Pay disparity in multinational and domestic firms in China: the role of pro-disparity norm

Abstract

A survey of Chinese employees was conducted in China to examine the antecedents and consequences of a pro-disparity norm concerning the pay disparity associated with expatriate managers and with Chinese managers recruited from distant geographical areas (outside managers). These two groups, especially expatriate managers, tend to receive high salaries. Interactional justice received from outside managers was positively related to pro-disparity norm and task interdependence with them was negatively related to pro-disparity norm, but no significant relationship was found for expatriate managers. When innovative climate was high, interactional justice and task interdependence showed a positive relationship with pro-disparity norm. With regard to consequences of pro-disparity norm, when innovative climate was high, it was positively related to compliance with the requests of expatriate and outside managers and positively related to knowledge sharing with them.

Keywords:

• expatriates
• innovative climate
• pay disparity
• pro-disparity norm
• task interdependence

Acknowledgements

This research was supported by a grant from the Research Grants Committee of Hong Kong (CityU 1274/03H).