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In this article, we develop and empirically test the theoretical argument that when an organizational culture promotes meritocracy (compared with when it does not), managers in that organization may ironically show greater bias in favor of men over equally performing women in translating employee performance evaluations into rewards and other key career outcomes; we call this the “paradox of meritocracy.” To assess this effect, we conducted three experiments with a total of 445 participants with managerial experience who were asked to make bonus, promotion, and termination recommendations for several employee profiles. We manipulated both the gender of the employees being evaluated and whether the company's core values emphasized meritocracy in evaluations and compensation. The main finding is consistent across the three studies: when an organization is explicitly presented as meritocratic, individuals in managerial positions favor a male employee over an equally qualified female employee by awarding him a larger monetary reward. This finding demonstrates that the pursuit of meritocracy at the workplace may be more difficult than it first appears and that there may be unrecognized risks behind certain organizational efforts used to reward merit. We discuss possible underlying mechanisms leading to the paradox of meritocracy effect as well as the scope conditions under which we expect the effect to occur.

This study helps to fill a significant gap in the literature on organizations and inequality by investigating the central role of merit-based reward systems in shaping gender and racial disparities in wages and promotions. The author develops and tests a set of propositions isolating processes of performance-reward bias, whereby women and minorities receive less compensation than white men with equal scores on performance evaluations. Using personnel data from a large service organization, the author empirically establishes the existence of this bias and shows that gender, race, and nationality differences continue to affect salary growth after performance ratings are taken into account, ceteris paribus. This finding demonstrates a critical challenge faced by the many contemporary employers who adopt merit-based practices and policies. Although these policies are often adopted in the hope of motivating employees and ensuring meritocracy, policies with limited transparency and accountability can actually increase ascriptive bias and reduce equity in the workplace.

Much research in sociology and labor economics studies proxies for productivity; consequently, little is known about the relationship between personal contacts and worker performance. This study addresses, for the first time, the role of referral contacts on workers' performance. Using employees' hiring and performance data in a call center, the author examines the performance implications over time of hiring new workers via employee referrals. When assessing whether referrals are more productive than nonreferrals, the author also considers the relationship between employee productivity and turnover. This study finds that referrals are initially more productive than nonreferrals, but longitudinal analyses emphasize posthire social processes among socially connected employees. This article demonstrates that the effect of referral ties continues beyond the hiring process, having long-term effects on employee attachment to the firm and on performance.For decades, we have seen a stream of theoretical and empirical studies in economic sociology and labor economics examining how recruitment sources relate to employees' outcomes such as turnover and tenure, starting wages, and wage growth (for a detailed review of these studies, see 1 I am grateful for the financial support provided by the Social Sciences Research Council (Program of the Corporation as a Social Institution). I have benefited enormously from the extensive and detailed comments of Roberto M. Ferná ndez, Mark Granovetter, and John W. Meyer. I thank Robert Freeland, Ezra Zuckerman, and Dick Scott for their wonderful suggestions on earlier versions of this paper. I also thank my colleagues in the Management Department at Wharton, especially Mauro F. Guillén, Anne-Marie Knott, Lori Rosenkopf, Nancy Rothbard, Christophe Van den Bulte, Steffanie Wilk, and Mark Zbaracki, and all the attendees of the M-square seminar for their comments on earlier drafts. I am also extremely thankful to the entire Ferná ndez family for all their love and support. Direct correspondence to Emilio J.

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