Determinants of Compensation Structure for Salespeople in the Retail Clothing Industry in Singapore: An Agency Theory Perspective

This study investigated the tenability of agency theory in explaining the structure of compensation for salespeople in the Singapore context. Results based on personal visits to 90 small retail clothing stores located at shopping centers throughout Singapore, with responses from 180 salespersons, store owners, and supervisors, showed that agency theory was robust in explaining the extent of outcome-based compensation used in rewarding salespeople. Risk sharing factors (e.g., the principal's risk aversion and average purchase size) were more prominent than monitoring factors (e.g., number of stores owned by the principal) in explaining the structure of compensation for salespeople in the industry. Implications for future research were discussed.