Pay Gap Between Top Management And Workers, Chairman Characteristics And Creative Outcome

Creativity is the power for long term development of enterprise, and it is the keyof incentive mechanism to improve creative outcome. The pay gap between topmanagement and the worker involve the incentive issues of the two groups at thesame time；on the one hand，it may increase outcome by inducing competition, on theother hand, it may decrease outcome because of unfairness of pay. The competitionand organizational justice can have effect on creative outcome simultaneously, andthen the pay gap between top management and the worker may impact upon thecreative outcome due to competition and fairness of the pay gap. Additionally,compared with the incentive mechanism which the performance evaluation and thepay depend on the absolute performance measures, pay gap can implement incentiveby relatively performance measurement and pay comparison, it will help decreasemonitoring cost and have superiority on the incentive efficiency for creative activitywhich is more implicit. So the research on the relationship between pay gap andcreative outcome may be interesting. Furthermore, due to the attention oforganizational goal and incentive mechanism, chairman as the most important leaderof listed company in China, may exert influence on the competition and fairness ofthe pay gap and moderate the incentive effect and efficiency, and the moderatingeffect is different among chairmen.On the reference of the analytic framework of tournament theory and equitytheory, the paper integrate the research idea of above two theory, and gives anempirical test for integrated effect of the competition and fairness of the pay gap oncreative outcome using the data of Chinese listed companies in the manufactureindustry. Then, the paper analyzes the regulating intensity and inclination of chairmancharacteristics to the competition and fairness of the pay gap, and gives an empiricaltest for the moderating effect of chairman characteristics between pay gap andcreative outcome. The one purpose of this study is to analyze simultaneously the competition effectand fairness effect on creative outcome which are caused by the incentive mechanismof pay gap between top management and the worker, and to obtain comprehensiveunderstanding of the incentive role of the pay gap. The other purpose of this study isto discuss the role of chairman from the perspective of leader behavior in incentiveprocess which is launched by pay gap between top management and the worker tocreative outcome.The main conclusions are:1. The hypothetical development shows that as an extrinsic incentive measures（extrinsic motivation）for different group, goal setting of pay gap between the topmanagement and the worker is the important link to achieve goal of creative outcome,and should take overall consideration for the competition and fairness of the pay gap.For arousing creative activity, the fairness of pay gap is the premise and thecompetition of pay gap is the dynamics. Neither of the fairness or the competitionmay lead to the inefficiency or failure in the incentive process. When the goal of paygap inclines to the fairness, dynamics of implementation of creative outcome mightbe insufficient；when the goal of pay gap inclines to the competition, it might lead tothe lower organization commitment and even departure from organizational goal. Soit is important to take comprehensive consideration to the competition and fairness ofthe pay gap to promote attainment of goal of creative outcome. Leader behavior mayinfluence on the competition and fairness of the pay gap and moderate incentiveeffect and efficiency of pay gap. As the most important leader of listed company inChina, chairman may influence differently on the competition and fairness of the paygap due to chairman characteristics, and then making the moderating effect on thecreative outcome different among chairmen.2. The empirical result shows that ceteris paribus, on the whole a positivesignificantly relationship between the pay gap and level of creative outcome can befound, the bigger pay gap，the higher level of creative outcome. It means thatcompared to the intrinsic incentive which has received many concerns, as an extrinsicincentive factors pay might arouse creative activity, the pay gap between topmanagement and the worker may arouse simultaneously arouse creative activity to different groups and promote creative outcome. Moreover, the effect of pay gap oncreative outcome may be continuous, the pay gap may stimulate contemporaneouscreative outcome and have a hysteresis effect on the creative outcome in theconsequent period.3. The empirical result shows that chairman characteristics can significantlymoderate the relationship between the pay gap and creative outcome. Specifically,those who are elder and have been as a chairman for a longer term, are benefitary tocomprehensive consideration for the competition and fairness of the pay gap, andmoderate positively the relationship between pay gap and creative output. However,those who are highly educated tend to determine the pay gap which is more fair butless competitive, and moderate negatively the relationship between pay gap andcreative output; for these chairman who has par-time job, it is difficult to takecomprehensive consideration to the competition and fairness of the pay gap, andmoderate negatively the relationship between pay gap and creative output. It meansthat chairman characteristics may be an important moderating variable whichinfluence the relationship between the pay gap and creative outcome, the behaviorsrelated to chairman characteristics may positively or negatively moderate the effect ofpay gap on creative outcome.