GLOBAL PERFORMANCE MANAGEMENT IN THE …

GLOBAL PERFORMANCE MANAGEMENT IN THE MULTINATIONAL ENTERPRISE

An Analysis of Country-specific Practices, Global Best Practices, and Employees’ Preferences in Performance Management

Inauguraldissertation submitted to attain the academic degree

doctor rerum politicarum (Doktor der Wirtschaftswissenschaften)

at the

ESCP EUROPE WIRTSCHAFTSHOCHSCHULE BERLIN

by

Dipl.-Psych. Lena Knappert

Berlin 2013

Doctoral examination committee Head: Prof. Dr. Stefan Schmid

Examiner: Prof. Dr. Marion Festing

Examiner: Prof. Dr. Markus Pudelko Day of disputation: 17.06.2013

ACKNOWLEDGEMENTS

During the years of organizing and writing this dissertation, several people’s help and support

were crucial in realizing this project, and it is my pleasure to thank everyone involved.

First of all, I would like to thank Prof. Dr. Marion Festing, for being my loyal and patient

supervisor and an inspiring mentor.

I would also like to show my gratitude to Prof. Dr. Markus Pudelko, for being the second

examiner of this thesis.

This dissertation would not have been possible without the cooperative initiatives offered by

Dirk Schneemann and Delphine Georget and the support given by Scott Patterson, Helen Luo,

Anthony Siebert, and Jerry Gule. I would also like to thank Prof. Dr. Allen Engle for being an

enthusiastic promoter of this thesis’s topic and a reliable source of inspiration. Moreover, I owe

sincere thanks to Prof. Dr. Robert Wilken, Dr. Sebastian Grümer, Jens Sievert, and Robert

Busching, for their expertise and advice in statistical matters. Furthermore, earnest thanks go to

the journals’ anonymous reviewers whose critiques and comments clearly improved the quality

of the four manuscripts building the core of this work.

Special thanks go to Dr. Juliane Felber, Angela Kornau, Julia Spiess, and Lynn Schäfer, for

being wonderful colleagues, great friends, and the best imaginable ‘final-spurt’ support.

Finally, I would like to thank my parents for their encouragement and love.

I

TABLE OF CONTENT

1 Introduction .......................................................................................................................... 1

2 Structuring the field of GPM research .................................................................................. 4

3 Differentiation and definition of performance management ............................................... 8

4

Theoretical perspectives on global performance management in the multinational enterprise ..............................................................................................................................

10

4.1 The influences of the organizational context of PM ................................................................11 4.2 Influences of diverse local contexts and the divergence of GPM ....................................................12

4.1.1 GPM from the cultural perspective ................................................................................................12 4.1.2 GPM from the business systems perspective ................................................................13 4.1.3 Integrating the cultural perspective and the business systems approach ................................14

4.3 The influences of global competition and the convergence of GPM ..............................................15 4.3.1 GPM from the market-driven perspective ................................................................ 15

4.3.2 GPM from the neo-institutional perspective ................................................................16 4.3.3 Integrating the market-driven and the neo-institutional perspective ................................17 4.4 The interplay of various impacts and crossvergence of GPM .........................................................18

4.5 Critical perspectives on GPM in MNEs ...........................................................................................21 4.5.1 PM best practices in question ................................................................................................21

4.5.2 Gender discrimination in PM ................................................................................................22 5

Applied perspectives, addressed questions, and contributions by this thesis – an overview of the four manuscripts .........................................................................................

24

6 Methodological framework ................................................................................................ 29

6.1 The research design ...........................................................................................................................29 6.2 The requirements of cross-cultural equivalence ...............................................................................32 6.3 The sample: the case of an MNE ................................................................................................36 7 Research manuscripts .......................................................................................................... 38

7.1

Global performance management in MNEs – conceptualization and profiles of country-specific characteristics ................................................................................................

38

7.2

Country-specific profiles of performance management in China, Germany, and the USA – an empirical test ....................................................................................................................

39

7.3

Do global ‘best practices’ in performance management meet employees’ preferences? Empirical evidence from China, German, South Africa, and the USA ................................

40

7.4

Gender-specific preferences in global performance management – an empirical study of male and female managers in a multinational context ................................................................

41

8 Conclusion ............................................................................................................................ 42

8.1 Summary ................................................................................................................................ 42

II

8.2 Practical implications ........................................................................................................................45 8.3 Limitations ................................................................................................................................47

8.3.1 Methodological limitations ................................................................................................47 8.3.2 Conceptual limitations ................................................................................................ 49 8.4 Perspectives for future research ................................................................................................51

8.4.1 Integrating institutional and cultural approaches ................................................................51

8.4.2

Integrating the convergence divergence debate and the standardization localization discussion ................................................................................................

52

8.4.3 Integrating critical and dominant perspectives ................................................................53 References ............................................................................................................................VIII

Appendix .............................................................................................................................. A1

A Cover letter main study................................................................................................................................A1

B Reminder main study ................................................................................................................................A2

III

LIST OF TABLES

Table 1. Overview of the convergence divergence debate .....................................................................................6

Table 2. The manuscipts included in this thesis ................................................................................................28 Table 3. Overview of the research design ................................................................................................ 32 Table 4.

A priori and post hoc techniques applied in the present work, in order to ensure and test for equivalence ................................................................................................................................

35

Table 5. Company data (for 2011) of the MNE cooperating in this survey .......................................................37

Table 6.

Distribution and responses of the online questionnaire for the whole sample as well as for the single locations .....................................................................................................................

37

IV

LIST OF FIGURES

Figure 1. The cyclic process of GPM in MNEs – in the context of various influences ................................11

Figure 2. Scatter plot of the item mean scores for the French and German sample (pretest) ..........................34 Appendix A Cover letter main study ................................................................................................................................A1 Appendix B Reminder main study ................................................................................................................................A2

V

LIST OF ABBREVIATIONS

BRICS Brazil, Russia, India, China and South Africa (today’s leading emerging economies) Ed. Editor Eds. Editors e.g. Exempli gratia (for example) et al. Et alii (and others) GLOBE Global Leadership and Organizational Behavior Effectiveness Program GPM Global performance management HR Human resources HRM Human resources management Hrsg. Herausgeber (Editor/s) i.e. Id est (that is) ILO International Labour Organization MANOVA Multivariate of variance MNC(s) Multinational corporation(s) MNE(s) Multinational enterprise(s) OECD Organisation for Economic Co-operation and Development p./pp. Page/s PM Performance management SD Standard deviation Vol. Volume

Global performance management in the MNE Introduction

1

1 INTRODUCTION

Multinational enterprises (MNEs) play a crucial role in today’s globalized economy, and “These

large, global firms dominate the world business setting because they have the capacity to do

business across a wide variety of settings” (DeNisi, Varma, & Budhwar, 2008, p. 225).

Moreover, MNEs employ large parts of the global workforce and therefore face challenges as a

result of transferring human resource management (HRM) systems (Budhwar & Sparrow, 2002;

Festing, Dowling, Weber, & Engle, 2011). “One of the key HRM issues facing contemporary

organizations” (Boselie, Farndale, & Paauwe, 2012, p. 369) is performance management (PM).

Described as “an extension of performance appraisal” (Lindholm, 2000, p. 45), PM links

individual objectives to the corporate strategy by defining standards and goals and by applying

certain consequences (e.g. rewards, development, etc.) to the evaluation of work (Cascio, 2012a;

Fletcher, 2001). Consequently, PM is highly relevant for both the organization and the

individual, in that the organization needs PM to ensure the realization of its business strategy,

while for employees it determines the distribution of organizational resources and career

developments (Alimo-Metcalfe, 1993; Evans, Pucik, & Björkman, 2011).

While the expression ‘PM’ names the management practice itself, the term ‘global

performance management’ (GPM) covers this practice in the international context of MNEs

and their required decision about standardization and adaptation of the practice (Engle,

Dowling, & Festing, 2008; Vance, 2006). As being part of international HRM the targets of

GPM research correspond to those in international HRM. These are the identification of

country-specific peculiarities, the comparison and explanation of them in the context of

respective cultural and institutional influences, and implications for internationally operating

organizations (see e.g. Festing et al., 2011). Due to the complexity of different national contexts,

global competition, and the broad diversity of the global workforce, GPM is a highly relevant

but challenging research field, and Cascio (2012a) emphasizes that “there is much to learn in this

evolving area, and it promises to challenge researchers for years to come” (2012a, p. 2).

However, in 2008, Varma, Budhwar and De Nisi observed “the absence of reliable literature”

(p. 3) concerning GPM. In recent years, though still in its infancy, the terrain of GPM has been

charted by several scholars (e.g. Bailey & Fletcher, 2002; Björkman, Barner-Rasmussen,

Ehrnrooth, & Mäkelä, 2009; Cascio, 2012a; Claus & Briscoe, 2008; Claus & Hand, 2009; Engle

et al., 2008; McKenna, Richardson, & Manroop, 2011). However, empirical investigations based

on a systematic conceptualization are still scarce, and the body of literature covering GPM has a

patchwork character, referring to different concepts and delivering diverse country-specific data

concerning single PM elements (Cascio, 2012a; Engle et al., 2008).


