Intra-Company Pay Gap and Enterprise Performance: An Empirical Analysis Based on Panel Data of Listed Chinese Manufacturing Companies

The manufacturing sector is the lifeblood of the national economy, and the improved performance of manufacturing firms provides the economic foundation for corporate innovation and transformation. Since the reform and opening up, intra-firm pay is more often linked to performance. Therefore, this paper conducted correlation analysis and regression analysis on the intra-firm pay gap and corporate performance of listed Chinese manufacturing companies from 2017-2020 using STATA 17.0 software to find how the intra-firm pay gap affects corporate performance. The results show that there is an inverted U-shaped relationship between the intra-firm pay gap and firm performance, i.e., an increase in the pay gap will improve firm performance before the threshold value, and after the threshold value is exceeded, the widening of the firm's pay gap will cause employee dissatisfaction and thus reduce firm performance.