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The Effects of Pay Dispersion Between Executives and Employees of an Organization on Firm Performance: Evidence from Turkey

The Cross-Disciplinary Perspectives of Management: Challenges and Opportunities

ISBN: 978-1-83867-250-8, eISBN: 978-1-83867-249-2

Publication date: 29 November 2019

Abstract

This study examines the performance consequences of pay dispersion in publicly listed firms in Turkey for the period 2009–2013. Our study focuses on vertical pay dispersion, which reflects intra-firm and vertical differences between pay at two important hierarchical levels: top executive level and lower hierarchical level. The author intends to present arguments based on equity theory and tournament theory and will propose two contradictory hypotheses to test them within the context of an emerging market. Results provided in the present study confirm that pay dispersion between executives and employees has a positive impact on a firm’s profitability in Turkey. Our study contributes current empirical evidence by examining vertical pay dispersion in an emerging country context, which may have a different cultural orientation and societal-wide assumptions concerning fairness, power, and disparities, relative to its developed country counterparts.

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Acknowledgements

Acknowledgment

The author would like to thank Galatasaray University Research Fund for supporting this study under the grant no. 14.102.001.

Citation

Ataay, A. (2019), "The Effects of Pay Dispersion Between Executives and Employees of an Organization on Firm Performance: Evidence from Turkey", Weber, Y., Vrontis, D., Tsoukatos, E. and Shams, S.M.R. (Ed.) The Cross-Disciplinary Perspectives of Management: Challenges and Opportunities (Cross-Disciplinary Management Perspectives), Emerald Publishing Limited, Bingley, pp. 153-163. https://doi.org/10.1108/978-1-83867-249-220191012

Publisher

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Emerald Publishing Limited

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