Incentive pay configurations: the influence of national culture

Abstract

Purpose

The purpose of this paper is to investigate the influence of national culture on the adoption of four different incentive pay bundles (incentive maximizer, contingent rewarder, profit rewarder, and incentive minimizer) using GLOBE national culture dimensions in 14 countries. It uses incentive pay bundles derived by Prince et al. (2016).

Design/methodology/approach

The study adopted multilevel random-intercept logistic modeling using firm incentive practice usage from the CRANET database and country culture scores from the GLOBE study.

Findings

Evidence suggests that in-group collectivism is associated with increased use of the incentive maximizer approach, in which firms use a combination of high levels of individual, team, and profit sharing incentives, and decreased use of the incentive minimizer approach (where firms minimally employ incentives) and the individual and team bonus focused contingent rewarder configuration. Higher uncertainty avoidance is linked to increased use of the profit rewarder approach (where only profit sharing is emphasized) and decreased use of the contingent rewarder approach. Performance-orientation cultures appear to support using the incentive maximizer and avoiding the incentive minimizer bundles.

Originality/value

This study investigates incentive practice bundles that firms use verses separate analysis of practices and use the GLOBE culture metrics. It utilizes multilevel modeling, which has been lacking in past studies of culture and incentives.

Citation

Prince, N.R., Prince, J.B. and Kabst, R. (2018), "Incentive pay configurations: the influence of national culture", Evidence-based HRM, Vol. 6 No. 2, pp. 187-202. https://doi.org/10.1108/EBHRM-12-2017-0059