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Moderating effects on the compensation gap between locals and expatriates in China: A multi-level analysis

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  • Leung, Kwok
  • Wang, Zhongming
  • Hon, Alice H.Y.

Abstract

The large compensation gap between locals and expatriates in developing countries is associated with a number of negative reactions on the part of the former. Drawing on the sense-making perspective, this study adopts a multi-level approach to examine the moderating effect of an inclusive climate initiated by expatriates for locals and firm performance on the negative relationships between disapproval of a compensation gap and several outcome variables. As expected, disapproval of this gap is related to local employees' negative reactions to expatriates and their firms. Consistent with the sense-making perspective, a stronger inclusive climate for locals is related to a less negative relationship between disapproval of the compensation gap and reactions to expatriates, whereas better firm performance is related to a more negative relationship between that disapproval and reactions toward the organization.

Suggested Citation

  • Leung, Kwok & Wang, Zhongming & Hon, Alice H.Y., 2011. "Moderating effects on the compensation gap between locals and expatriates in China: A multi-level analysis," Journal of International Management, Elsevier, vol. 17(1), pages 54-67, March.
    • Handle: RePEc:eee:intman:v:17:y:2011:i:1:p:54-67
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    References listed on IDEAS

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    1. Leung, Kwok & Zhu, Yongxin & Ge, Cungen, 2009. "Compensation disparity between locals and expatriates: Moderating the effects of perceived injustice in foreign multinationals in China," Journal of World Business, Elsevier, vol. 44(1), pages 85-93, January.
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    Cited by:

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    4. Kwok Leung & Xiaowan Lin & Lin Lu, 2014. "Compensation Disparity between Locals and Expatriates in China: A Multilevel Analysis of the Influence of Norms," Management International Review, Springer, vol. 54(1), pages 107-128, February.

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