Organizational Governance and Trade-offs Between Pay and Subjective Employee Well-being: a Comparative Analysis

The incompleteness of labor contracts is expected to cause uncertainty among forward-looking employees as to whether implicit contracts with greater intrinsic rewards in lieu of pay will be breached by employers, thus reducing employee well-being. Marsden (2021) theorized that an organization’s form of governance can serve as a stable, easy-to-observe signal of the likelihood of a breach, and thus employees across governance types will exhibit different extrinsic-intrinsic trade-offs. Using the European Working Conditions Survey, we extend Marsden’s theory and find supportive evidence across 35 European countries and 9 governance categories. We also extend Marsden’s theorizing into the comparative domain, and analyze patterns of subjective well-being, compensatory pay, and organizational governance across varieties of political economies.