GLOBAL REWARD MANAGEMENT IN MULTINATIONAL ENTERPRISES
Antecedents and Consequences of Practice Centralization
Inaugural dissertation
submitted to attain the academic degree
doctor rerum politicarum
(Doktor der Wirtschaftswissenschaften)
at the
ESCP Europe Business School Berlin
by
Dipl.-Psych. Michael Tekieli
born on March 22nd, 1987 in Jastrzębie-Zdrój, Poland
Berlin
2018
Global reward management in MNEs
DOCTORAL EXAMINATION COMMITTEE
Head: Prof. Dr. Christian Durach, ESCP Europe Berlin
Examiner: Prof. Dr. Marion Festing, ESCP Europe Berlin
Examiner: Prof. Dr. Xavier Baeten, Professor of Management Practice, Vlerick Business School
Day of disputation: October 29, 2018
Global reward management in MNEs
TABLE OF CONTENTS
List of figures ...... I List of tables ...... II List of abbreviations ...... III 1 Introduction ...... 1 2 Overview on global reward management research ...... 4 2.1 Global reward management from a theoretical perspective ...... 4 2.1.1 Firm-internal theories ...... 5 2.1.1.1 Resource-based view ...... 5 2.1.1.2 Resource dependence theory ...... 6 2.1.2 Firm-external theories ...... 7 2.1.2.1 Cultural perspective ...... 7 2.1.2.2 Institutional perspective ...... 7 2.2 Current state of research in global reward management and research gaps ...... 8 3 Dissertation Structure ...... 10 3.1 Overview of the manuscripts ...... 10 3.2 Data collection and data basis ...... 15 4 Introductory Insights on the Global Reward Management of the Sample ...... 16 5 Research Manuscripts ...... 18 5.1 Global Alignment or Localization? An Empirical Examination of Global Reward Management in MNEs from a Subsidiary Perspective ...... 18 5.2 Global reward management – a power perspective on the decision-making centralization in multinational enterprises ...... 19 5.3 Centralization and Effectiveness of Reward Management in Multinational Enterprises: Perceptions of HQ and Subsidiary Reward Managers...... 20 6 Discussion and Conclusion...... 21 6.1 Summary of key findings ...... 21 6.2 Further analyses ...... 23 6.2.1 Further analyses linking manuscript 1 and 2 ...... 23 6.2.2 Further analyses related to manuscript 2 ...... 27 6.3 Contributions ...... 29 6.4 Limitations and future research implications ...... 30 6.5 Practical Implications ...... 32 6.6 Closing Remarks...... 33 7 References ...... 34
Global reward management in MNEs
LIST OF FIGURES
Figure 1. Underlying total rewards perspective of this dissertation...... 11 Figure 2. Underlying framework of this dissertation...... 13 Figure 3. Reward management centralization of MNEs provided by the headquarters subsample. .... 16 Figure 4. Influences of foreign subsidiaries on MNE’s development of reward programs provided of the headquarters subsample...... 17
I
Global reward management in MNEs
LIST OF TABLES
Table 1. Overview of the manuscripts included in the thesis...... 14 Table 2. Centralization of decision-making for the different employee groups and reward practices...... 24 Table 3. Multiple regression analyses predicting for three different employee groups centralization of decision-making by alignment and localization pressures...... 25 Table 4. Centralization of decision-making for the different employee groups and reward procedure...... 28
II
Global reward management in MNEs
LIST OF ABBREVIATIONS
ANCOVA Analysis of covariance Ed(s). Editor(s) ed. Edition e.g. Exempli gratia (for example) et al. Et alii (and others) GLOBE Global Leadership and Organizational Behavior Effectiveness Program GRM Global reward management HQ Headquarters i.e. Id est (that is) (I)HRM (International) Human resource management IT Information technology LTI Long-term incentives MNE(s) Multinational enterprise(s) p./pp. Page/s PFP Pay for performance PMS Performance management systems SE Standard error SIT Social identity theory STI Short-term incentives UNCTAD United Nations Conference on Trade and Development UK United Kingdom USA United States of America Vol. Volume
III
Global reward management in MNEs
1 INTRODUCTION
Due to the increasing prevalence of globalization, multinational enterprises (MNEs) have become central players in the world economy. The number of MNEs worldwide increased from 3,000 in 1990 to 100,000 in 2012 (Javidan & Bowen, 2013), and they account through their value chains for 80 percent of global trade (UNCTAD, 2013) and employ a major part of the worldwide workforce (Budhwar & Sparrow, 2002). Consequently, international human resource management (IHRM) has received a lot of attention in the recent decade from researchers as well as practitioners (Kroeck & Von Glinow, 2015).
Global reward management (GRM) is a crucial issue for MNEs, since it affects employee behavior and is therefore able to improve global firm performance (Graham & Trevor, 2000;
Gross & Friedman, 2004). With ongoing globalization, GRM comprises so much more than expatriate pay, consisting of the following core tasks: a) The consideration of local and global data when setting up total reward packages for a global workforce, b) the decision whether to use centralized or decentralized reward systems, and c) the linkage of global outcomes with geographically dispersed costs. This broad spectrum of tasks has the aim of addressing several
MNE objectives (Kroeck & Von Glinow, 2015):