The Salary and Wage Inequality Effect on Productivity on the Mexico-US Border: Mexican Middle Management Supervisor Perspective

1. Introduction

Now a days the emerging economies are key players in Global business, countries like China and India have become large and competitive participants in the global market. As a result, the labor force on these emerging markets has developed high skills, therefore multiple companies from developed economies such as the US and Germany have moved their manufacturing facilities to these countries. This phenomenon has created wage inequality between manufacturing workers from the developed economies and manufacturing workers in emerging markets. This phenomenon has reached Mexico as well.

In this sense, analyzing the effects of wage inequality in the Mexican-US border will help better understand this phenomenon and improve path of productive development among borders. In the study of Sanchez (2013) he considers that: “The theorization of the border between Mexico and the United States helps to recognize its dynamics and its hierarchical and functional attributes.” This view also coincides with Nicol and Minghi’s (2005) emphasis on flexible approaches capable to consider their dynamic nature when studying border regions. Theorizing the practices that are generated in the border territory between Mexico and the United States involves investigating the power behind those practices, the scales in which they operate, the ways in which the border adapts to those processes, and the discourses that result from them.

Additional studies also consider that the promotion of the borders between Mexico and the United States is fostered by international free trade agreements (Carbajal, 2017). For instance, the implementation of the North American Free Trade Agreement (NAFTA) since 1994 have furthered the dynamics of the economic activity of the northern border, especially in the automotive industry. For multinational companies in the automotive sector, NAFTA represented the possibility of a larger potential market with better commercial conditions. Additionally, Mexican Border States had become natural areas for new foreign investment due to their geographic location advantages derived from their proximity to the US market. Sánchez and Campos (2010) explained that the Mexican border region is, economically speaking, one of the most outstanding in the country. The region’s proximity to the United States places it in an outstanding position to strengthen the industrialization of the area. The development of the Mexican northern border, helped by the maquiladora industry, are linked to the cycles of US manufacturing and the Mexican labor, which is much lower (López, 2004).

Underlying the effect of leadership in personal productivity among middle management supervisors there are additional factors that need to be identified and analyzed. For instance, perceived salary and wage inequality influences negative attitudes that may undermine personal productivity among workforce. Thus, salary and wage inequality can reduce or even eliminate the positive effect of leadership on personal productivity. The question salary and wage inequality raises is: how influential is salary and wage inequality on the leadership-productivity relation among middle management supervisors? Furthermore, is there an administrative process companies can implement to minimize or, if possible, eliminate the negative attitudes that undermine personal productivity among middle management supervisors? Thus, there is a need to first, determine the effect of leadership in middle management supervisors’ personal productivity. Second, determine the effect of salary and wage inequality in the leadership-productivity relation among middle management supervisors. And third, determine if implementing an internal administrative process to develop and control leadership execution could overcome the negative impact of salary and wage inequality on the leadership-productivity relation.

The following research questions guide this study: