Management scholars have argued and demonstrated that pay dispersion can exert a considerable influence on a number of factors, including corporate behavior and performance. However, there is still relatively little knowledge available concerning the influence that pay dispersion may exert on firms’ internationalization decisions. In this study, we investigate how top executive pay dispersion shapes a firm’ internationalization strategy. Drawing on tournament theory, we propose that top executive pay dispersion is positively related to firms’ internationalization speed. Moreover, we argue that the impact of pay dispersion will be weakened by top management team coordination needs. Using a sample of 2,421 Chinese listed companies from 2008 to 2021, we find strong evidence to support our arguments. This study advances our understanding of tournament theory by examining international business as a novel form of research context. It also provides a new perspective on how remuneration structures shape firms’ internationalization strategic decision-making.
