Corporate standards and local decisions: A cross-country comparison of variable compensation design in a decentralized MNC

Abstract: Despite an intense rate of globalization, cultural diversity has not decreased (Scholte, 2002) and managing different national cultures therefore continues to be ever-present for multinational corporations (MNCs). Previous research on performance management systems (PMSs) in MNCs has found considerable differences as well similarities when conducting cross-national research on the design of incentive systems (Van der Stede, 2003; Jansen et al., 2009). However, there is a void in qualitatively researching how decentralized MNCs adapt their incentive systems across geographical borders, a question this thesis aims at investigating. By conducting 30 interviews with representatives from Sweden, Germany and Belgium in the Swedish MNC 'ManuComp', we examine if the incentive system has been adapted to the national cultures of the subsidiaries or some other construct of culture. From the data analysis, three principle conclusions are drawn: (i) there are different 'versions' of decentralization within ManuComp due to complementing control mechanisms, (ii) applying theories on national cultures is an insufficient tool to fully explain our results, and (iii) a strong corporate culture enables implicit steering and explains why we observe such similar results across the three subsidiaries despite ManuComp's decentralized structure.