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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.
Keywords: business and society; compensation structure; corporate social performance; executive compensation; normative myopia; personality; value neglect
For a number of years, there has been a trend toward ever-increasing salary ifferentials in organizations. Whereas pay for the lowest earning workers decreased between 1960 and 1990, compensation for top managers increased greatly (Feenstra & Hanson, 1996; Juhn, Murphy, & Pierce, 1993; Mishel, Bernstein, & Schmitt, 1996). However, these pay disparities may not be warranted by companies' performance records (Colvin, Harrington, & Hjelt, 2001; Craig, 2003; Loomis, 2001; Useem & Florian, 2003). Moreover, some corporate governance structures have apparently allowed executives to receive extremely large pay packages in the form of stock options whereas investors suffered losses (Fox, 2002). This has prompted Fortune, a probusiness magazine, to call current executive pay practices "over-the-top CEO piggishness" (Fox, 2002, p. 70) and "outrageous," "madness," or "grossly high-astronomical" (Colvin et al., 2001, p. 64). Even Harvard agency theorist Michael Jensen, an advocate of high executive pay, has professed, "I've generally worried these guys weren't getting paid enough. . . . But now even I'm troubled" (Colvin et al., 2001, p. 64).
Despite such criticism, only a few companies have tried to rein in the income gaps between executives and nonexecutives (Morgenson, 2005), a state of affairs that seems contrary to the view that socially responsible firms should try to reward their employees-one of their most...