivity: Evidence from government contractors. Journal of Corporate Finance. doi.org/10.1016/j.jcorpfin.2016.11.007.
Hayes, A. F., Scharkow M. (2013). The relative trustworthiness of inferential tests of the indirect effect in statistical mediation analysis. Does method really matter? Psychological Science, 24, 1918–1927.
Hiedari, M., Didar, H., Qaderi, B. (2015). The Empirical Investigation of Relationship between Political Costs and Growth Opportunities: A Structural Equation Modeling Approach. Empirical Studies in Financial Accounting, 12(47), 141-157. (in Persian)
Kotabe, M., Jiang, C. X. & Murray, J. Y. (2014). Examining the Complementary Effect of Political Networking Capability with Absorptive Capacity on the Innovation Performance of Emerging-Market Firms. Journal of Management, 1-26.
Kusuma, A., Lestari, H., & Usman, O. (2019). Influence of Motivation Work, Discipline of Work, Work Environment, Cultural Organization, and Compensation to the Performance of Employees. Discipline of Work, Work Environment, Cultural Organization, and Compensation to the Performance of Employees (January 7, 2019).
Lam, K. C., McGuinness, P. B., & Vieito, J. P. (2013). CEO gender, executive compensation and firm performance in Chinese-listed enterprises. Pacific-Basin Finance Journal, 21(1), 1136-1159.
Li, H. & Zhang, Y. (2007). The Role of Managers` Political Networking and Functional Experience in new Venture Performance: Evidence from China`s Transition Economy. Strategic Management Journal, 28, 791-804.  
Li, H., Atuahene-Gima, K. (2001). Product innovation strategy and the performance of new technology ventures in China. Academy of Management Journal, 44(6), 1123–1134.
Liang, H., Renneboog, L., & Sun, S. L. (2015). The political determinants of executive compensation: Evidence from an emerging economy. Emerging Markets Review, 25, 69–91.
Magnan, M., & Martin, D. (2018). Executive Compensation and Employee Remuneration: The Flexible Principles of Justice in Pay. Journal of Business Ethics, 1-17.
Mills, L. F., Nutter, S. E., & Schwab, C. M. (2013). The effect of political sensitivity and bargaining power on taxes: Evidence from federal contractors. The Accounting Review, 88(3), 977-1005.
Najafikhah, M. (2017). The Border between Public and Private Sectors in Iran's Law with Emphasis on Privatization and Outsourcing. The Journal of Planning and Budgeting, 21 (4), 101-133. (in Persian)
 Phillips, L., & Fox, M. A. (2003). Compensation strategy in transnational corporations. Management Decision, 41(5), 465–476.
Raddadi, A., Bagheri Kani, M., Hajipour, B. (2014). Analyzing the Organizational Responses to Institutional Pressures (Case Study: Imam Sadegh University). Management in the Islamic university, 3(7), 129-142. (in Persian)
Ramus, C.A. (2001). Organisational support for employees: encouraging creative ideas for environmental sustainability. California Management Review, 43, 85–105.
Rao-Nicholson, R., Khan, Z., & Marinova, S. (2019). Balancing social and political strategies in emerging markets: Evidence from India. Business Ethics: A European Review, 28(1), 56-70.
Scott, W. R. (2006). The adolescence of institutional theory. Administrative Science Quarterly, 32(4), 493–511.
Seo, J., Gamache, D. L., Devers, C. E., & Carpenter, M. A. (2015). The role of CEO relative standing in acquisition behavior and CEO pay. Strategic Management Journal, 36(12), 1877-1894.
Seyed Naghavi, M., Vaezi, R., Ghorbani Zadeh, V., Afkaneh, M. (2018). A Model of Human Resources Excellence for Iranian Governmental Organizations. Quarterly Journal of Public Organzations Management, 6(2), 11-26. (in Persian)
Sheng, S., Zhou, K., & Li, J. J. (2011). The effects of business and political ties on firm performance: Evidence from China. Journal of Marketing, 75(1), 1-15.
Slesman, L., Baharumshah, A.Z., Azman-Saini, W.N.W. (2019). Political institutions and finance-growth nexus in emerging markets and developing countries: A tale of one threshold. The Quarterly Review of Economics and Finance, 72, 80-100.
Watts, M. (2000). Political ecology. A companion to economic geography.
Wetzels, M., Schroder, G., Van Oppen, C. )2009(. Using PLS path modeling for assessing hierarchical construct models: guidelines and empirical illustration. Management Information Systems Quarterly, 33(1), 177-195.
Williams, C., & Spielmann, N. (2019). Institutional pressures and international market orientation in SMEs: Insights from the French wine industry. International Business Review, 28(5). 
Wolff, H.G., Moser, K. (2009). Effects of Networking on Career Success: A Longitudinal Study. Journal of Applied Psychology, 94(1), 196-206.
Wu, H., Li, S., Ying, S. X., & Chen, X. (2018). Politically connected CEOs, firm performance, and CEO pay. Journal of Business Research, 91, 169–180.
Xu, E., & Zhang, H. (2008). The impact of state shares on corporate innovation strategy and performance in China. Asia Pacific Journal of Management, 25, 473-487.
Yaghoobnezhad, A., Javadi, N. (2009). The relationship between the size of firms and political costs. Financial Knowledge of Securities Analysis, 2(4), 41-61. (in Persian)
Yang, C.-S. (2018). An analysis of institutional pressures, green supply chain management, and green performance in the container shipping context. Transportation Research Part D: Transport and Environment, 61, 246–260. 
Yu, H.Y. (2010). Politically-connected boards and the structure of chief executive officer compensation packagesinTaiwanese firms. Asia-Pacific Journal of Financial Studies, 39 (5), 578–606.
Yu, W., Ramanathan, R., & Nath, P. (2017). Environmental pressures and performance: An analysis of the roles of environmental innovation strategy and marketing capability. Technological Forecasting and Social Change, 117, 160-169.
Zeng, H., Chen, X., Xiao, X., & Zhou, Z. (2017). Institutional pressures, sustainable supply chain management, and circular economy capability: Empirical evidence from Chinese eco-industrial park firms. Journal of cleaner production, 155, 54-65.
Zhang, Y., Wei, Y., & Zhou, G. (2018). Promoting firms’ energy-saving behavior: The role of institutional pressures, top management support and financial slack. Energy Policy, 115, 230–238.
Zhu, Q. (2016). Institutional pressures and support from industrial zones for motivating sustainable production among Chinese manufacturers. International Journal of Production Economics, 181, 402–409.