Wage Inequality Reduces Corporate Profits

In a new paper published in the Journal of Marketing, Boas Bamberger, Dr. Dominik Wielgos, and Prof. Christian Homburg provide insights into the impact of wage inequality on customer satisfaction and company performance. Based on two empirical studies, the authors show that it is true that wage inequality increases the profitability of companies in the short term. In the long term, however, this positive effect fades. What remains is a negative effect on customer satisfaction, as wage inequality can motivate employees to act opportunistically towards their customers and to be less customer-oriented.
The study appeals to managers to consider the consequences of increasing wage inequality for customers and in the long term. At the same time, it offers political decision-makers a valid argument for building consensus with managers that reducing wage inequality would be beneficial for society and businesses alike.
The original publication is available at: https://lnkd.in/enjyv29z