Organizational Governance and Trade‐Offs Between Pay and Subjective Employee Well‐Being: A Comparative Analysis

ABSTRACT The incompleteness of labour 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. David Marsden 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 analyse patterns of subjective well‐being, compensatory pay and organizational governance across varieties of political economies.