Pain or Gain? A Cultural Perspective on Management of Pay Disparity in Family Businesses (WITHDRAWN)

Abstract

Under which circumstances will pay disparity be a threat or an opportunity for effective management of family business employees? We conceptually claim that in a collectivistic high power distance culture family employees will reciprocate overcompensation by exerting additional effort and non-family employees will not expect equal compensation. However, the opposite will be true in an individualistic low power distance culture. We discuss the effect of distributive justice on employees’ withdrawal intentions and conclude that, depending on the cultural setting, pay disparity can be either a threat or an opportunity. Boundary conditions and implications are discussed.