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As McKenna et al. (2011) add, most contributions to PM research focus on the

managerial and functionalist paradigm and neglect employees’ perspectives, though the

workforce’s dissatisfaction with PM and the gap between applied practices and employees’

preferences have been reported previously (e.g. Pulakos, 2009; Von Glinow, Drost, &

Teagarden, 2002). The consideration of employees’ preferences is of particular importance in

today’s diverse organizations, where the neglect of various needs and values in PM risks

discrimination against minorities (Kamenou & Fearful, 2006). Strong support in identifying and

emphasizing the need for more research on the variety of perspectives and preferences comes

from authors investigating the discriminatory impact of PM practices on women (Alimo-

Metcalfe, 1993; Hind & Baruch, 1997). Though women are still highly underrepresented in

senior management positions (OECD, 2008; Terjesen & Singh, 2008) and PM systems influence

their careers (Alimo-Metcalfe, 1993), research on the discriminatory impact of PM on women is

extremely understated.

Targeting these research gaps, the present thesis focuses on the challenges of balancing

the standardized solutions and diverse preferences of GPM in MNEs, not only on the country

level but also on the level of individual differences and preferences. In four manuscripts, which

build the core of this thesis, data on practices and preferences in PM from one MNE’s

subsidiaries in China, the USA, and Germany (as well as South Africa and France) are analyzed

with respect to the participants’ location and gender. It is important to note here that balancing

GPM in the MNE is the focus and starting point of this work, and consequently we have

chosen an MNE to act as our sample. However, we approach this topic by analyzing country-

specific characteristics, global best practices, and employees’ preferences in PM. Hence, we use

the term ‘GPM’ when the international context and the tension between standardization and

adaptation is emphasized, while we refer to the unspecified term ‘PM’ in all other cases.1

This thesis seeks to enrich current debates in the international HRM literature by

integrating dominant and critical perspectives, cultural and institutional perspectives, and the

concepts of divergence and convergence. It contributes further to the growing body of literature

on GPM in MNEs by presenting an encompassing literature review on country-specific

characteristics on the one hand and a literature-based overview of so-called ‘best practices’ in

PM on the other. Furthermore, it delivers a conceptualization of GPM as well as a questionnaire

to investigate and compare practices and preferences in this area. This methodological tool

allows for the inclusion of employees’ voices in researching PM and designing or evaluating PM

systems in practice. Moreover, initial empirical findings on PM practices and preferences in

China, Germany, the USA (and South Africa) are provided, and gender-specific preferences in

1 The first manuscript has already been published, so this differentiation cannot be applied there.


3

PM across five countries (China, Germany, the USA, South Africa, and France) are presented.

By including South Africa and China on the one hand and Germany and the USA on the other,

we further aim to contribute to the very limited empirical knowledge on GPM in the leading

emerging economies, i.e. BRICS (Brazil, Russia, India, China, and South Africa) countries as

compared to so-called developed countries (see e.g. Cassiolato & Martins Lastres, 2009).

In order to cover these goals and contributions, each of the four manuscripts follows a

particular research focus. While the first seeks a conceptualization of GPM and country-specific

profiles for China, Germany, and the USA, the second investigates these propositions

empirically. The third manuscript contrasts employees’ preferences from China, Germany,

South Africa, and the USA with literature-based PM ‘best practices’, and it also questions the

global applicability of the latter. The research question of the fourth paper targets the

discriminatory impact of PM and asks if there are gender-specific preferences in GPM.

In the next section an overview of the research traditions, paradigms, and central theses in

GPM research will be provided, followed by the differentiation and definition of the PM

concept. Next, the theoretical perspectives on GPM in MNEs, reflected by the four

manuscripts, are presented on a deeper level than the lengths of the respective papers allow.

Based on this, an overview of the four manuscripts will be given, summarizing the respective

theoretical perspectives, addressed questions, and contributions, together with their publication

status. The methodological approach and common research design underlying the three

empirical manuscripts will be explained thereafter. Again, the aspects mentioned here complete

the methodological sections of each manuscript by providing background information,

connective challenges, and arguments. After presenting the four manuscripts, the conclusion

will summarize the results and will seek to leave the reader with an idea of the encompassing

contribution of this thesis. In line with this summary, the limitations and implications of this

work, as well as perspectives for future research, will be discussed.

Global performance management in the MNE Structuring the field of GPM research

4

2 STRUCTURING THE FIELD OF GPM RESEARCH

In accordance with the traditions of international HRM research (Brewster, Sparrow, Vernon, &

Houldsworth, 2011; Festing et al., 2011; Pinnington & Harzing, 2011), the three dominant fields

in GPM research can be traced back to cross-cultural management (e.g. Cascio, 2012a; Varma,

Budhwar, & DeNisi, 2008), comparative management (e.g. Boselie et al., 2012; Zhou &

Martocchio, 2001), and international management (e.g. Engle et al., 2008; Vance, 2006). While

the field of cross-cultural management deals primarily with country-specific cultures and their

influence on management practices (e.g. Hofstede, 1980; House, Hanges, Javidan, Dorfman, &

Gupta, 2004), comparative management perspectives adopt mainly institutional approaches,

such as neo-institutionalism (e.g. DiMaggio & Powell, 1991; Meyer & Rowan, 1991), the

varieties of capitalism approach (e.g. Hall & Soskice, 2001), or the business system approach

(e.g. Whitley, 1992b), to explain differences and similarities between countries with respect to

management policies and practices. The third dominant research tradition, international

management perspectives, applies an organizational focus to investigate how organizations

manage their human resources globally (e.g. Bartlett & Ghoshal, 1991). Most practical

challenges and questions, for which these three research fields seek a response, require more

than one perspective to be answered, as these research fields are highly connected and

interrelated (Festing et al., 2011). This thesis further integrates a fourth research tradition,

namely the critical perspective on PM (e.g. McKenna et al., 2011). Scholars applying critical

perspectives emphasize, for example, the need to consider the variety of perspectives of today’s

diverse workforce, in order to avoid discrimination against minorities when investigating or

implementing (international) HRM practices (e.g. Kamenou & Fearful, 2006; Metcalfe &

Woodhams, 2012).

Within each research field an important differentiation goes back to the research paradigm

that is applied: The universalist versus the contextualist paradigms. The contextualist paradigm

assumes that HRM practices are contextually unique, and it seeks to understand peculiarities of

countries as well as the differences and similarities between them. On the contrary, the

universalist paradigm aims to improve organizations’ HRM by providing strategic approaches,

or so-called ‘best practices’, which are assumed to be universally applicable (Brewster, 1999a).

The gap between these two paradigms is emphasized by Brewster et al. (2011): “Universalism

and contextualism are paradigms – that is, they are taken-for-granted truths that the proponents

of each simply assume must be correct. The fact that there are people who hold fast to each

paradigm indicates that they are intellectual constructs capable of being challenged, but for the


5

proponents of each one, they are ‘obviously’ correct and ‘the only’ way to think about

management science and HRM” (p. 72).

The contextualist and universalist paradigms are related to a central debate in GPM

research, namely the divergence convergence debate (e.g. Claus & Briscoe, 2008; DeNisi et al.,

2008). The contextualist paradigm is associated with the concept of convergence, which is

defined as the adaptation of priorities and patterns of management practices across countries as

a result of increasing global competition (Festing, 2012; Pudelko & Harzing, 2007). The

theoretical approaches offered to explain the idea of convergence are the market-driven

perspective and the neo-institutionalist perspective. The market-driven perspective emphasizes

the need to find the most effective and most efficient solution in today’s global and highly

competitive market, often referring to US-based benchmarks (e.g. Huselid, 1995; Tichy, 1982),

whereas the neo-institutionalist perspective assumes a global diffusion of US-shaped practices

caused by the dominant role of the USA in the global economy (e.g. DiMaggio & Powell, 1991;

Smith & Meiksins, 1995). Conversely, divergence is related to the contextualist paradigm and

describes differences in management practices that remain stable over time because of constant

country-specific influences (Pudelko, 2006; Pudelko & Harzing, 2007). The theoretical

frameworks presented to explain the idea of divergence are cultural perspectives (e.g. House et

al., 2004) as well as institutional approaches explaining national differences (Whitley, 1992b).

The debate about convergence and divergence also corresponds to another important

discussion in GPM research: The debate about standardization and localization, which is “the

oldest debate in the literature on MNCs [Multinational Corporations]” (Pudelko & Harzing,

2007, p. 538). While standardized solutions in GPM practices promise comparable results and a

consistent corporate culture, local conditions might require some form of adaptation (Dowling,

Festing, & Engle, 2013; Wöcke, Bendixen, & Rijamampianina, 2007). According to Pudelko and

Harzing (2007), the strategic challenges of localization and standardization take place on the

organizational level, whereas the corresponding phenomena of divergence and convergence can

be observed on a contextual level, where similarities and differences in HRM practices occur

across countries. Hence, when following the idea of divergence, localization approaches are

recommended, whereas “if more credence is attached to the convergence concept, MNCs

should strive to standardize their practices throughout the organization” (Pudelko & Harzing,

2007, p. 540). Although the discussion about standardization and localization has its roots in the

tradition of international management, the organizational perspective is often amended by the

other two research fields (cross-cultural and comparative management) when this decision and

its drivers are analyzed (e.g. Farndale & Paauwe, 2007).


6

An integrative alternative to the convergence and divergence concepts is the idea of

crossvergence (for crossvergence in GPM, see e.g. Claus & Briscoe, 2008; Vance, 2006; Varma

et al., 2008), which assumes that individual work values are shaped by both national influences

and economic ideology, so that new and unique practices and policies emerge (Ralston, Holt,

Terpstra, & Yu, 1997). The concept of crossvergence emphasizes transnational learning and

flexibility and corresponds to the organizational level as well, in the form of the balance and

integration of global standards and local peculiarities (Ralston et al., 1997).

