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Title: Promotion tournaments and hierarchy
Author: Wu, Maoguo
ISNI:       0000 0004 2737 5363
Awarding Body: University of Aberdeen
Current Institution: University of Aberdeen
Date of Award: 2012
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This thesis studies promotion tournaments and hierarchy, through both theoretical and empirical means. The data set utilised through- out the thesis for empirical tests consists of a large panel gathered from a major British financial sector firm. The data set has very detailed and consistent data on job levels, which are particularly well suited for studies of transitions across levels. The thesis first investigates one main assumption of the tournament theory, i.e., hierarchy is relatively fixed, and finds support in empirical results that external hiring number, promotion into level number, promotion out of level number, and exit number are closely related. The thesis then extends the conventional tournament model to a multi-contestant multi-prize setting and sets out to test the theoretical model predictions. Following the predictions, an empirical model of promotion probabilities is tested. Fixity of hierarchy, proxied by external hiring rate and exit rate, along with conventional promotion determinants, are included in the estimation. The results shed light on a distinct finding that fixity of hierarchy plays an important role in promotion outcomes, i.e., vacancies influence promotion probabilities, and incentives vary closely with promotion probabilities. The relation between incentives and promotion probabilities can be characterised as a hump shape. The results also indicate that promotion requirement would even get weakened if a large number of vacancies emerged. The thesis also compares two alternative promotion rules, tournaments versus standards. The theoretical model argues that tournaments and standards have similar incentive effect on inducing effort. In tournaments, maximal incentive occurs for intermediate promotion rates, and lower incentive occurs for lower and higher promotion rates. In standards, maximal incentive occurs when the standard is set so that the chance of promotion is a half, and lower incentive occurs when the standard is set so that the chance of promotion is far from a half. The empirical tests address the extent to which promotions within organisations are driven by relative comparisons of worker performance and comparisons of worker performance against absolute standards. The results provide evidence that relative comparisons become more important at higher hierarchical levels.
Supervisor: Not available Sponsor: Business School, University of Aberdeen
Qualification Name: Thesis (Ph.D.) Qualification Level: Doctoral
EThOS ID:  DOI: Not available