This is counter-intuitive from a business standpoint. Managers behave this way because they've learned through experience that:

1) Most of the worst employees hang on for dear life to their jobs and don't dare risk losing them for any reason (asking for a raise, etc). Incompetence or sub-par job performance not withstanding.

2) Occasionally employees get a fire lit under them by a spouse, mid-life crisis, etc and attempt to obtain a raise. Doing so communicates that the employee wants to stay at the company, and that they can be low-balled.

3) The best employees have mobility in the job space and can get better offers. This is why quitting is the only reliable way to get a raise (counter-offer). The employee has clearly shown market value above their current position, and the psychological effect of social proof kicks in.

There are of course exceptions, but even a moderate amount of time in a large company shows this to be generally true. Managers are incentivized to keep personnel costs down, and only give in if their hand is forced. It's just human nature at work.