Meeting stretch goals via incentive compensation: Evidence from two emerging-country organizations

In this paper, we study the effect that incentive compensation has on meeting the stretch goals of an organization in the context of an emerging country. Our results differ from the conceptual insights into stretch goals presented by Sitkin et al. (2011) , especially the suggested mechanisms and conditions that influence the facilitative and disruptive effects of stretch goals on organizational performance. By drawing on in-depth case studies of two Vietnamese organizations, we explore the potential and limitations of incentive compensation in realizing stretch goals and their facilitative and disruptive effects in an emerging-country setting. We find that apart from recent performance and the level of slack resources, incentive compensation plays an important role in influencing the facilitative and disruptive effects of using stretch goals. Our paper is among the first to explore the potential and limitations of stretch goals in an emerging-country setting, where Western management control concepts frequently face resistance from employees and other stakeholders. In addition, it is among the first to explore the role of incentive compensation in determining the effects of stretch goals on organizational performance