THE REMUNERATION OF NON-OWNER MANAGERS IN SMALL AND MEDIUM-SIZED UK ENTERPRISES

Virtually all prior research on small and medium sized enterprise (SME) management has focused on owner managers. This article, however, empirically examines the determinants of managerial remuneration for a sample of 97 UK SME non-owning managerial employees. The empirical analysis, based upon data obtained from interviews with middle (i.e. non-director level) managers and the published financial records of their employing firms lodged at Companies House, first examines the influence of firm size and performance and then augments the empirical model to include pay composition, industrial sector, external labour market and human capital variables. The empirical results indicate that the average profitability of the employing firms is not a significant determinant of managerial remuneration. However, composition of pay appears to have a significant effect upon total remuneration since, even after controlling for other influences, managers in receipt of annual bonuses and/or profit-sharing bonuses are estimated to earn an additional 6,600 Pound. The managers' age and qualifications, and the asset size, industry and location of their employing firms are also significant factors and collectively are able to explain a large proportion of the cross-sectional variance in remuneration. Though there is a lack of previous empirical research on SME managerial pay, these results are broadly consistent with the expectations derived from the extant theoretical and empirical literatures on managerial remuneration.