Does Pay Transparency Affect How Employees Bargain for Idiosyncratic Terms?

Abstract

This study investigates how pay transparency affects employees' desire to bargain employment conditions for themselves. Drawing from past research of pay transparency as well as compensating differentials theory, the authors propose that pay transparency affects employee i-deal requests via incentive pay compression. Hypotheses were tested in a sample of 111 medical device distribution firms located in China using multiple data sources. Results suggest that the positive impact of pay transparency on employee i-deals requests is largely explained by incentive pay compression, but only when firm collectivism is taken into consideration. Implications for theory and practice are discussed.