Marketization,Confucianism And Executive-Employee Pay Dispersion

Pay dispersion between executives and ordinary employees has an important impact on performance.When the pay dispersion is reasonable,it will motivate the enthusiasm of most employees.Therefore,how to adjust the pay dispersion to maximize the incentive effect is particularly important.Which requires the organization to pay attention to factors that may affect the pay gap.Some studies have demonstrated that organizational governance structure can affect the pay dispersion.But there is no literature from the institutional environment to examine the formal market system,the traditional culture of the informal system and the impact of the interaction between the two on the pay dispersion.As a fast-growing emerging market country,Chinese economic development is facing a complex institutional environment.On the one hand,a relatively complete market institution is gradually being established.The characteristics of reform and geographical have also made significant differences in the institutional environment and marketization process in each regions.on the other hand,the traditional culture still has a profound impact on the economic development.At the same time,reforms are often accompanied by conflicts and break-in of various institutions.Market-oriented reforms also have the same conflicts between new institution and traditional culture.Therefore,it is necessary to explore the differences in regional institutional environment,especially the conflicts between different institutions on the pay dispersion of executive-employee.Based on this,this paper uses the data of Chinese A-share listed companies in Shanghai and Shenzhen from 2003 to 2014,and adopts the OLS regression method.From the perspective of institutional theory,studying the impact of the interaction between formal and informal institutions on the pay dispersion of executive-employee in China.Conclusion as below:(1)From the perspective of the formal institutions,we found that the higher market level,the greater the pay dispersion between executives and ordinary employees.In areas with high market level,the stronger the sense of competition among employees,people pay more attention to whether incomes greatly reflect the contribution,ability and value of individuals.And People have a higher acceptance of the income gap.(2)From the perspective of informal institutions,this study discover that Confucianism can reduce the pay dispersion between executives and ordinary employees.Confucianism advocates the doctrine of the mean,which promotes the company to consider the overall interests of employees when designing the salary structure.It not only pays attention to the matching between the pay and return of executives,but also pays attention to the pay satisfaction of ordinary employees.(3)From the interaction between Confucianism and market level.Confucian culture will regulate the relationship between market level and the pay dispersion.The stronger the influence of Confucianism,the weaker the influence of market level on the pay dispersion between executives and ordinary employees.The main innovation of this paper is to enrich the existing research on the pay dispersion between executives and employees,and shift the focus to the institutional environment,considering the interactive impact of the complex and diverse institutional environment on the pay gap.Secondly,this paper focuses on the special national background and considers the influence of unique traditional culture on corporate governance behavior.Confucianism as a social norm profoundly affects Chinese economic and social order.Therefore,it is very necessary to study the role of Confucian culture.At the same time,there are still some problems in measuring the impact of Confucianism through the distance.The degree of influence of culture is not only related to the distance of cultural distance from the affected objects,but also by many other variables that are variable and immutable.Further research should focus on more accurate measurements of the extent of influence on Confucianism.