Since it integrates the different theoretical perspectives and offers the alternative concept

of crossvergence, the divergence convergence debate is used as a classification criterion when

presenting the literature on GPM throughout the first sections of this thesis. Table 1 provides

an overview of the convergence divergence debate and its related concepts and approaches.

Table 1. Overview of the convergence divergence debate

Divergence Convergence

Definition

= Context-specific influences lead to different country-specific priorities and patterns of practices

= Global competition and diffusion lead to an adaptation of priorities and patterns of practices

Paradigm Mainly contextualistic Mainly universalistic

Applied theoretical perspectives

1. Cultural perspective: country-specific culture shapes practices and preferences

2. Business systems approach: country-specific institutions shape country-specific practices

1. Market-driven: global competition requires the most effective and efficient solutions

2. Neo-institutionalism: US-dominated diffusion due to isomorphism

Influencing factors Stable institutional and cultural influences

Increasing globalization and growing worldwide competition

Direction of development

Static Similar or confluent

Final endpoint of development

Country-specific management practices

Global ‘best practices’

Normative implication on the organizational level

Localization Standardization

Source: Adapted from Brewster et al. (2011); Mayrhofer and Brewster (2005), Festing (2012); Pudelko and Harzing (2007).

The four manuscripts that make up the core of this thesis reflect this complex terrain and refer

to related traditions, paradigms, and debates. The first and the second papers apply the

contextualist paradigm to analyze divergence, i.e. the local characteristics of PM from cultural


7

and institutional perspectives. The third manuscript targets the universalist paradigm and the

idea of convergence from a critical perspective, and the fourth contribution deepens this critical

view on standardized solutions, targeting the discriminatory impact of PM on women.

In order to derive an unambiguous definition of the concept, PM is differentiated and

defined in the following. Subsequently, we provide an overview of the various influences on

GPM in the context of MNEs.

Global performance management in the MNE Differentiation and definition of performance management

8

3 DIFFERENTIATION AND DEFINITION OF PERFORMANCE MANAGEMENT

The overall objective of a PM system is to improve the performance of a company, business

unit, or individual employee. The link with the company’s strategy and objectives is one

fundamental principle of the system, as well as the continuity and the cyclical nature of the PM

process (Aguinis, 2013; Armstrong, 2009). Therefore, PM is defined as a spiral process in which

performance will be evaluated and improved continuously, based on clearly defined criteria that

are aligned to the business strategy (Festing et al., 2011).

However, the application on different levels (e.g. the individual versus the department

level) makes the definition of PM dependent on the respective context. For example, on the

company level, corporate PM systems target the performance of the entire organization and

make use of instruments mostly summarized and known as ‘performance measurement’ or ‘corporate

performance management’ (Möller, 2010; Strohmeier, 2008), which refer to the development and

application of indicators of different corporate performance dimensions, such as cost, time,

quality, innovation, and customer satisfaction, to assess the effectiveness and efficiency of

performance and the performance potential of different objects in the enterprise (Möller, 2010).

One example that includes several dimensions is the concept of the Balanced Scorecard (Gleich,

2011), which was developed by Kaplan and Norton (1992). Sharing the aim of transferring the

company’s strategy on individual objectives, the Balanced Scorecard facilitates the setting,

documentation’ and assessment of various key figures. This includes not only financial

measures’ but also customers’ perspectives, business processes, and learning measures. HR

activities might be considered here within the assessment of the innovative dimension of a

company, as for example in terms of organizational learning, commitment, and competencies of

employees (De Waal, 2007). However, HR measures in general and PM in particular are not

included explicitly in the concept, which is criticized as its central weakness (e.g. by Evans et al.,

2011).

Even with a focus on HRM, the concept of PM is applied and defined on different levels.

Thus, Claus and Hand (2009) identify three groups of definitions. While the first refers mainly

to the core process of performance appraisal, the second group of definitions describes the

impact of HR activities on the total performance of the company. The third bundle of

definitions, also labeled ‘employee performance management’, covers “individual employee

performance linked to the overall strategic goals of the organization” (Claus & Hand, 2009, p.

238) and is also applied in this thesis. In the tradition of this definition, several other scholars

(e.g. Aguinis, 2013; Boselie et al., 2012; Cascio, 2012a; Engle et al., 2008; Evans et al., 2011;

Festing et al., 2011; Lindholm, 2000; Varma et al., 2008) have formulated similar

Global performance management in the MNE Differentiation and definition of performance management

9

conceptualizations, in which the central role of performance appraisal, correspondence between

organizational and individual objectives, and the link to consequences as training or career

decisions are emphasized. In summary, as Björkman (2002) states, PM systems are “the most

sophisticated forms of performance appraisal systems, where the personal objectives of the

appraisee are agreed upon, and the outcomes of appraisal are linked to training and

development (and sometimes also to financial bonuses)” (Björkman, 2002, p. 45). Therefore,

PM can be categorized into performance evaluation criteria (which emerge on the basis of

individual objectives), the appraisal itself (characterized by various actors’ roles and different

appraisal methods), and the follow-up (shaped by feedback as well as by certain interventions

and purposes within the system). At the same time, the latter delivers the starting point for the

subsequent cycle. When implementing these PM elements in the global context of today’s

MNEs, several challenges arise that need to be addressed by a GPM system (Cascio, 2012a;

Claus & Briscoe, 2008; Engle et al., 2008). These issues are analyzed in the following.

Global performance management in the MNE Theoretical perspectives

10

4 THEORETICAL PERSPECTIVES ON GLOBAL PERFORMANCE MANAGEMENT

IN THE MULTINATIONAL ENTERPRISE

This section provides the conceptual foundations and theoretical perspectives applied in the

four manuscripts of this thesis. As mentioned above, the divergence convergence debate is used

as the classification criterion when theoretical explanations and approaches concerning the

influences of GPM in MNEs are described. Next, the critical perspectives of GPM in MNEs are

described, and finally, we present the questions addressed and perspectives applied by this

thesis.

As stated in the introduction, the conceptualization and application of PM in the

international context of MNEs is referred to as ‘GPM’ and underlies different national contexts,

global competition, and a broad diversity of the global workforce. Steering GPM between these

various influences is, for many scholars, one of the most important and challenging aspects of

HRM. For example, Vance states that “perhaps more than any other human resource activity,

performance management resides at the focal point of this duality challenge and

convergence/divergence dynamic tension, since it represents the enactment of upstream

company strategy and the downstream local, individual level” (Vance, 2006, p. 38). While

organizational factors, e.g. organizational culture or a chosen strategy, might require certain

measures, external factors (country-specific institutional and cultural influences) might hinder

their company-wide transfer or demand other actions (Evans et al., 2011). At the same time,

global competition provokes the search for the most efficient and effective solutions, which are

promised by ‘best practices’ and globally applicable guidelines (Brewster et al., 2011; Pudelko &

Mendenhall, 2009). Figure 1 presents the various influences on the cyclic process of GPM in

MNEs.


11

Figure 1. The cyclic process of GPM in MNEs – in the context of various influences

In the following, each of these contexts and its influences on GPM is described in more detail,

with special attention given to the theoretical explanations behind the convergence divergence

debate. Moreover, attempts to combine these influences within the concept of crossvergence

are explained.

4.1 The influences of the organizational context of PM

Although organizational factors (the inner level of influences in Figure 1) are not the focus of

the present thesis, their effects should be mentioned here briefly. Referring to organizational

influences, some authors discuss the assumption of company-specific patterns of HRM in

general and of PM in particular. With respect to HRM in general, organizational culture (e.g.

Gerhart, 2008) or the strategic role of the HRM (e.g. Wächter & Müller-Camen, 2002), for

example, are discussed to shape respective practices, while reports on their effect on PM in

particular are very limited (a recent exception is Haines III & St-Onge, 2012). Other scholars

analyze the influence of organization size on PM as being part of HRM (e.g. Aycan, 2005; Fee,

McGrath-Champ, & Yang, 2011; Shaw, Tang, Fisher, & Kirkbride, 1993). For example, Aycan

(2005) assumes that in small firms, feedback might be less formal and periodical than in large

corporations. With particular relevance to GPM, another argument within the analyses of

organizational influences is the country of origin – that is, the country in which company


12

headquarters are based (Björkman et al., 2009; Edwards, Colling, & Ferner, 2007; Pudelko &

Harzing, 2007). As the so-called ‘country-of-origin effect’ describes the adaptation of

subsidiaries’ practices towards the headquarters’ practices, it can also be deemed a form of

convergence within MNEs (Pudelko & Harzing, 2007). In this tradition some scholars focus on

the transfer of PM practices from MNEs’ headquarters to their subsidiaries (e.g. Björkman et al.,

2009). However, as Björkman et al. (2009) point out, subsidiaries asked by headquarters to

implement specific PM systems may react through different levels of implementation or the

internalization of the requested system. Obstacles to the transfer can be explained by the middle

level of influences in Figure 1, i.e. by the contextual peculiarities that require certain adaptations

towards the local context. These peculiarities and influences on GPM are described in the

following subsection.

