Employee-Based Brand Equity: The Impact of Customer Perceptions on Executive Pay

December 2014 | Sorescu, Alina

This article examines the concept of employee-based brand equity – the value that a brand provides to a firm through its effects on the attitudes and behaviors of its employees – and empirically demonstrates its significance on executive pay. Executives value being associated with strong brands and, therefore, accept substantially lower pay at firms that own them. Consistent with identity theory, this effect is stronger for CEOs compared to other top executives, as well as for younger executives. Findings from data on a large, cross-industry sample of executives suggest that academics and practitioners should take a broader view of the contributions of brand-related investments to firm value, as well as make use of strong brands in pay negotiations that are typically viewed as being outside the realm of marketing.

 

Author

Alina Sorescu

Co-author(s)

• Nader T. Tavassoli
• Rajesh Chandy

Publication(s)

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