Country-Compatible Incentive Design (eBook)

Dr. Marjaana Gunkel ist wissenschaftliche Mitarbeiterin von Prof. Dr. Birgitta Wolff am Lehrstuhl für Betriebswirtschaftslehre - Internationales Management - der Otto-von-Guericke-Universität Magdeburg.

Foreword 7
Preface 9
Table of Contents 11
List of Tables 14
List of Figures 16
List of Abbreviations 17
List of Variables 18
1 Cross-National Differences in Performance Reward Preferences - An Introduction 19
2 Employee Motivation and Institutional Frameworks- A Literature Review 24
2.1 Motivation Theories and their Country-Compatibility 24
2.2 Employee Motivation through Incentive Compensation 38
2.3 Formal and Informal Institutional Frameworks and Employee Motivation 42
3 Analyzing Incentives in a Multinational Corporation - From Data to Results 62
3.1 The Questionnaire 62
3.2 The Study Organization 63
3.3 Distribution of the Questionnaire Survey 67
3.4 The Study Sample 68
3.5 Data Entry and Cleaning 69
3.6 Test of Validity 72
3.7 The Analysis of the Hypotheses 73
4 Retaining and Motivating Employees in Germany and the United States - Hypothesis 1 87
4.1 Differences in the Motivational Effects of Performance Rewards Across Countries 87
4.2 Influence of Formal and Informal Institutional Framework on the Perform- ance Reward Preferences 92
4.3 Synopsis 104
5 Diminishing Marginal Utility of Performance Rewards- Hypothesis 2 107
5.1 Diminishing Marginal Utility and Employee Motivation 107
5.2 Influence of Institutional Frameworks on the Utility Curve Placement of Performance Rewards 110
5.3 Conclusion and Suggestions 116
6 An Exploratory Comparison of Performance Reward Preferences in China, Germany, Japan and the USA 118
6.1 Retaining and Motivating Employees in China, Germany, Japan and the United States- Hypothesis 1 119
6.2 Influence of Formal and Informal Institutional Frameworks on the Performance Reward Preferences 124
6.3 Diminishing Marginal Utility of Performance Rewards- Hypothesis 2 130
6.4 Influence of Institutional Frameworks on the Utility Curve Placement of Performance Rewards 133
6.5 Exploratory Meta-Analysis 137
6.6 Synopsis 142
7 Conclusion and Outlook 144
List of References 149
Appendix 158
Questionnaire for Employees of the Study Organization 159

Employee Motivation and Institutional Frameworks- A Literature Review (p. 7-8)

Starting from the 1960s researchers have shown great interest in motivation. Along with research in areas such as Human Resource Management and Organizational Be- havior employee motivation has become a fascinating research topic also for Man- agement academics. The research focus has been placed on the motivation process of employees as well as on the rewards which individuals find motivating. Further, some research has been conducted on finding out the differences in employee motivation in different countries. The following subsections cover some major motivation theories and their applicability in different countries as well as discuss the existing cross- national studies on employee motivation.

2.1 Motivation Theories and their Country-Compatibility

Prominent motivation theorists, such as Abraham Maslow (1968), Frederick Herzberg (1966), and David McClelland (1987) explain motivation through different models. Their theories, so called content theories, are concemed with identifying factors within the individuals, which energize, direct, and sustain behavior 15. Process theories, such as presented by Victor Vroom (1964) concentrate on how employee behavior is initi- ated, redirected and halted.

Such theories focus on certain psychological processes underlying actions, in particular how individuals make decisions that are related to their behavior. 16 Many of the motivation theories are not country-compatible which means that these theories do not necessarily work in different institutional frameworks, in other words, in different countries. Most of the theories were developed in the Anglo-Saxon coun- tries, and therefore, focused on motivating employees in the Anglo-Saxon environ- ment.

Various studies, from which some will be introduced in this chapter, have exam- ined the most prominent motivation theories and their country-compatibility. Never- theless, these studies often merely conclude that the motivation theories are not appli- cable in all countries without providing any further insight on what then actually moti- vates the employees in those countries where the motivation theories do not apply. The following subsections cover the main content of some classic motivation theories and the critique that they have received with respect to their insufficient country- compatibility.

Maslows Hierarchy of Needs Maslows hierarchy of needs attempts to explain motivation in general through the assumption that each individual has five basic needs: physiological, safety, social, es- teem and self-actualization. These needs guide the behavior of indi- viduals until the respective needs have been satisfied. The various needs appear in a hierarchical fashion, meaning that the lower level needs have to be satisfied first. A higher level need is not activated before the lower level needs are satisfied. Also, the theory states that offering a higher level of satisfaction with respect to a need that has already been satisfied does not affect the behavior of individuals any more. Once a need is satisfied, it has no motivational effects anymore.