Another comment brought up optionality, and that's certainly part of it for big companies -- so much of how much you're paid is directly related to their perception of your own optionality and how you and others like you bucket into their leveling system to keep the buckets full enough.
For smaller companies, I think fungibility is another way to look at it. Fungibility is sort of taken for granted at big companies because it needs to be there to grow past a certain size without imploding. But small companies can make a lot of money by accepting non-fungibility and keeping total headcount minimal.
What I think this means is that they'll probably be a lot more inclined to dismiss location-based pay because for a growth inclined company, it's basically a rounding error in their cost benefit analysis. You need capable people to do stuff /and/ work well with other people, it's hard to find them anywhere (even if you're looking globally). If someone's doing good work and you want to pay them more to incentivize them, it's not going to be a huge pain to get that checkbook control and the CEO is likely to implicitly sign off on it. The same can't be said for big companies.
For smaller companies, I think fungibility is another way to look at it. Fungibility is sort of taken for granted at big companies because it needs to be there to grow past a certain size without imploding. But small companies can make a lot of money by accepting non-fungibility and keeping total headcount minimal.
What I think this means is that they'll probably be a lot more inclined to dismiss location-based pay because for a growth inclined company, it's basically a rounding error in their cost benefit analysis. You need capable people to do stuff /and/ work well with other people, it's hard to find them anywhere (even if you're looking globally). If someone's doing good work and you want to pay them more to incentivize them, it's not going to be a huge pain to get that checkbook control and the CEO is likely to implicitly sign off on it. The same can't be said for big companies.