Mediating Role of Employee Payroll Methods Between Lean Production and Corporate Performance in SMEs

This study explores the mediating effect of employee payroll methods (EPMs) on the relationship between lean production (LP) and corporate performance (CP) in small and medium-sized enterprises (SMEs). Drawing on the Job Demands-Resources (JD-R) model and lean management theory, we developed a theoretical framework to test how LP practices influence CP directly and indirectly through three typical EPMs (hourly payroll system, piece-rate payroll system, and performance-based payroll system). A quantitative research design was adopted, with data collected from 328 production managers and front-line employees across 68 manufacturing SMEs in Shandong, China. Structural equation modeling (SEM) and bootstrap analysis were used to validate the hypotheses. The results show that: (1) LP has a significant positive impact on CP (β=0.587, p<0.001); (2) LP positively predicts the adoption of piece-rate payroll system (β=0.423, p<0.001) and performance-based payroll system (β=0.516, p<0.001), but negatively predicts hourly payroll system (β=-0.289, p<0.01); (3) Piece-rate payroll system (β=0.215, p<0.001) and performance-based payroll system (β=0.302, p<0.001) play partial mediating roles between LP and CP, while hourly payroll system shows no significant mediating effect (β=-0.064, p>0.05). These findings contribute to the literature by clarifying the mechanism through which LP affects CP in SMEs and provide practical implications for SME managers to optimize payroll systems while implementing lean practices.