Employee reactions to pay dispersion: A typology of existing research

Pay dispersion has received growing attention in the management literature. Despite an increasing number of studies, research evidence on the effects of pay dispersion has not yet been consistent. The purpose of this paper is to review existing work and to provide a comprehensive theoretical framework that can advance pay dispersion research. Specifically, our framework suggests four unique types of pay dispersion and discusses three existing theories (equity theory, expectancy theory, and tournament theory) to integrate existing research from an employee reaction perspective in the pay dispersion area. We build upon this taxonomy and theoretical explication to suggest an agenda for future pay dispersion research.