Pay gap and firm performance based on Chinese culture: Concurrently confirm the applicable objects of tournament theory and behavioral theory

Based on Chinese culture, this paper conducted an empirical research on the relationship between pay gap and firm performance to correct the former research results. Our research results indicated that under the incentive and constrain conditions of collectivism and great power distance, the relationship between pay gap of different organizational levels and firm performance was positive, which was a conic function. And pay gap trended to be wider along with the promotion of organizational levels, which uphold tournament theory. However, the relationship between pay gap within the same organizational level and firm performance was irrelevant or negative, which accorded with behavioral theory. In addition, based on characteristics of Chinese culture, we reconfirmed the applicable objects of tournament theory and behavioral theory, and concluded that they were complementary.