Pay structure is described as a moderating
variable because there is no theoretical, ex ante reason, to expect that the relation between the use of
non-financial measures will differ for egalitarian firms versus hierarchical firms. Accordingly, there is no
hypothesis for the significance and sign of EGAL. EGAL is, however, included in the model (as a direct
effect) since it aids in the interpretation of the interaction or moderating variable (Judd and McClelland,
1989).