This paper examines whether decisions to improve pay for low-level employees lead to more positive attitudes toward firms, depending on firm’s service reputation.
Four experiments examine whether information on compensation decisions for employees affects consumer attitudes toward firms.
Results show attitudes toward firms providing raises are more positive when firms are known for high quality (vs average) service. This occurs because individuals use information about firm reputation as a cue to make inferences about employees, and fairness of firm pay procedures. Moderators are introduced to show how these effects can be altered.
Drawing from research on the representativeness bias, this work extends theories on justice and equity and contributes to the literature on corporate social responsibility.
This research provides firms with insight on how to promote their efforts to improve employees’ financial welfare.
Findings provide guidance on how to increase public support of initiatives to improve financial well-being for low-wage workers.
This research is the first to examine how specific firm factors affect reception of initiatives to improve employee financial welfare and to delineate the process.
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