Country-Compatible Incentive Design

Schmalenbach Business Review, Vol. 61, pp. 290-309, July 2009

20 Pages Posted: 30 Nov 2009

See all articles by Marjaana Gunkel

Marjaana Gunkel

Leuphana University of Lueneburg

Edward J. Lusk

SUNY Plattsburgh

Birgitta Wolff

Otto-von-Guericke-University Magdeburg

Date Written: July 1, 2009

Abstract

Today’s management faces the challenge of employing workforces in different countries. Institutional frameworks, both formal and informal, in various countries influence employees’ preferences related to performance rewards and management styles. We conduct an empirical study to examine employees of a German multinational corporation at its locations in China, Germany, Japan, and the U.S. We find that employees from these countries have different preferences on incentives and management styles. Therefore, motivational mechanisms designed for one country might not work in others. We also find that the logic of diminishing marginal utility applies to most performance rewards.

Keywords: Incentive Compensation, Institutional Frameworks, Management Style, Motivation, Performance Rewards

JEL Classification: M12, M16, M52

Suggested Citation

Gunkel, Marjaana and Lusk, Edward J. and Wolff, Birgitta, Country-Compatible Incentive Design (July 1, 2009). Schmalenbach Business Review, Vol. 61, pp. 290-309, July 2009, Available at SSRN: https://ssrn.com/abstract=1514430

Marjaana Gunkel (Contact Author)

Leuphana University of Lueneburg ( email )

Edward J. Lusk

SUNY Plattsburgh ( email )

United States
518.564.4190 (Phone)

Birgitta Wolff

Otto-von-Guericke-University Magdeburg ( email )

Universitaetsplatz 2
Magdeburg, 39016
Germany

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