Exploring the Intersectionality Between Technology Firms and Inequality
In this article, co-authors Brett Anitra Gilbert and Meredith Burnett reflect on their interests and the inspiration behind their research article, “Firm Heterogeneity and Inequality: A Regional Perspective,” found in Business & Society.
My interest in this topic began after reading an increasing number of popular press articles on growing inequality in regions of technology firms. Knowing that firms have contributed to various social problems, I committed to understanding how firms affect regional inequality. Because the high pay that technology workers receive was believed to imbalance income in the region, which leads to other problems, I knew that any project would require a collaboration with an HR colleague. Fortunately, Meredith works in my department, and holds the expertise that would help me develop the arguments you’ll read in this paper.
Meredith started her research on HR strategy and total rewards in 2011 when it was established that multinational corporations that their total rewards and compensation and benefits policies maximize recruitment efforts. She became particularly interested in learning more about how international compensation, recruitment, and staffing strategies are related to firm outcomes and sought out collaborations with colleagues who study both international and domestic firms. So this topic enabled us both to combine our relative areas of expertise to develop holistic theory about firms, HR practices and regional inequality.
The article challenges management scholars to look beyond CEO compensation in their research, and to incorporate a more holistic perspective on the impact of heterogenous firms and compensation practices on societal outcomes. It also encourages the field to consider whether it is high- or low-income levels that are driving inequality, because each of these drivers may require different policy mechanisms to address them. Finally, it challenges the field to examine inequality at the local (MSA) level, since that is where firms and employees experience the negative outcomes of inequality.
The review process enhanced our initial submission in important ways. One reviewer believed that the decisions might look different for family businesses and under certain conditions (e.g. the pandemic). We agreed that it could, but not only for family businesses, also potentially for international vs. domestic companies, and publicly traded vs. private companies, as well as under different types of shocks. So, we added the exogenous shocks and ownership contingencies into the model.
For managers, our research encourages them to consider how their human capital strategy impacts their local region. For example, predominant hiring from outside of the region can increase upper wage levels within the region, while extensive use of part time and contingent employment arrangements can affect lower wage levels. HR managers are encouraged to ensure the local workforce of the future holds the skills that the industry will ultimately need, while monitoring employment arrangements to avoid contributing to a poorly paid labor market.
To conclude, we believe this research generates many interesting questions that can influence how managers and policy makers impact regional inequality. We hope that the topic encourages many empirical tests of these relationships, and that you enjoy reading about our work!
