The Effects of Pay Differential on Social Undermining and Work Effort via Envy

Abstract

Invoking the self-evaluation maintenance model (Tesser, 1988), I argue that a pay differential leads to both social undermining and work effort behaviors through envy. In addition, I further propose that an employee’s internal pay standing and his or her self-esteem moderate the effects of pay differential on employee social undermining and work effort. Using Taiwanese employee data of 614 dyads nested within 186 members of 46 teams collected with the round-robin survey method, I analyzed the data with social relations model (SRM), which was used in dyadic data analyses studies, and found that a pay differential was positively associated with social undermining behaviors and envy partially mediated the pay differential effect on social undermining behaviors. Moreover, pay differential effects on envy was stronger when the focal employee’s internal pay standing was low, and the envy effects on social undermining was stronger when the employee self-esteem was low.