4.2 Influences of diverse local contexts and the divergence of GPM

Several scholars have identified the localization requirements for various elements of the GPM

system (e.g. Amba-Rao, Petrick, Gupta, & Von der Embse, 2000; Bailey & Fletcher, 2008;

Festing & Barzantny, 2008; Fey, Morgulis-Yakushev, Hyeon Jeong, & Björkman, 2009; Horwitz

et al., 2006; Lindholm, 2000; Paik, Vance, & Stage, 2000). The majority of these efforts

analyzing country-specific peculiarities in PM follow the contextualist paradigm and the idea of

divergence, though they rarely include the process-perspective, as the term ‘diverge’ might

indicate, but assume stable contextual influences that result in stable, context-specific PM

patterns (Pudelko, 2006). The stability of the approaches assuming divergence goes back to their

theoretical fundamentals, which are seen in the cultural perspective on the one hand and in the

business systems approach on the other. Both theoretical streams, which suppose no or only

slight changes to contextual influences, are described in the following.

4.2.1 GPM from the cultural perspective

In this perspective, stable patterns of management practices are shaped by culture, which is

defined as the “software of the mind” (Hofstede, 1991, p. 4) shared by people belonging to the

same societal group or nationality. Hence, culture becomes manifest through individual

behavior formed precisely by this software and respectively by values and attitudes (Adler &

Gundersen, 2008). Regarding these conceptualizations of culture, several scholars have

compared different cultures and their management practices by contrasting people’s values and

practices (Hofstede, 1980; House et al., 2004). Hofstede was the first to posit cultural-dependent


13

value differences in dimensions such power distance, that is, “the degree to which the less

powerful members of a society accept and expect that power is distributed unequally”

(Hofstede, 2013), or individualism versus collectivism, which can be described as the extent of

integration in groups (families or organizations) in a society. When investigating the influence of

these dimensions on GPM, stable context-specific differences are described. For example,

Cascio (2012a) supposes that self-appraisals are applied more frequently in individualistic

cultures compared to collectivistic societies. Moreover, he assumes that if these cultural

premises are neglected, the validity of the respective measure is affected negatively. Hence,

Cascio (2012a) expects the validity of self-appraisals to be lower in collectivistic rather than

individualistic cultures. However, demonstrating the danger of clustering countries, and

emphasizing the need for cultural sensitivity, Paik et al. (2000) tested the supposed cluster

homogeneity for performance appraisals in Indonesia, Malaysia, the Philippines, and Thailand

and revealed significant differences in managerial practices related to performance appraisal.

The authors concluded that “MNE managers should carefully design the appropriate

performance appraisal system for foreign operations, even in a region where countries are

generally considered to be culturally similar” (Paik et al., 2000, p. 747).

4.2.2 GPM from the business systems perspective

The other theoretical approach, followed by the contextualist school and supporting the idea of

divergence, is the business systems approach, in which business systems are defined as

“particular arrangements of hierarchy-market relations which become institutionalized and

relatively successful in particular contexts” (Whitley, 1992b, p. 6). Whitley assumes that the

characteristics of firms and management practices vary, due to the country-specific institutional

framework in which the business is located and working, namely proximate institutions such as

“[…] political, financial and labour systems” (Whitley, 1992a, p. 269), as well as background

institutions such as trust, loyalty, or the educational system. Historically shaped national

institutional frameworks and their tight link to the respective business system lead to a

reproduction of management practices within the respective context (Tempel & Walgenbach,

2007).

In this tradition, several scholars have identified the influence of legal aspects as crucial

for country-specific variance in PM systems (e.g. Aycan, Al-Hamadi, Davis, & Budhwar, 2007;

Milliman, Nason, Zhu, & De Cieri, 2002; Pulakos, Mueller-Hanson, & O'Leary, 2007). For

example, Milliman, Nason, et al. (2002) discuss the high relevance of documentation purposes in

US-American PM as the “justification for administrative and termination decisions, should they


14

be challenged later in court” (Milliman, Nason, et al., 2002, p. 89). Furthermore, due to their

high relevance to business investments, institutional challenges on GPM have been discussed,

especially with regard to transfers to developing countries and emerging markets (Amba-Rao et

al., 2000; Leat & El-Kot, 2007; Mamman, Akuratiyagamage, & Rees, 2006; Mamman, Baydoun,

& Adeoye, 2009; Mendonca & Kanungo, 1996). For example, in the case of Nigeria, “the

industrial and HRM system of the country is largely influenced by its British colonial history”

(Mamman et al., 2009, p. 5), while at the same time the fully-liberalized economy and the

possibility of 100% foreign-owned direct investments correspond to a growing transfer of HRM

practices – and consequently the pursuit of PM systems by company headquarters.

4.2.3 Integrating the cultural perspective and the business systems approach

Based on these theoretical foundations, both the cultural and the institutional perspective allow

for structured analysis of the context and its influence on GPM. However, “some people argue

that it is unnecessary to look into issues that are so amorphous and difficult to explore as

‘culture’ because there are very obvious and visible institutional differences which explain most

of the variance” (Brewster et al., 2011, p. 77). Indeed, institutional influences appear easier to

measure and to compare than cultural influences, because the latter targets people’s values that

are partly unconscious (Adler & Gundersen, 2008; Schein, 2004). Nevertheless, even the

business system approach includes cultural conditions. In particular, background institutions

(trust, loyalty, and the education system) are necessarily influenced by culture, thus explaining

why Whitley occasionally argues for the cultural dimensions formulated by Hofstede (Whitley,

1992b). This emphasizes that cultural and institutional influences are often hard to differentiate,

and since both shape the diverse local contexts of management practices in general and GPM in

particular, we refer to Kostova and Roth (2002), who state that “it might be beneficial not to

limit research to any one particular approach but to incorporate both issue-specific institutional

effects and cultural effects” (p. 231).

An example of this integration is provided by Festing and Barzantny (2008), who compare

the French and German institutional as well as cultural environments and their impact on PM.

The authors identify legal institutions as well as cultural peculiarities as the main influences in

the work setting. For instance, the authors state that in Germany the co-determination right of

work councils “has a strong influence on the emergence of performance management systems,

while in France legal aspects play only a minor role” (Festing & Barzantny, 2008, p. 220). At the

same time, they identify the high power distance in France to influence PM by the prevailing

elite system that manifests itself in more favorable expectations and, consequently, more


15

positive appraisals for individuals with more prestigious backgrounds (in terms of social class).

The integration of both explanations allows for a broader picture when analyzing country-

specific management practices and preferences, whereas at the same time the sometimes eclectic

argumentation has to be acknowledged. However, other scholars add the influences of global

competition to the discussion about divergence and convergence in GPM, which are described

in the next section.

4.3 The influences of global competition and the convergence of GPM

Besides the adaptation towards headquarters or the local context, subsidiaries are also affected

by global competition and consequently might adapt to what is seen as globally most effective

and efficient (the outer level of influences in Figure 1). “In this case, management practices of

subsidiaries are shaped in accordance to neither the host country (localization) nor the home

country (country-of-origin effect), but according to the country that sets the standards for what

are perceived as global best practices” (Pudelko & Harzing, 2007, p. 538). This adaptation leads

to standardization not only within MNEs but also between companies, so that practices

converge on a global level. Contrary to the divergence concept, which assumes stable

differences, the process perspective is a crucial aspect of convergence research, because of the

assumed developments towards similar or even identical practices (Brewster et al., 2011). Since

long-term studies are highly expensive and costly, some scholars identify converging trends in

PM by comparing practices with expectations or tendencies, measured at one point in time (e.g.

Von Glinow et al., 2002). Other researchers provide data from an actual process perspective,

albeit with a focus on European countries (e.g. Boselie et al., 2012). The theoretical foundations

of the convergence thesis are seen either in the market-driven perspective or in the neo-

institutional perspective (Mayrhofer & Brewster, 2005).

4.3.1 GPM from the market-driven perspective

From a market-driven perspective the process of globalization is seen as the major reason for a

convergence of management processes (Mayrhofer, Brewster, Morley, & Ledolter, 2011).

‘Globalization’ refers to “the processes of unification that have taken place in markets and

consumer tastes, an increasingly mobile investor capital, and the rapid spread of technology”

(Brewster & Mayrhofer, 2011, p. 51). In this highly competitive field, rational-choice, cost

efficiency, and productivity are crucial for companies’ survival. Hence, the market-driven

perspective regards these principles as the main explanations for human and organizational


16

behavior (Festing, 2012; Mayrhofer & Brewster, 2005), thus leading to the worldwide

dominance of capitalism (Giddens, 1993) and deregulated markets (Mayrhofer & Brewster,

2005). The worldwide emergent orientation towards the capitalist economic system – and the

example of the rising Chinese economy in particular – support this view (for contrary and

controversially debated perspectives, see Fukuyama, 1992; Klein, 2007). As Ralston (2008) sums

up, “Given the time period of the development of the convergence concept, this perspective

also implies a convergence to Western capitalism” (p. 4).

One example for the most efficient and effective solutions promised in the HRM

literature is the concept of strategic HRM, which is defined by its proponents as “the pattern of

planned human resource deployments and activities intended to enable a firm to achieve its

goals” (Wright & McMahan, 1992, p. 298). As one implication of strategic HRM, so-called

‘High Performance Work Systems’ promise universal applicability and performance

improvement (e.g. Huselid, 1995; Kling, 1995). In this tradition, performance-related pay and

information transparency are examples of PM-related best practices (Pfeffer, 1994). The authors

of the Best International HRM Practices Project (Geringer, Frayne, & Milliman, 2002; Milliman,

Nason, et al., 2002; Von Glinow et al., 2002) take a somewhat different approach and ask

employees for their preferences in HRM (and PM, respectively), in order to establish universally

embraced ethics. Challenging comparative research and the cultural perspective, they find

convergence in Asian and North American countries with respect to developmental purposes in

PM. Von Glinow et al. (2002) state that “recognizing subordinates, evaluating their goal

achievement, planning their development activities, and (ways to) improving their performance

are considered the most important appraisal practices for the future” (p. 134). These results

argue for a potential standardization of GPM practices.

