Are pay satisfaction and pay fairness the same construct?: A cross‐country examination among the self‐employed in Latvia, Germany, the UK, and the USA

The purpose of this study is to test the extent to which pay satisfaction is equivalent to perceptions of pay fairness in order to call to attention the need for care in designing instruments in order to lessen the likelihood of the confounding of concepts within measures as has been in numerous previous studies. Questionnaire data were collected as part of a larger project seeking to understand the customer service behaviors of business owners for four groups of self-employed business owners from Latvia, Germany, the UK, and the USA. It is found that while pay satisfaction and pay fairness are not the same construct, with the exception of internal pay comparisons, the self-employed may not distinguish between pay fairness and pay satisfaction in a meaningful manner. All four of the samples included in the current study had limited control over their compensation as the economy and industry are the most powerful influences on the income of the self-employed in small businesses. It might prove useful to examine whether these results hold true for individuals with highly variable compensation. Organizations should not assume that individuals naturally differentiate between pay fairness and pay satisfaction. It also would appear that there are few differences in the perceptions between the self-employed based upon country of origin. While many studies have been performed on pay fairness and pay satisfaction that have assumed that they are distinct constructs, this is the first study to use a multi-step process in order to systematically and empirically examine the degree to which they are similar. This is done across four countries and with a sample of self-employed business people - a group rarely examined in human resource research. [PUBLICATION ABSTRACT]