Challenges in Contract Theory: Performance-Based Pay as a Solution to Address Promotion Risk in a Competitive Corporate Environment

Ria Wulandari ; Sara ; Yuni
International Journal of Business Law, Business Et... 📅 2025 Vol 2, No 2 🔗 DOI: 10.70142/ijbge.v2i2.359
Abstract
This study examines the challenges in implementing contract theory, particularly related to corporate performance pay as a solution to promotion risk in a competitive environment. Performance-based pay serves to increase employee motivation and reduce uncertainty in promotion, but has the potential to create unhealthy competition and reduce teamwork. This study suggests that a balanced incentive contract design, which combines financial and non-financial rewards, can optimize individual performance without sacrificing team harmony. Although performance-based pay can provide short-term benefits, it is important for companies to consider its long-term impact on employee satisfaction and collaboration within the organization. This study provides theoretical and practical insights for companies in designing fair and effective promotion systems
Keywords
Performance-based pay; Contract theory; Promotion risk; Competitive environment; Corporate incentives
How to Cite

Ria Wulandari, et al. (2025). Challenges in Contract Theory: Performance-Based Pay as a Solution to Address Promotion Risk in a Competitive Corporate Environment. International Journal of Business Law, Business Ethic, Business Communication & Green Economics (IJBGE), 2(2). https://doi.org/10.70142/ijbge.v2i2.359

Ria Wulandari; Sara, Yuni, "Challenges in Contract Theory: Performance-Based Pay as a Solution to Address Promotion Risk in a Competitive Corporate Environment," International Journal of Business Law, Business Ethic, Business Communication & Green Economics (IJBGE), vol. 2, no. 2, 2025.

Ria Wulandari; Sara, Yuni. "Challenges in Contract Theory: Performance-Based Pay as a Solution to Address Promotion Risk in a Competitive Corporate Environment." International Journal of Business Law, Business Ethic, Business Communication & Green Economics (IJBGE), vol. 2, no. 2, 2025.

Ria Wulandari; Sara, Yuni. "Challenges in Contract Theory: Performance-Based Pay as a Solution to Address Promotion Risk in a Competitive Corporate Environment." International Journal of Business Law, Business Ethic, Business Communication & Green Economics (IJBGE) 2, no. 2 (2025).

Ria Wulandari, et al. (2025) 'Challenges in Contract Theory: Performance-Based Pay as a Solution to Address Promotion Risk in a Competitive Corporate Environment', International Journal of Business Law, Business Ethic, Business Communication & Green Economics (IJBGE), 2(2). doi: 10.70142/ijbge.v2i2.359.

Ria Wulandari; Sara, Yuni. Challenges in Contract Theory: Performance-Based Pay as a Solution to Address Promotion Risk in a Competitive Corporate Environment. International Journal of Business Law, Business Ethic, Business Communication & Green Economics (IJBGE). 2025;2(2).

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