4.3.2 GPM from the neo-institutional perspective

Contrary to the assumption of rational choice by the market-driven perspective, the neo-

institutional perspective assumes that institutionalized rules and external expectations form

organizations and their processes. “Many of the positions, policies, programs, and procedures of

modern organizations are enforced by public opinion, by the views of important constituents,

by knowledge legitimated through the educational system, by social prestige, by the laws”

(Meyer & Rowan, 1991, p. 41). However, contrary to the business system approach which the

concept of divergence applies, neo-institutionalism postulates a homogenization of the

institutional environment across national borders and therefore feeds the convergence idea

(Geppert, Mattern, & Schmidt, 2004). Both the business system approach and the neo-


17

institutional approach view organizations as social actors and paint a passive portrait of

organizations, since they adapt to their institutional environment. However, the business system

approach concerns structural-regulative institutions that are influenced by state actions (e.g. legal

institutions as described in chapter 4.2.2), while neo-institutionalism refers to normative and

cognitive institutions, i.e. assumptions and patterns of thought that are taken for granted and

diffuse globally (Tempel & Walgenbach, 2007). Within neo-institutionalism the mechanism of

adaptation is called ‘isomorphism’ and can be motivated by three different motives: external

pressure to conform by more powerful organizations (coercive isomorphism), imitation by

choice (mimetic isomorphism), and professionals’ similar orientations and standards (normative

isomorphism) (e.g. DiMaggio & Powell, 1991).

Most empirical studies applying neo-institutionalism focus on MNEs and the

US-American context, while the business system approach also suits the study of local

organizations, though interest in MNEs as the object of study is increasing here as well

(Geppert et al., 2004). With respect to neo-institutionalism an often cited example of global

homogenization is the worldwide application of quality management norms by the ISO 9000

standards (Geppert et al., 2004; Walgenbach, 2006). Regarding PM, some scholars identify

traditionally Western standards by comparing the practices of companies in the West with those

operating in other countries and regions. For example, when comparing Chinese and Western

HRM practices, Björkman (2002) assumes the Western evaluation criteria more likely to be

driven by result orientation and specific task objectives, while he also proposes these very

criteria will be adopted step by step by Chinese firms due to mimetic and normative behavior

(for a similar comparison with the region Israel, Palestine, Syria, Jordan, and Lebanon, see

Giangreco, Carugati, Pilati, & Sebastiano, 2010; with Japan, see Shadur, Rodwell, & Bamber,

1995; for another comparison with China, see Shen, 2004). These studies emphasize the

diffusion of Western principles and show that these principles correspond to what the best

practices literature tells us.

4.3.3 Integrating the market-driven and the neo-institutional perspective

Both approaches upon which the idea of convergence relies – the market-oriented as well as the

neo-institutional perspective – assume so-called best practices to be the (actual or perceived)

‘one best way’ to channel the process of convergence across companies (Marchington &

Grugulis, 2000; Pudelko, 2005). In the case of GPM, the one-to-one appraisal, in which the

supervisor evaluates each subordinate individually, and the link to individual rewards are

examples of best practices discussed in the literature, since individuals are assumed to be


18

motivated to perform by esteem and rewards (for this and other examples of guidelines in PM,

see e.g. Aguinis, 2013; Armstrong, 2009; Rao, 2006). Several scholars describe these best

practices as ‘Americanized’ (e.g. Festing, 2012; Smith & Meiksins, 1995; Brewster et al., 2011),

and the market-driven as well as the neo-institutional perspective list several reasons for this

orientation towards the US-American model. Some authors see the imbalance of power

between economies as a historically shaped hierarchy, in which some societies represent

‘modernity’ or ‘progress’ (Smith & Meiksins, 1995). Others add today’s success and dominance

of US-American companies, business schools, and consultancies to the discussion (Festing,

2012). Consequently, best practices in PM and other management functions might be applied

without any critical assessment or evaluation, presuming their global applicability (Marchington

& Grugulis, 2000).

One example for an empirical approach in HRM research that refers to the market-

oriented as well as the neo-institutional perspective is the Cranet Project, which compares

developments in PM and other HRM practices by applying a pan-European, long-term design.

For example, Mayrhofer et al. (2011) analyzed HRM developments in the private sector of 13

European countries. They found that practices moved in the same direction (directional

convergence) between 1992 and 2004, while no evidence was found indicating final

convergence, in which practices become more alike. With respect to PM, the Cranet researchers

observed convergence concerning the use of PM systems (Boselie et al., 2012). However,

country-specific differences, especially regarding self-evaluation and communication styles, were

found as well, indicating more complex developments than the concept of convergence alone

might cover. Boselie et al. (2012) discuss these findings by referring to the concept of

crossvergence, which is described in the next section.

4.4 The interplay of various impacts and crossvergence of GPM

Besides convergence and divergence, a third type of development in management practices is

known as crossvergence, which describes the integration of converging and diverging developments

that result in new patterns of management practices (Ralston, 2008; Ralston et al., 1997).

Research focusing on crossvergence includes the cultural perspective and the business system

approach as well as the market-driven perspective and neo-institutionalism when explaining

variance in management practices (Witt, 2008). Therefore, the concept of crossvergence allows

for the consideration of various influences and might consequently draw a more realistic picture

of management practices. Moreover, this view also takes convergence towards new practices

into account that have not been described before – not as best practices nor as country-


19

specificities (Ralston, 2008). The final endpoint or goal of the crossverging process is

development itself, since a dynamic understanding of culture and mutual learning are the

premises of this approach (Ralston et al., 1997; Vance, 20062). The organizational implications

from this perspective target mainly a strategic balance of localization and standardization, as

examined by several authors with respect to various HR issues (Farndale & Paauwe, 2007;

Festing & Eidems, 2011; Mäkelä, Björkman, & Ehrnrooth, 2009). However, because of its

conceptual variety and somewhat eclectic explanations, unambiguous hypotheses from a

crossvergence perspective are rare. Though Witt (2008) underlines the relevance of the concept

and the important opportunities it offers for theory development and empirical research, he

points to the overall verdict of crossvergence: “The implication is that the formal definition of

crossvergence is so encompassing, and the implied definitions of convergence and divergence

are so exclusive, that even under our stringent assumptions about culture and ideology, it would

seem difficult for empirical work not to find evidence supporting the crossvergence

perspective” (Witt, 2008, p. 50).

With respect to GPM, a number of authors have mentioned crossvergence as the result of

their analyses (Claus & Briscoe, 2008; Entrekin & Chung, 2001; Evans et al., 2011; Mamman et

al., 2009; Shen, 2004; Vance, 2006). For example, concluding their edited book on PM in

various countries, De Nisi et al. (2008) sum up: “Are countries really so unique that nothing can

be learned by examining what has been done somewhere else? Or, on the other hand, are

differences between countries disappearing […] so that we can focus on the universals and

apply them wherever we need? The answer is, of course, that neither is completely true and

perhaps some kind of ‘crossvergence’ […] is taking place” (p. 254).

In his promising concept of balanced GPM systems, Vance (2006) differentiates strategic

upstream processes, which reflect organizational or global standards, and downstream

processes, which are adapted to local requirements. Furthermore, he assumes the crossvergent

development of single GPM elements as an outcome of balancing standardized upstream and

localized downstream processes. In order to accomplish this balance, Vance (2006) suggests

crossing strict categorization, for example by providing standardized and consistent solutions

for the operative downstream level or by integration and appreciation of diverse perspectives

during decision processes on the upstream level. Most vital for crossing the levels and reaching

the balance are flexibility and the willingness to learn, so that dynamic dialogues and exchanges

2 Vance differentiates ‘crossvergence’ from ‘transvergence’, describing the first as “hybrids of cross cultural

compromise” (Vance, 2006, p. 50) and the latter as “meaningful interactions […] exposure to and adoption of different culturally based ‘best practices’” (Vance, 2006, p. 50), which is in accordance with the ‘crossvergence’ definition proffered by Ralston et al. (1997). To simplify the present analysis we refer to ‘crossvergence’ in the original sense, as stated by Ralston et al. (1997), and indicate deviating definitions, for example in those cases referring to the compromise aspect of the construct.


20

between the perspectives and levels allow for new solutions (Gupta & Wang, 2004; Vance,

2006). Corresponding with the conceptualization of convergence, in order to understand

crossvergence as a dynamic process, the observation of developments and long-term studies

would be advisable. As described earlier, those studies targeting GPM are scarce, and the long-

term research project by the Cranet researchers seems to be an exception. As mentioned above,

its results concerning GPM show both converging and diverging tendencies, leading to

assumptions about crossvergence (Boselie et al., 2012; see chapter 4.3.2).

