Show Them the Money? Better Do It Fairly: the Effects of Pay Inequity in a Team's Strategic Core

Teams are driven by their strategic core - members who encounter more team problems, are more exposed to team tasks, and are more central to team workflow. Although research indicates that committing more financial resources to the strategic core is connected with team success, doing so imposes greater pay dispersion and research is inconclusive regarding its effects. This may be because team pay dispersion is applied too broadly - mistakenly considering all team members as coequals - and due to unexamined mechanisms that might clarify the connection between pay dispersion and team performance. Using a team-centered view of equity theory, we elucidate the effects of team pay inequity by focusing on pay inequity in the strategic core and by testing its indirect association with team performance via the theorized mechanisms of collective effort and team coordination. We tested our hypotheses in a sample of professional basketball teams and find a negative connection between pay inequity and team performance, but only when the inequity exists within the strategic core (as opposed to the entire team) and only via the mechanism of team coordination (not collective effort). These findings clarify the effects of pay inequity in teams and underscore the importance of the strategic core.