Understanding Vertical Pay Dispersion in the Public Sector: The Role of Publicness

Abstract

This study introduces vertical pay dispersion into public management research, a prevailing equity issue in discussions in organizations and society. Bridging tournament and equity theory with the publicness debate, the study analyses how manager-to-worker pay ratios of state-owned enterprises (SOEs) are affected by the dimensions of publicness – ownership, funding, and control. For a unique, hand-collected, five-year data set, the study finds that ownership publicness partly affects vertical pay dispersion, and the effects are moderated by city and SOE size. It enhances the understanding of vertical pay dispersion in the public sector and offers a research agenda for the determinants.