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Business & Society
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Normative Myopia, Executives' Personality, and Preference for Pay Dispersion

Toward Implications for Corporate Social Performance

Marc Orlitzky

University of Auckland, Auckland, New Zealand

Diane L. Swanson

Kansas State University, Manhattan

Laura-Kate Quartermaine

Westpac Banking Corporation, Sydney, Australia

In this preliminary study, the authors extend Swanson's concept of normative myopia (the propensity of executives to downplay or ignore the values at stake in their decision making) by using it as a point of reference for studying executives' preference for high pay dispersion. Specifically, the authors designed a survey to examine hypothesized relationships among myopia, personality, and executives' preference for highly stratified organizational pay structures. Data from 133 executive respondents suggest that myopic executives tend to prefer top-heavy compensation systems. In addition, the findings point to an inverse relationship between the personality factor Agreeableness and normative myopia, with the former offsetting the latter. The authors reject the alternative hypothesis that gender influences both agreeableness and myopia and conclude with some implications for business and society, including Swanson's proposition that normative myopia at the top contributes to a neglectful form of corporate social performance.

Key Words: business and society • compensation structure • corporate social performance • executive compensation • normative myopia • personality • value neglect

Business & Society, Vol. 45, No. 2, 149-177 (2006)
DOI: 10.1177/0007650306286739
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