Alternatively, some scholars emphasize the compromise or hybrid character of

crossvergence between opposing diverging and converging forces, which allows for a single

measurement. Following this line of argumentation, Pudelko (2006) found German, Japanese,

and US-American HR systems (including performance appraisal practices) to be embedded in

the respective socio-economic context, while at the same time, the German and the Japanese

HRM systems were oriented towards the US-American model. He concludes that best practices

might inspire management practices by cross-cultural learning but underlie the constraints of the

socio-economic context.

Another example emphasizing the hybrid character of crossvergence between extremes is

provided by Shen (2004), who conducted interviews in Chinese MNEs to investigate the

balance of global and national influences. He found the use of appraisals in line with Western

standards. At the same time, the Chinese MNEs showed different appraisal approaches for

diverse groups of employees (e.g. different hierarchical levels), while the Western standard

favors more equal approaches for all appraisees. Shen (2004) concludes that “the Chinese

international performance appraisals are […] a mix of traditional Chinese personnel

management and modern Western HRM concepts” (Shen, 2004, p. 547). These observed PM

practices are hard to explain by referring to one theoretical approach within the divergence

convergence debate alone, emphasizing the need for an integrative perspective. As Pudelko

(2006) sums up, the integration of the ideas of divergence and convergence might be “the most

useful approach to overcome the deadlock between proponents of the two concepts” (Pudelko,

2006, p. 125). At the same time, single measuring can only indicate but not confirm the

assumptions of the process of crossvergence.

Besides the mainstream of literature, GPM has not been without criticism, which is

summed up by the following section.


21

4.5 Critical perspectives on GPM in MNEs

Critical voices that target directly GPM in MNEs are scarce (an exception is McKenna et al.,

2011), but several voices from critical management studies (e.g. Alvesson, 2008), feminist (e.g.

Alimo-Metcalfe, 1993) or postcolonial (e.g. Metcalfe & Woodhams, 2012) perspectives

contribute to this discussion by delivering critical insights and analyses with respect to HR in

general or particular aspects of GPM. In the following, the critique against GPM is structured

into those voices questioning the managerial perspective and best practices in PM and those

emphasizing the discriminatory risk against women.

4.5.1 PM best practices in question

In line with the general critique against efficiency-focused measures in business (e.g. Alvesson,

2008), McKenna et al. (2011) pinpoint the pressure to perform and achieve continuous

improvement that is inherent in the concept of PM. They criticize the “managerial need for

control as a central research agenda” (McKenna et al., 2011, p. 151), which provides measures

to enhance and control the workforce’s performance, while employees’ perspective is largely

neglected. Hence, the authors proclaim the necessity for more approaches to critical research in

PM as well as the consideration of employees’ perspectives. The high importance of the

employees’ voice has also been emphasized with respect to the challenges of MNEs, as for

example from the cross-cultural and institutional approaches, which emphasize required fit with

cultural values and the relevance of employees’ internalization when implementing management

practices worldwide (House et al., 2004; Kostova & Roth, 2002; Maseland & van Hoorn, 2009).

Underlining the practical importance of the employees’ perspective with respect to GPM,

some scholars point out employees’ lack of trust and dissatisfaction with the system and the gap

between what is expected and what are actually applied PM practices (Brewster et al., 2011;

Furnham, 2004; Price, 2004). As Milliman, Nason, et al. (2002) showed, the actually applied and

the expected or preferred intentions of performance appraisals differ significantly.

Consequently, it is hardly surprising that only small numbers of employees are satisfied with the

PM system and convinced of its use (Pulakos, 2009). Nevertheless, studies, such as those by

Milliman, Nason, et al. (2002), which include employees’ preferences in the research design are

heavily underrepresented in the literature (McKenna et al., 2011). Furthermore, as for most

areas of management and organization research, a dominance of North-American contributions

in this field is apparent (Metcalfe & Woodhams, 2012; Özkazanç-Pan, 2008). This leads to a lack

of alternative perspectives (McKenna et al., 2011) as well as to potentially ‘Americanized’


22

guidelines and best practices (Festing, 2012; Smith & Meiksins, 1995). Often these best practices

are contrary to the experience and comprehension of good practice for scholars and

practitioners outside the USA (Brewster et al., 2011) However, an investigation of the mostly

US-rooted best practices in PM with regard to their correspondence to employees’ preferences

is still missing. In this context, including a broad variety of perspectives that meet the diversity

of today’s organizational memberships is crucial in order to avoid discrimination against

minorities and inequalities in practice and research (Kamenou & Fearful, 2006). In the

following, this discriminatory risk of PM will be analyzed with respect to gender.

4.5.2 Gender discrimination in PM

The discriminatory risks inherent in PM have been largely neglected, in spite of PM’s impact on

the distribution of organizational resources and career developments. In accordance with the

ideas put forward Alimo-Metcalfe (1993), it can be assumed that people in power who design

the system will design it in a way that suits their values and preferences, which in turn makes the

system very likely to discriminate against those individuals who do not share the same values.

If PM, as most management practices in leading organizations, is conceptualized by white,

Christian, middle-aged, heterosexual men, its application is most likely to match this group’s

values, measuring their preferred criteria, in their favored way, and with the consequences they

value most. Therefore, people with other values and preferences have to adapt in order to

obtain good application results and the respective share of resources and opportunities, which

discriminates against them and can be described as bias on the organizational level (Alimo-

Metcalfe, 1993; Meyerson & Fletcher, 2000). Discriminating GPM practices against women are

of special concern, because the underrepresentation of women in senior management positions

is a worldwide phenomenon, with only minor national variations (OECD, 2008; Terjesen &

Singh, 2008), and several approaches and ideas can be drawn here from previous feminist

research (e.g. Ely & Padavic, 2007).

For example, Meyerson & Fletcher (2000) portray gender-discrimination as “deeply

embedded in organizational life” (p. 127) and as being expressed, for example, in biased

performance appraisal results, gender pay gaps, or low-visibility jobs for the majority of female

workforce. However, these indicators of inequity mostly have been seen as taken-for-granted or

even naturally given, so that the authors describe gender discrimination as “virtually

indiscernible” (Meyerson & Fletcher, 2000, p. 127). They recommend a small-wins strategy

characterized by dialogue, experimentation, and incremental changes. Conversely, Alimo-

Metcalfe (1993) assumes that a radical change will be needed to eliminate the current


23

discrimination against women in organizations. She conceptualizes discrimination within

performance appraisal as one crucial barrier that women face with respect to career

advancement, since the criteria, techniques, and judgments of performance and potential

assessments were found to be oriented towards male principles and values. For example, the

characteristics ‘personal’ and ‘emotional’, which are traditionally more likely to be associated

with women, were found to be devalued traits. Focusing on the relationship between the

evaluation of the appraisal procedure and the individual attitudes of men and women, Hind and

Baruch (1997) deliver first evidence with respect to gender-related perceptions of PM practices.

They found that in contrast to their male colleagues, females’ career expectations are negatively

correlated to PM, indicating “an awareness by women that their career development is

constrained or determined by factors other than performance” (Hind & Baruch, 1997, p. 285).

Still, these results need to be taken one step further, by asking women (and men) for their

preferences or ideal models of PM and therefore analyzing a potential gender bias on the

organizational level. Besides, an international investigation could provide input with respect to

the worldwide underrepresentation of women and GPM.

In the following, the open questions to GPM addressed by the four manuscripts of this

thesis are explained. Moreover, the respective publication status is mentioned briefly.

Global performance management in the MNE Overview on the four manuscripts

24

5 APPLIED PERSPECTIVES, ADDRESSED QUESTIONS, AND CONTRIBUTIONS

BY THIS THESIS – AN OVERVIEW OF THE FOUR MANUSCRIPTS

As shown above, MNEs face the challenge of balancing global standards and diverse

preferences concerning their GPM practices. Most research in GPM concentrates on the

description of national differences in single PM elements, pointing to the requirements of

localization and referring to the concept of divergence (Amba-Rao et al., 2000; Bailey &

Fletcher, 2008; Cascio & Bailey, 1995; Festing & Barzantny, 2008; Fey et al., 2009; Horwitz et

al., 2006; Lindholm, 2000; Paik et al., 2000). However, as the following examples emphasize, the

body of literature on country-specific peculiarities in GPM has a patchwork character, using

different concepts and delivering diverse data concerning single PM elements from a broad

variety of countries:

• “Indeed, Korean middle-level managers often do not really know exactly how their

performance is viewed until roughly five years after joining their companies” (Cascio &

Bailey, 1995, p. 28).

• “However, the major purpose of performance appraisal in Chinese MNEs is to decide

how much to pay rather than for the organizational development” (Shen, 2004, p. 559).

• “In Britain, appraisal has often been ‘sold’ to employees in terms of its ability to serve

their individual needs for development and self-actualization” (Snape, Thompson, Yan,

& Redman, 1998, p. 857).

• “What counts is results, not personality. This is even upheld in US law courts to

protect employees from being evaluated based on who they are rather than what they

do” (Schneider & Barsoux, 2003, p. 163).

• “The French labour law gives considerable flexibility to assess and evaluate the

performance of employees” (Festing & Barzantny, 2008, p. 215).

Besides valuable insights into the diversity of GPM, the body of country-specific findings lacks a

structured overview, an encompassing concept, and a comprehensive empirical investigation.

These gaps are addressed by the first and second manuscripts of this thesis. Here, according to

Festing and Barzantny (2008), we integrate the cultural and institutional perspectives to

investigate the adaptation challenges of GPM in MNEs on the country level (“Global performance

management in MNEs – conceptualization and profiles of country-specific characteristics in China, Germany,

and the USA” and “Country-specific profiles of performance management in China, Germany, and the USA –

an empirical test”). The first manuscript focuses on conceptual alignment and contains a literature


25

review which includes various elements and room for country-specific or individual differences.

