Nonexecutive employee compensation and firm labor productivity

Minghui Zhao, Kwong Yee Fong, Wai Nga Leong, Qiu Li and Rujie Chen

Finance Research Letters, 2025, vol. 73, issue C

Abstract: This study examined the impact of nonexecutive employee compensation on labor productivity. We explored how organizational empowerment dimensions and industry characteristics shape this relationship based on data from Chinese-listed firms from 2012 to 2021. Compensation effectiveness varied across productivity levels and industries, with stronger effects at lower-productivity levels. Industry heterogeneity analysis indicates that technology-intensive sectors had enhanced compensation–productivity relationships, while labor- and asset-intensive industries exhibited weaker effects. Management capability, organizational resilience, and digitalization positively moderated this relationship. These findings highlight that the effectiveness of compensation strategies is significantly affected by organizational context and industry characteristics. This study augments compensation theory by identifying key boundary conditions in the compensation–productivity relationship, providing practical guidance for creating effective compensation strategies across organizational contexts.

Keywords: Employee compensation; Labor productivity; Organizational empowerment; Management capability; Organizational resilience; Digitalization (search for similar items in EconPapers)
JEL-codes: J24 L25 M52 O15 (search for similar items in EconPapers)
Date: 2025
References: Add references at CitEc
Citations:

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S1544612324017070
Full text for ScienceDirect subscribers only

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eee:finlet:v:73:y:2025:i:c:s1544612324017070

DOI: 10.1016/j.frl.2024.106678

Access Statistics for this article

Finance Research Letters is currently edited by R. Gençay

More articles in Finance Research Letters from Elsevier
Bibliographic data for series maintained by Catherine Liu ().