When my pay is lower than my expatriate colleagues: Where do the Hospitality Managers go from here?

Abstract

Evidence suggests that the failure of expatriate managers has a great impact on MNCs in the hospitality industry. While this mainly stems from poor interrelationships with local subordinates, little is known about ways to ameliorate the detrimental effect. Given this, we examined the moderating roles of trust on compensation gap-work outcomes relationships. The Multilevel approach was used on a sample of 286 local team members and 32 expatriate team leaders from hotel companies in China. Results show that compensation gap between locals and expatriates relates negatively to local employee work outcomes. The negative compensation gap–work outcome relationship is moderated by trust. Affective trust significantly reduces the negative effect of compensation gap on employees’ satisfaction with expatriate managers and altruism towards them while cognitive trust minimizes the effect on job satisfaction and organizational commitment. We suggest an increase in trust dimensions to reduce perceived injustice in hospitality international management.