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Corporate Strategy, Pay Gap and Employee Turnover Rate: Based on Mediation Model

Received: 8 July 2021     Accepted: 19 July 2021     Published: 24 July 2021
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Abstract

The characteristics of prospector are to constantly find new market opportunities, carry out technological innovation, and obtain growth opportunities by moving to high value-added fields. Defender often choose a relatively stable market area and take effective actions, such as setting competitive prices or providing high-quality products and services, to actively prevent subsequent competitors from entering this industry. Although different strategic types of enterprises have different business preference, they cannot do without the active cooperation of employees in the process of strategy implementation, because they are the closest to the production and customers. If the incentive mechanism conflicts with employees' interests, employees may respond by leaving. Based on the sample of China's A-share listed companies from 2007 to 2019, this paper uses the fixed effect model to examine the impact of strategy on employee incentive mechanism and turnover rate. The empirical results show that, compared with defender, the pay gap of prospector is higher, and the above phenomenon is more significant in enterprises with lower labor intensity. In addition, prospector will also push up the turnover rate of employees, in which the pay gap plays a mediating role. This conclusion not only enriches the research of strategic theory and compensation contract, but also has some enlightenment for the relevant government departments to develop vocational training to improve employees' skills.

Published in Science Journal of Applied Mathematics and Statistics (Volume 9, Issue 3)
DOI 10.11648/j.sjams.20210903.12
Page(s) 78-84
Creative Commons

This is an Open Access article, distributed under the terms of the Creative Commons Attribution 4.0 International License (http://creativecommons.org/licenses/by/4.0/), which permits unrestricted use, distribution and reproduction in any medium or format, provided the original work is properly cited.

Copyright

Copyright © The Author(s), 2021. Published by Science Publishing Group

Keywords

Strategy, Pay Gap, Employee Turnover Rate

References
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[7] Lazear E P, Rosen S. (1981). Rank-Order Tournaments as Optimum Labor Contracts. Journal of Political Economy, 89 (5): 841-864.
[8] Lazear, Edward P. (2000). Performance Pay and Productivity. American Economic Review, 90 (5): 1346-1361.
[9] Chi W, Liao H, Wang L, Zhao R, Ye Q. (2019). Incentives to Move Up: Effects of Pay Gaps between Levels on Employee Performance [J]. Human Resource Management Journal, 29 (2): 238-253.
[10] Faleye O, Reis E, Venkateswaran A. (2013). The Determinants and Effects of CEO–Employee Pay Ratios [J]. Journal of Banking & Finance, 37 (8): 3258-3272.
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  • APA Style

    Xiangyi Zhu. (2021). Corporate Strategy, Pay Gap and Employee Turnover Rate: Based on Mediation Model. Science Journal of Applied Mathematics and Statistics, 9(3), 78-84. https://doi.org/10.11648/j.sjams.20210903.12

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    ACS Style

    Xiangyi Zhu. Corporate Strategy, Pay Gap and Employee Turnover Rate: Based on Mediation Model. Sci. J. Appl. Math. Stat. 2021, 9(3), 78-84. doi: 10.11648/j.sjams.20210903.12

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    AMA Style

    Xiangyi Zhu. Corporate Strategy, Pay Gap and Employee Turnover Rate: Based on Mediation Model. Sci J Appl Math Stat. 2021;9(3):78-84. doi: 10.11648/j.sjams.20210903.12

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  • @article{10.11648/j.sjams.20210903.12,
      author = {Xiangyi Zhu},
      title = {Corporate Strategy, Pay Gap and Employee Turnover Rate: Based on Mediation Model},
      journal = {Science Journal of Applied Mathematics and Statistics},
      volume = {9},
      number = {3},
      pages = {78-84},
      doi = {10.11648/j.sjams.20210903.12},
      url = {https://doi.org/10.11648/j.sjams.20210903.12},
      eprint = {https://article.sciencepublishinggroup.com/pdf/10.11648.j.sjams.20210903.12},
      abstract = {The characteristics of prospector are to constantly find new market opportunities, carry out technological innovation, and obtain growth opportunities by moving to high value-added fields. Defender often choose a relatively stable market area and take effective actions, such as setting competitive prices or providing high-quality products and services, to actively prevent subsequent competitors from entering this industry. Although different strategic types of enterprises have different business preference, they cannot do without the active cooperation of employees in the process of strategy implementation, because they are the closest to the production and customers. If the incentive mechanism conflicts with employees' interests, employees may respond by leaving. Based on the sample of China's A-share listed companies from 2007 to 2019, this paper uses the fixed effect model to examine the impact of strategy on employee incentive mechanism and turnover rate. The empirical results show that, compared with defender, the pay gap of prospector is higher, and the above phenomenon is more significant in enterprises with lower labor intensity. In addition, prospector will also push up the turnover rate of employees, in which the pay gap plays a mediating role. This conclusion not only enriches the research of strategic theory and compensation contract, but also has some enlightenment for the relevant government departments to develop vocational training to improve employees' skills.},
     year = {2021}
    }
    

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  • TY  - JOUR
    T1  - Corporate Strategy, Pay Gap and Employee Turnover Rate: Based on Mediation Model
    AU  - Xiangyi Zhu
    Y1  - 2021/07/24
    PY  - 2021
    N1  - https://doi.org/10.11648/j.sjams.20210903.12
    DO  - 10.11648/j.sjams.20210903.12
    T2  - Science Journal of Applied Mathematics and Statistics
    JF  - Science Journal of Applied Mathematics and Statistics
    JO  - Science Journal of Applied Mathematics and Statistics
    SP  - 78
    EP  - 84
    PB  - Science Publishing Group
    SN  - 2376-9513
    UR  - https://doi.org/10.11648/j.sjams.20210903.12
    AB  - The characteristics of prospector are to constantly find new market opportunities, carry out technological innovation, and obtain growth opportunities by moving to high value-added fields. Defender often choose a relatively stable market area and take effective actions, such as setting competitive prices or providing high-quality products and services, to actively prevent subsequent competitors from entering this industry. Although different strategic types of enterprises have different business preference, they cannot do without the active cooperation of employees in the process of strategy implementation, because they are the closest to the production and customers. If the incentive mechanism conflicts with employees' interests, employees may respond by leaving. Based on the sample of China's A-share listed companies from 2007 to 2019, this paper uses the fixed effect model to examine the impact of strategy on employee incentive mechanism and turnover rate. The empirical results show that, compared with defender, the pay gap of prospector is higher, and the above phenomenon is more significant in enterprises with lower labor intensity. In addition, prospector will also push up the turnover rate of employees, in which the pay gap plays a mediating role. This conclusion not only enriches the research of strategic theory and compensation contract, but also has some enlightenment for the relevant government departments to develop vocational training to improve employees' skills.
    VL  - 9
    IS  - 3
    ER  - 

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Author Information
  • Business School, Shandong University of Technology, Zibo, China

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