Strategic Choices for Sustainable Competitive Advantage, Marketization Degree, and the Executive-Employee Compensation Gap

Abstract

Responding to the latest demand for strategic human resource management research, the paper investigates the links between the strategic choice of sustainable competitive advantage for firms and the executive-employee compensation gap (EECG), and the moderating role of marketization degree in influencing such links between the two. A balanced panel of data consisting of 3900 annual observations of companies listed in China’s Shanghai and Shenzhen A-share manufacturing industries from 2008 to 2017 is used as the research sample, using SPSS 23.0 and STATA 16.0 software. The paper makes empirical analysis using several methods, including factor analysis, correlation analysis, multiple linear regression analysis based on OLS/2SLS, and fixed effect regression analysis, respectively. The empirical results confirmed that the differentiation strategy had a positive effect on EECG, and the marketization degree would strengthen the positive effect; and that the cost leadership strategy had an inhibitory effect on EECG, and the marketization degree would strengthen the inhibitory effect. Further exploration has found that both differentiation and cost leadership strategies can effectively improve firm performance and enhance sustainable competitive advantage when matched with a moderately higher EECG; the level of participation of female executives in corporate governance would harm the performance consequences of differentiation strategy, while improving the performance consequences of cost leadership strategy.