Does Religion Matter For Corporate Pay Dispersion Symmetrically: An Institutional Approach

Abstract

This study examines how corporate pay dispersion is shaped by Buddhism- and Confucianism-based institutional environments. Buddhism and Confucianism are prevalent in China and regarded as having a significant influence on corporate policies and practices. We theorize that a Buddhism-based institutional environment is negatively associated with horizontal and vertical pay dispersion, whereas a Confucianism-based institutional environment has competing influences (positive vs. negative relationship) on corporate pay dispersion. Furthermore, we theorize that Buddhism- and Confucianism-based institutional environments have an asymmetric influence on corporate pay dispersion. We propose the existence of an asymmetric influence between Buddhism- and Confucianism-based institutional environments, in which the magnitude of the influence of a Confucianism-based institutional environment on corporate vertical pay dispersion is stronger than that of the influence of a Buddhism-based institutional environment. Our study provides an improved understanding of the antecedents of corporate pay dispersion and empirical evidence showing how broad social structures shape corporate compensation arrangements.