Small Business Economics

, Volume 22, Issue 1, pp 33–49 | Cite as

Administrative Compensation and Organizational Performance in Texas Nursing Facilities

  • Kris Joseph Knox
  • Eric C. Blankmeyer
  • J. R. Stutzman

Abstract

This study examines the link between compensation and performance by comparing profit-seeking versus nonprofit nursing homes in Texas. Using both cost and profit functions to measure facility performance, that is, resource allocation efficiency by firm management, we find that: (1) the highest paid administrators (profit-seekers) are also the most efficient allocators of firm resources; (2) rural administrators are paid more than their urban counterparts but there is no significant difference in their overall ability to allocate resources; and (3) chain administrators are not compensated more than independent administrators yet are significantly superior in resource allocation. Further, management compensation is strongly influenced by firm size and capacity utilization. These results provide very weak support for the agency theorist's pay/performance paradigm.

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Copyright information

© Kluwer Academic Publishers 2004

Authors and Affiliations

  • Kris Joseph Knox
    • 1
  • Eric C. Blankmeyer
    • 2
  • J. R. Stutzman
    • 2
  1. 1.Department of Maritime AdministrationTexas A&M University at GalvestonGalvestonU.S.A
  2. 2.Department of Finance and EconomicsSouthwest Texas State UniversitySan MarcosU.S.A

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