Does the Regional Sense of Social Fairness Really Narrow the Executive-Employee Pay Gap?

Abstract

Based on Chinese traditional Confucianism and under the policy background of “salary limit order”, this paper uses tournament theory and social comparison theory to research and analyze the relationship between regional social fairness and the executive-employee pay gap, its effect on employee productivity and the effect of the matching relationship on company performance incentives. Based on the questionnaire survey of China’s comprehensive social survey from 2010 to 2016 and the data of all A-share listed companies in China, we find that the regional sense of social fairness will significantly increase the salary gap of companies, and the higher the sense of social fairness, the greater the incentive effect of the salary gap on the production efficiency of ordinary employees, and the correct match between the sense of social fairness and the salary gap will promote the development of the performance of local enterprises. This means that the cultural environment will deeply affect the micro-governance of enterprises. We should attach importance to the role of hidden factors in the executive-employee pay gap, promote the rationalization of the income distribution pattern, and promote the development of the economy stably.