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Moderating effects on the compensation gap between locals and expatriates in China: A multi-level analysis

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  • Leung, Kwok
  • Wang, Zhongming
  • Hon, Alice H.Y.
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    Abstract

    The large compensation gap between locals and expatriates in developing countries is associated with a number of negative reactions on the part of the former. Drawing on the sense-making perspective, this study adopts a multi-level approach to examine the moderating effect of an inclusive climate initiated by expatriates for locals and firm performance on the negative relationships between disapproval of a compensation gap and several outcome variables. As expected, disapproval of this gap is related to local employees' negative reactions to expatriates and their firms. Consistent with the sense-making perspective, a stronger inclusive climate for locals is related to a less negative relationship between disapproval of the compensation gap and reactions to expatriates, whereas better firm performance is related to a more negative relationship between that disapproval and reactions toward the organization.

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    Bibliographic Info

    Article provided by Elsevier in its journal Journal of International Management.

    Volume (Year): 17 (2011)
    Issue (Month): 1 (March)
    Pages: 54-67

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    Handle: RePEc:eee:intman:v:17:y:2011:i:1:p:54-67

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    Related research

    Keywords: Compensation gap Expatriates Firm performance Inclusive climate Multi-level approach Sense-making;

    References

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    1. Engelhard, Johann & Nägele, Joakim, 2003. "Organizational learning in subsidiaries of multinational companies in Russia," Journal of World Business, Elsevier, vol. 38(3), pages 262-277, August.
    2. Roberson, Quinetta M., 2006. "Justice in teams: The activation and role of sensemaking in the emergence of justice climates," Organizational Behavior and Human Decision Processes, Elsevier, vol. 100(2), pages 177-192, July.
    3. Kwok Leung & Peter B Smith & Zhongming Wang & Haifa Sun, 1996. "Job Satisfaction in Joint Venture Hotels in China: An Organizational Justice Analysis," Journal of International Business Studies, Palgrave Macmillan, vol. 27(4), pages 947-962, December.
    4. Michael Harvey, 1993. "Empirical Evidence of Recurring International Compensation Problems," Journal of International Business Studies, Palgrave Macmillan, vol. 24(4), pages 785-799, December.
    5. Fryxell, Gerald E. & Butler, John & Choi, Amanda, 2004. "Successful localization programs in China: an important element in strategy implementation," Journal of World Business, Elsevier, vol. 39(3), pages 268-282, August.
    6. Thompson, Leigh & Loewenstein, George, 1992. "Egocentric interpretations of fairness and interpersonal conflict," Organizational Behavior and Human Decision Processes, Elsevier, vol. 51(2), pages 176-197, March.
    7. Leung, Kwok & Zhu, Yongxin & Ge, Cungen, 2009. "Compensation disparity between locals and expatriates: Moderating the effects of perceived injustice in foreign multinationals in China," Journal of World Business, Elsevier, vol. 44(1), pages 85-93, January.
    8. Evans, Martin G., 1985. "A Monte Carlo study of the effects of correlated method variance in moderated multiple regression analysis," Organizational Behavior and Human Decision Processes, Elsevier, vol. 36(3), pages 305-323, December.
    9. Kwok Leung & Peter B Smith & Zhongming Wang & Haifa Sun, 1996. "Job Satisfaction in Joint Venture Hotels in China: An Organizational Justice Analysis," Journal of International Business Studies, Palgrave Macmillan, vol. 27(5), pages 947-962, December.
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