Incentive Preferences of Employees in Germany and the USA: An Empirical Investigation

Marjaana Rehu (), Edward Lusk () and Birgitta Wolff ()
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Marjaana Rehu: Otto-von-Guericke-University Magdeburg, Faculty of Economics and Management
Edward Lusk: Otto-von-Guericke-University Magdeburg, Faculty of Economics and Management
Birgitta Wolff: Otto-von-Guericke-University Magdeburg, Faculty of Economics and Management

management revue. Socio-economic Studies, 2005, vol. 16, issue 1, 81-98

Abstract: This study investigates performance reward preferences of employees in Germany and the USA. The investigation uses the following three constructs: The Institutional Framework and its formal and informal implications for incentive compensation, Diminishing Marginal Utility of individuals related to performance rewards, and Incentive Schemes as motivational devices in organizations. Our empirical investigation is based upon survey data collected from employees of a MNC in Germany and the USA using an enriched form of Hofstede?s cross-cultural questionnaire. Our results show that employees from these countries have different preferences on incentives and further that incentive plans designed for one country might have non-motivating consequences in the other. We also find that the logic of diminishing marginal utility applies to certain rewards. Referencing these results, we suggest a method for organizations to develop effective and efficient incentive systems.

Keywords: Institutional Framework; Incentive Compensation; USA; Germany; Performance Rewards (search for similar items in EconPapers)
JEL-codes: F23 J53 M10 (search for similar items in EconPapers)
Date: 2005
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