Effects of inter- and intra-hierarchy wage dispersions on firm performance in Chinese enterprises

Abstract

This study examined the impact of inter- and intra-hierarchy wage dispersions on company performance based on a sample of 395 Chinese enterprises. It was hypothesized that (1) inter-hierarchy wage dispersion between managers and workers is positively related to firm performance and (2) intra-hierarchy wage dispersion within manager and worker groups is negatively related to firm performance. Results based on regression analysis confirmed the first hypothesis and showed partial support for the second. Practical and policy implications are discussed in the context of China's transitional economy.