This manuscript was rewarded with the Best Paper Award at the International Human Resource

Management Conference in Birmingham, UK, in 2010 and was asked to be submitted for the

conference’s special issue in the Thunderbird International Business Review, where it has been

published recently (Festing et al., 2012).

The second article focuses on the empirical investigation of the propositions presented in

the first and provides empirical findings from a quantitative study including 167 managers from

MNE subsidiaries in Germany, USA, and China. Therefore, a measurement capturing PM

practices is provided, reflecting the suggested conceptualization and meeting the requirements

of cross-cultural equivalence. Contrary to what the literature review in the first manuscript

suggests about the local peculiarities of PM, the results show significant country-specific

differences only in six out of 16 investigated PM features. These findings question previous

contextualist assumptions and direct attention towards the idea of convergence in GPM.

Furthermore, despite the often cited analytical categorization of Western countries versus China,

more similarities between China and Germany than between the USA and Germany have been

identified. Since this second article can be seen as the empirical completion of the first, it has

been submitted to the Thunderbird International Business Review as well, where it has been

conditionally accepted for publication.

In line with the differentiation by Pudelko and Harzing (2007), another stream of

literature can be differentiated into those contributions targeting standardization within MNCs

(when practices converge towards standards by headquarters, i.e. the country of origin) and

those examining standardization across firms and countries, i.e. global convergence. While our

knowledge about the transfer and standardization of GPM within MNEs is still extremely

limited (exceptions are Mamman et al., 2009; Björkman et al., 2009, Claus & Hand, 2009), some

authors (e.g. Armstrong, 2009; Aguinis, 2013; Rao, 2006) provide guidelines and best practices

on the design of PM systems that seem to allow for global standardization across countries and

organizations. The market-driven as well as the neo-institutional perspective describe those

(actual or perceived) best practices, to provide an orientation or model and therefore to

“determine the direction of convergence” (Pudelko, 2005, p. 2046). However, these guidelines

often remain without a critical assessment (Marchington & Grugulis, 2000). Though best

practices in general have often been described as ‘Americanized’ (Festing, 2012; Smith &

Meiksins, 1995), the global applicability of PM best practices has not been challenged or

evaluated. However, the necessity for such an evaluation becomes clear when taking other

contributions into account that examine convergence in PM by comparing the practices of

companies in the West with those operating in other countries and regions (e.g. Björkman 2002;


26

Shen 2004, Giangreco et al., 2010). These studies reveal that most Western principles mirror the

guidelines of the best practices literature, while companies in non-Western countries often find

other solutions. While the separation of the world into ‘the West and the rest’ is also described

as a perspective that fosters Western hegemony, these findings underline the “Western claims of

‘universal’ knowledge” (Özkazanç-Pan, 2008, p. 965). Consequently, literature-based best

practices need to be examined with respect to the employees’ perspective in different countries.

This investigation is targeted in the third manuscript of this thesis (“Do global ‘best practices’ in

performance management meet employees’ preferences? Empirical evidence from China, Germany, South Africa,

and the USA”). Focusing on the preferences in PM of a sample of 210 employees from one

MNE’s subsidiaries in Germany, USA, South Africa, and China, this study indeed reveals

common preferences, which reflect only partly literature-based best practices. At the same time,

common preferences for additional PM elements are found that are included in the discussion

about global guidelines. These additional commonalities, as for example the preference for

teamwork-oriented criteria and developmental purposes, are assumed to focus the more ‘soft’

features of a PM system. At the same time, some country-specific preferences are found that are

discussed to be the results of context-specific influences. Hence, crossvergence in GPM is

discussed here. Furthermore, this paper includes the critical perspective in order to contrast

standardized solutions with employees’ preferences across four countries. The global

applicability of best practices is questioned and alternative preferences in PM are revealed. This

article was submitted to International Business Review and was rejected after review in April 2013.

The final manuscript also applies a critical approach and compares gender-specific

preferences in GPM to actually applied practices. While the strategic relevance of HRM

proposes a view of human resources as one key factor in an organization’s competitive

advantage, diversity in the needs and preferences of employees has been considered only

marginally (Kamenou & Fearful, 2006). Hence, “HRM needs to be reconsidered to take account

more fully of diversity in order to enhance success in dealing effectively with the nature of

contemporary organisational memberships” (Kamenou & Fearful, 2006, p. 155). This is

especially true in the field of GPM, which is very strategy-oriented on the one hand and has

been identified as a major discriminatory risk for minorities on the other.

Some contributions (Alimo-Metcalfe, 1993; Meyerson & Fletcher, 2000; Hind & Baruch,

1997) discuss gender-discrimination in PM, revealing that performance appraisal is one major

barrier to the career advancement of women and that females’ career expectations are correlated

negatively to PM. Since the design and features of performance appraisals are discussed as being

oriented towards male values and principles, these results need to be taken one step further, by

asking women (and men) for their values and preferences in PM in order to identify differences


27

and potential discrimination. This focus is provided in the fourth manuscript of this thesis,

which applies the critical perspective in order to analyze gender-specific preferences in GPM

(“Gender-specific preferences in global performance management – an empirical study of male and female

managers in a multinational context”). Here, the methodological tool employed to investigate and

compare practices and preferences in PM is presented. To account for the underrepresentation

of female managers as a global issue, empirical data from China, France, Germany, South

Africa, and the USA, and therefore from five differing cultural clusters, were included in this

analysis. This manuscript reveals that, across all countries, preferences vary significantly between

male and female managers for crucial parts of the GPM system (actors’ roles, evaluation

methods, feedback procedures, purposes), while the applied practices match male preferences

more so. Hence, it is discussed that female managers might be less satisfied with existing GPM

systems. These findings add to explanations on the often limited career advancement of women,

and the discriminatory impact of the system against women is discussed, also contributing to the

very limited knowledge on gendered practices in international HRM (Hearn, Metcalfe, &

Piekkari, 2012). As such, we again provide evidence for the necessity to apply critical

perspectives and include employees’ perspectives when investigating GPM (McKenna et al.,

2011). A revised version of this article is currently under review at Human Resource Management.

Table 2 provides an overview of the manuscripts in terms of their focus and contribution,

as well as with respect to their publication status. Thereafter, their epistemological and

methodological foundations are explained.

28


Table 2. The manuscipts included in this thesis

No. 1 2 3 4

Title

Global performance management in MNEs – conceptualization and profiles of country-specific characteristics in China, Germany, and the USA

Country-specific profiles of performance management in China, Germany, and the USA – an empirical test

Do global ‘best practices’ in performance management meet employees’ preferences? Empirical evidence from China, Germany, South Africa, and the USA

Gender-specific preferences in global performance management – an empirical study of male and female managers in a multinational context

Co-authors Marion Festing Peter J. Dowling Allen D. Engle

Marion Festing

Marion Festing

Marion Festing Angela Kornau

Journal Thunderbird International Business Review

Thunderbird International Business Review

International Business Review Human Resource Management

ABS Ranking Position

C C B A

Publication state

Published (December 2012) Conditionally accepted (March 2013)

Rejected after review (April 2013) Revised version under review

Approach Conceptual Empirical Empirical Empirical

Focus Conceptualization and the localization challenges of GPM

Contextual particularities and localization challenges in GPM

Comparison of literature-based best practices with employees’ preferences in PM

Gender-specific preferences in GPM

Major contributions

• Conceptualization of GPM • Literature review • Country-specific profiles

• Scales measuring similarities and differences in GPM systems

• Initial empirical findings on GPM in China, Germany, and the USA

• Overview of global PM best practices in the literature

• Initial empirical evidence on employees’ preferences concerning PM

• Methodological tool to investigate and compare practices and preferences in PM

• Identification of gender-specific preferences in PM

Additional information

Winner of the Best Paper Award at the International Human Resources Management Conference in Birmingham, UK, 2010

Best Paper Proceedings of the Academy of Management Annual Meeting in Orlando, USA, 2013

Presented at the Academy of Management Annual Meeting in Boston, USA, 2012

Global performance management in the MNE Methodological framework

29

6 METHODOLOGICAL FRAMEWORK

As made clear in the descriptions above, the first manuscript is a conceptual contribution, based

on a literature-review, while the other three share an empirical approach and a methodological

basis. The detailed development and application of the methodology are explained and

described in manuscripts No. 2 and No. 4. This section, however, summarizes general

methodological foundations in terms of the design and the cross-cultural requirements of this

empirical approach and presents a description of the target company, i.e. the sample.

6.1 The research design

For the epistemological basis of this research design we refer to Karl Popper’s measures in

terms of falsification, but we also acknowledge the idea of different paradigms, by Thomas

Kuhn, at the same time. The existing literature concerning GPM allows for assumptions and

hypotheses. However, according to Popper, scientific hypotheses can be tested only by

falsification, because every proposition could be disproved by a single exception, in which case

no hypothesis would ever be verified. For Popper, no theory is completely true, but if not

falsified, it can be stated within the scientific discussion (Andersson, 1988). Hence, this thesis

applies the measures of falsification. However, by integrating more than one paradigm into the

present analyses (in our case, e.g., the contextualist versus universalist and dominant versus

critical perspectives), the relativity of each paradigm, and consequently the respective tendencies

in scholarly work, are postulated. Without referring to the scientific revolution suggested by

Kuhn (1996), we nevertheless assume scientific paradigms and their shifts to impact heavily on

researchers’ questions and their findings. We therefore developed the design of this research

project on this epistemological basis. In general, a research design seeks to give an overview of

relevant constructs, their operationalization, and relations within the analysis stage of a research

work (Töpfer, 2009).

