Are Small Firms More Beautiful or Is Bigger Better? A Study of Compensating Differentials and Law Firm Internal Labor Markets

• Published in: Sociological quarterly Vol. 50; no. 3; pp. 474 - 496
• Main Authors: Wallace, Jean E., Kay, Fiona M.
• Format: Journal Article
• Language: English
• Published: Malden, USA Blackwell Publishing Inc 01.07.2009; Wiley-Blackwell; Wiley; Taylor & Francis Ltd
• Subjects: Attorneys; Autonomy; Benefit plans; Business; Business structures; Companies; Comparative analysis; Compensation; Complex organizations; Employee characteristics; Employees; Employment; Employment opportunities; Fairness; Industrial sociology; Interpersonal relations; Job satisfaction; Job security; Labor market; Labor markets; Law; Law firms; Manufacturing; Markets; Motivation; Occupational mobility; Organizational Culture; Size of enterprise; Small Businesses; Social research; Sociology; Sociology of work; Sociology of work and sociology of organizations; Studies; Wages; Wages & salaries; Work Environment; Labor Market; Work Organization; Professional career; Enterprise Size; Reward; Promotion (Occupational)
• ISSN: 0038-0253; 1533-8525
• DOI: 10.1111/j.1533-8525.2009.01149.x

Research on the size-job rewards relationship emphasizes extrinsic rewards that are typically more prevalent in large, complex organizations. We examine whether certain intrinsic rewards are more characteristic of small firms and shift the focus from manufacturing industries to professional service (law) firms. We find that small is not entirely beautiful. Smaller firms offer more autonomy but no more challenging work or better coworker relations, whereas larger firms offer lucrative salaries, enhanced benefits, and greater promotional opportunities. Our results challenge the compensating differential explanation whereby large firms offer superior extrinsic rewards to compensate for a shortfall of instrinsic job rewards.