Tavassoli, N. T., Sorescu, A., & Chandy, R. (2014). Employee-based brand equity: Why
firms with strong brands pay their executives less. Journal of Marketing Research, 51,
676-690.
Introduction
Strong brands: those that project a clear and consistent set of positive associations at high levels of
awareness → managers invest in it. A common assumption: the power of brands lies in the minds of
customers. But, firms also complete for employees: strong brands should also attracts employees at
lower pay levels.
Employee-Based Brand Equity: the value that a brand provides to a firm through its effects on the
attitudes and behaviors of its employees.
Theoretical framework
Identity theory: a core human need is to define our identity, in terms of both how we view and
understand ourselves and how others perceive us: affected by brands or employer. Why executives
accept lower pay in strong brands: self-enhancement: the accrual of social, psychological or
economic benefits. People use brand affiliations to affirm, express and enahce their identity both
privately (self-esteem) and publicly (status). Were a person works might even say more about that
person than the products he consumes.
Two contingencies that buttress the negative effect of brand strength on executive pay:
• Strength of identification: the degree to which people perceive themselves as being one with
an entity. Self-enhancement benefits should increase with the strength of a personal
identification with a brand. Could be due to social benefits and self-definition.
• Potential for uncertainty reduction afforded by the association with the brand: this potential
is highest for people whose identity is unclear, then the brand can serve as information
source to reduce the uncertainty.
Hypotheses
Self-enhancement as a substitute for pay: the benefits previous describes are non-financial rewards
of employment: a substitute for pay. The theoretical framework suggests that executives’ leadership
positions enable them to credibly position the brands they manage as a central part of their identity
and to rely on equity transfer from these brands as a potent source of self-definition.
H1: Firms with strong brands pay their executives less.
CEO visibility and strength of identification: given the CEO’s visible role, outsiders tend to see them
as being one and the same with the organization, to identify the CEO with the firm. So the benefits
occur most to CEO’s.
H2: The negative effect of brand strength on executive pay is strongest for the CEO compared with
other executives.
Uncertainty about younger executives’ identities: reducing uncertainty is by (1) short-term private
and public identity, and (2) long-term signal of their qualities like resumé building. The younger, the
more there is to build on and the more opportunities will still come.
H3: The negative effect of brand strength on executive pay is stronger for younger executives than
older executives.
Research method
IV = brand strength, measures: N = 15.000, 45-minute surveys. Following the BAV model: questions
firms with strong brands pay their executives less. Journal of Marketing Research, 51,
676-690.
Introduction
Strong brands: those that project a clear and consistent set of positive associations at high levels of
awareness → managers invest in it. A common assumption: the power of brands lies in the minds of
customers. But, firms also complete for employees: strong brands should also attracts employees at
lower pay levels.
Employee-Based Brand Equity: the value that a brand provides to a firm through its effects on the
attitudes and behaviors of its employees.
Theoretical framework
Identity theory: a core human need is to define our identity, in terms of both how we view and
understand ourselves and how others perceive us: affected by brands or employer. Why executives
accept lower pay in strong brands: self-enhancement: the accrual of social, psychological or
economic benefits. People use brand affiliations to affirm, express and enahce their identity both
privately (self-esteem) and publicly (status). Were a person works might even say more about that
person than the products he consumes.
Two contingencies that buttress the negative effect of brand strength on executive pay:
• Strength of identification: the degree to which people perceive themselves as being one with
an entity. Self-enhancement benefits should increase with the strength of a personal
identification with a brand. Could be due to social benefits and self-definition.
• Potential for uncertainty reduction afforded by the association with the brand: this potential
is highest for people whose identity is unclear, then the brand can serve as information
source to reduce the uncertainty.
Hypotheses
Self-enhancement as a substitute for pay: the benefits previous describes are non-financial rewards
of employment: a substitute for pay. The theoretical framework suggests that executives’ leadership
positions enable them to credibly position the brands they manage as a central part of their identity
and to rely on equity transfer from these brands as a potent source of self-definition.
H1: Firms with strong brands pay their executives less.
CEO visibility and strength of identification: given the CEO’s visible role, outsiders tend to see them
as being one and the same with the organization, to identify the CEO with the firm. So the benefits
occur most to CEO’s.
H2: The negative effect of brand strength on executive pay is strongest for the CEO compared with
other executives.
Uncertainty about younger executives’ identities: reducing uncertainty is by (1) short-term private
and public identity, and (2) long-term signal of their qualities like resumé building. The younger, the
more there is to build on and the more opportunities will still come.
H3: The negative effect of brand strength on executive pay is stronger for younger executives than
older executives.
Research method
IV = brand strength, measures: N = 15.000, 45-minute surveys. Following the BAV model: questions
