THE EFFECT OF COMPENSATION PROGRAM AND STRUCTURE ON SBU COMPETITIVE STRATEGY: A STUDY OF TECHNOLOGY-INTENSIVE FIRMS

In this paper we examine the impact various compensation programs have upon businesslevel strategy for technology-intensive firms. Similarly, we examine the effect of centralization of R&D and non-R&D decision-making, formality of procedures, and SBU size on competitive strategy. Analysis of data from 79 SBUs suggest that there is a resource tradeoff between marketing-oriented strategies and R&D-oriented strategies, and that managers who operate under certain types of compensation programs will tend to favor R&D/innovation strategies and capital investment over other alternatives. Structure and competitive position also appear to play a significant role in determining technology and investment strategy.