The Impact of National Culture on CEO Compensation and Salary Gaps Between CEOs and Manufacturing Workers

This article explores the results of a cross-national study of the salaries of managers and subordinates from 25 countries. To explain the cross-national differences in salary gaps and CEO pay, a cultural approach is taken, and country scores for three of the cultural dimensions developed by Hofstede are used as explanatory variables. The results of correlation and regression analyses demonstrate that the dimension of Power Distance is positively correlated and the dimension of Individualism is negatively correlated with salary gaps. For CEO pay, the results are less significant. The overall conclusion is that culture as a variable seems to explain much of the differences in pay and remuneration across countries.