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When Are Pay Gaps Good or Bad for Firm Performance? Evidence from China

Published online by Cambridge University Press:  17 February 2020

Jin-hui Luo ,
Yuangao Xiang  and
Ruichao Zhu
Jin-hui Luo*
Affiliation:
Xiamen University, China
Yuangao Xiang
Affiliation:
Xiamen University, China
Ruichao Zhu
Affiliation:
The Hong Kong University of Science and Technology, Hong Kong
*
Corresponding author: Jin-hui Luo (jinhuiluo@xmu.edu.cn)
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Abstract

There is still an ongoing debate regarding the firm performance implications of pay gaps between top executives and subordinate employees. This study integrates relative deprivation theory and tournament theory to investigate the potential nonlinear effects of pay gaps. We expect that at low levels of pay inequality, increased inequality hurts firm productivity, while at higher levels of pay inequality, increased inequality helps firm productivity. Our study of Chinese firms confirms that pay gaps have an approximately U-shaped relationship with firm performance. This nonlinear relationship is weaker in state-owned enterprises (SOEs) than in non-SOEs, suggesting that state ownership is an important moderator in the association. Overall, this study explains previous mixed findings regarding consequences of pay gaps with meaningful implications for policymakers and entrepreneurs in China and other economies with similar cultural and institutional backgrounds.

摘要

摘要

高管与下属的薪酬差距对于企业业绩的影响至今仍然存在争论。本研究整合相对剥夺理论和竞标赛理论探讨薪酬差距可能的非线性效应。我们预计，当薪酬不平等的水平较低时薪酬不平等的增加会伤害企业生产率，而当薪酬不平等水平较高时薪酬不平等的增加则有利于企业生产率。我们针对中国企业的研究证实薪酬差距与企业业绩之间存在近似U型的关系。这种非线性关系在国有企业比在非国有企业更弱，表明企业所有制是一个重要的调节变量。总体而言，本研究解释了以往研究中有关薪酬差距的不同发现，对于中国的政策制定者和企业家以及在文化和制度上与中国类似的经济体都有意义。

Аннотация

АННОТАЦИЯ

До сих пор продолжаются споры о влиянии разницы в оплате труда между высшим руководством и подчиненными на производительность компании. Данное исследование объединяет теорию относительной депривации и теорию соревнования, чтобы изучить потенциальное нелинейное влияние разницы в оплате труда. Мы предполагаем, что при низком уровне неравенства в оплате труда, увеличение неравенства вредит производительности компании, а при более высоком уровне неравенства в оплате труда, увеличение неравенства способствуют росту производительности в компании. Наше исследование китайских компаний подтверждает, что существует примерно U-образная зависимость между разницей в оплате труда и производительностью компаний. Эта нелинейная взаимосвязь слабее в государственных предприятиях (ГП), чем в негосударственных, что говорит о том, что государственная собственность является важным фактором в этом отношении. В целом, это исследование разъясняет прежние противоречивые данные о влиянии разницы в оплате труда, а также делает важные выводы для политиков и предпринимателей в Китае и других странах с аналогичными культурными и институциональными условиями.

Resumen

RESUMEN

Hay aún un debate en curso sobre las implicaciones en el desempeño de la empresa de las brechas salariales entre los altos ejecutivos y los empleados subordinados. Este estudio integra la teoría de privación relativa y la teoría de torno para investigar los efectos no-lineares potenciales de las brechas salariales. Esperamos que, en menores niveles de desigualdad salarial, una mayor desigualdad perjudique a la productividad de la empresa, mientras que en mayores niveles de desigualdad una mayor desigualdad ayude a la productividad de la empresa. Nuestro estudio en empresas china confirma que las brechas salariales tienen una relación casi en forma de U con el desempeño de la empresa. Esta relación no linear es más débil en empresas estatales (SOE) que, en empresas no estatales, sugiriendo que la propiedad del estado es un moderador importante en la asociación. En general, este estudio explica resultados mixtos previos sobre las consecuencias de las brechas salariales con implicaciones significativas para formuladores de política y emprendedores en China y en otras economías con antecedentes culturales e institucionales similares.

Keywords

Chinafirm performanceownership structurepay gaprelative deprivation theorytournament theory中国企业业绩所有制结构薪酬差距相对剥夺理论竞标赛理论Китайпроизводительность компанииструктура собственностиразница в оплате трудатеория относительной депривациитеория соревнованияChinadesempeño de la empresaestructura de propiedadbrecha salarialteoría de la privación relativateoría de torneo
Type
Article
Information
Management and Organization Review , Volume 16 , Issue 5 , December 2020 , pp. 1030 - 1056
Copyright
Copyright © 2020 The International Association for Chinese Management Research

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Footnotes

Accepted by: Senior Editor Ray Friedman

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