Though each manuscript of this present work has its own particular research question and

approach, the common issue of this research project is the investigation of GPM in an MNE

with respect to the challenges of balancing standardized solutions and diverse preferences.

Therefore, the previous literature on GPM in MNEs has been reviewed and propositions with

respect to country- and gender-specificities have been derived. Hence, the overall goal of this

research is to test whether the propositions derived from the previous literature hold in the

reality, i.e. we apply a confirmatory design (Töpfer, 2009). The purposes of our testing are


30

descriptive and evaluative – descriptive concerning the encompassing picture of PM practices in

different countries, and evaluative with respect to the measurement of preferences, their

comparison with literature-based best practices, and the investigation of gender-specific

preferences and gendered PM practices. The evaluative research purpose is also called ‘policy-

oriented’, since the results deliver direct practical implications (Kromrey, 2002). However, it is

important to note that we provide data and the respective implications from the case of one

MNE. Consequently, further studies in other companies, industries, and countries are required

before general implications can be derived. Therefore, as an additional purpose of the present

study, a measurement tool that operationalizes practices and preferences in PM is provided.

Here, differentiation of the level of analysis comes into play. According to Tsui, Nifadkar,

and Ou (2007), the level of analysis can be defined “by the unit of measurement and the level at

which the hypotheses are tested” (p. 455), meaning that if the operationalization and the analysis

target the individual level, this can be considered as individual-level research. However, the

differentiation of levels as they appear in practice, and their integration in a research design, has

been identified as a challenge for many researchers because “the organization may be an

integrated system, but the science is not” (Kozlowski & Klein, 2000, p. 3). According to the

sophisticated research models in the cross-cultural field (e.g. the GLOBE study by House et al.,

2004), and following the advice given by Fischer (2009), this research project integrates two

models of operationalization: The referent-shift consensus model and the direct consensus model. In the

referent-shift consensus model, the data are measured on the individual level, while the

questions target explicitly a higher level, for example society or the organization. Hence, items

that follow the scheme ‘At my current workplace, PM is …’ (‘as is’ items) target practices and

norms in PM on the level of the organizational unit. On the contrary, the direct consensus

model measures constructs on the individual level by following the scheme ‘I think PM should

be like …’ (‘should be’ items). This data delivers information about the preferences and values of

the participants and can be aggregated on the group level, as long as agreement within the

groups (Fischer, 2009), as well as the equivalence of data between the groups, is ensured

(Harkness, Mohler, & Van de Vijver, 2003). With respect to GPM, some previous empirical

work includes similar differentiations of practices and preferences (e.g. Milliman, Nason, et al.,

2002; Von Glinow et al., 2002) or expectations (e.g. Pudelko, 2005), delivering cautious

descriptions of future developments. It is important to note here that it has been argued that

‘should be’ items measure the mere reaction towards the status quo and might therefore

demonstrate just the opposite direction compared to ‘as is’ items (Maseland & van Hoorn,

2010). If this was the case, negative correlations between ‘as is’ and ‘should be’ scores should


31

identify this relation. However, this discussion (Brewer & Venaik, 2010; Maseland & van Hoorn,

2010) makes clear that ‘should be’ items measure at least preferences, so that we can focus on the

analyses of preferences in this work.

Furthermore, in order to include the above described diversity of employees’ perspectives,

our analyses of practices and preferences of GPM in MNEs are carried out from two sides:

From a cross-contextual point of view and with respect to employee gender. While manuscripts

No.1, No. 2, and No. 3 target the contextual level, manuscript No. 4 uses the individual variable

‘gender’ as its category of analysis. Hence, the overall research design includes the contextual

construct ‘location’ and the individual construct ‘gender’ as independent variables. The single

elements of ‘PM practices’ and ‘PM preferences’ are the dependent variables, while several other

constructs need to be included as control variables (Bortz & Döring, 2006). In line with

previous research (e.g. Tsui et al., 2007; Geringer et al., 2002), these are the ‘age’ as well as the

‘cultural identity’ of participants, their experience with the GPM system, and their international

experience in general. Finally, these constructs (as indicated in Table 3) are measured within an

online questionnaire.

This research medium was chosen in line with a large body of research, since this

instrument allows for a very focused measurement of many business-related, sociological, or

psychological issues within empirical social research (Kromrey, 2002). Especially concerning

cross-cultural management and international HRM matters, questionnaires are by far the most

applied instrument for measurement (Geringer et al., 2002), which might be also the result of

the challenges of cross-cultural equivalence which are easier to address by questionnaires –

compared to, for example, interviews (Harkness, Van de Vijver, & Johnson, 2003). Moreover,

an online version of a questionnaire has the advantage of distribution time and cost savings,

while the responses can be assumed to show less social desirability due to higher anonymity

(Podsakoff, MacKenzie, Lee, & Podsakoff, 2003).

This questionnaire was designed to target male and female employees on the middle

management level of one MNE. The context of one MNE was chosen in order to control for

further potential confounding variables, for example different industries or sizes of other

companies. Middle managers were targeted, since it is assumed that these employees are familiar

with the GPM system from the perspective of the assessed as well as from the assessing

perspective. Table 3 summarizes the applied design of our research project.


32

Table 3. Overview of the research design

Design categories Applied design features in this research project

Goal Confirmatory

Research purpose Descriptive and evaluative (policy-oriented)

Operationalization model Referent shift Direct consensus model

Research medium Online questionnaire

Analysis perspective Cross-contextual Gender

Constructs Independent Variables Location Gender

Dependent Variables PM practices PM preferences

Control variables Age Cultural identity International experience Experience with the GPM system at location

Target sample Middle management employees in one MNE

As mentioned earlier, equivalence has to be ensured when aggregating and comparing data on

the group level. The requirements of cross-cultural equivalence relevant for our study are briefly

explained in the following.

6.2 The requirements of cross-cultural equivalence

As Cascio (2012b) summarizes, “methodological issues can be particularly thorny considerations

in international HR management research. If not addressed properly, they can severely

undermine valid inferences” (p. 2532). The point here is the challenge of the equivalence of data

in international research settings (see also Tsui et al., 2007). In this context, equivalence

describes the comparability of the measurement and the results, meaning that these are free of

errors and biases that might result from cross-cultural differences. If errors occur, results and

conclusions are not drawn on the basis of actual differences between cultures, but on the basis

of cultural biases; hence, their validity is questionable (Byrne & van de Vijver, 2010).

Different levels of equivalence are distinguished by most contributions in this field;

however, the definitions of these levels are not uniform. An overlap within the relevant

literature (Byrne & van de Vijver, 2010; Cascio, 2012b; Van de Vijver, 2003a) might be the


33

differentiation of equivalence into the three levels of construct-, structural-, and measurement

unit equivalence. While construct equivalence refers to a comparable comprehension of the

measured constructs in different groups of the analysis, structural equivalence describes the

same understanding of structures and relations between these constructs. Finally, measurement

unit equivalence ensures the comparability of data points for each item.

While several statistical procedures are mentioned for testing equivalence after the

measurement has taken place (post hoc), some techniques can also be applied in advance

(a priori). For example, in order to enhance construct and structural equivalence a priori, Van de

Vijver (2003b) cites the consideration and inclusion of additional perspectives from scholars and

practitioners in other cultures, when designing the questionnaire and the items. On the other

hand, post hoc techniques aim to identify items or even scales that might be biased, in order to

eliminate them from the questionnaire. The most frequently mentioned post hoc procedure,

targeting structural and measurement unit equivalence, involves the application of structural

equation modeling (SEM) with multiple group comparisons. This statistical program enables

“the testing of complex causal or path models and the examination of measurement or model

equivalence across cultural groups” (Tsui et al., 2007, p. 457). The minimum number of

participants for a valid conduction of SEM is N = 100 per group (Hox & Maas, 2001).

Alternative approaches include confirmatory factor analyses (Van de Vijver, 2003b).

A priori as well as post hoc measures have been applied in the present work. In particular,

interviews with HR managers from Germany, the USA, Japan, and China are included in the

overall conception of the questionnaire, and US-American, French, and German researchers

reviewed the questionnaire critically, in order to enhance the construct and structural

equivalence. Furthermore, all items were developed in English, in order to provide equal labels

for the constructs across all settings. Factor and reliability analyses challenged the construct and

structural equivalence post hoc, indicating which items needed to be deleted and which scales

had to be reworked. With respect to measurement equivalence, the distribution of online

questionnaires to the middle management of one MNE was chosen, while an assessment of

correlations and scatter plots was used as statistical remedies in this context. According to Van

de Vijver (2003b), scatter plots of item means (as depicted for the pretest in Figure 2) are

suitable techniques for assessing and improving measurement equivalence in small samples.


34

Figure 2. Scatter plot of the item mean scores for the French and German sample (pretest)

The idea is that as long as all values remain along one line – as in the case above – no

unexpectedly high differences between the countries occur. However, the graphical diagram can

only catch and relate the scores of two countries, so the use of this technique was limited to the

pretest data. Table 4 provides a summary of the techniques applied.


35

Table 4. A priori and post hoc techniques applied in the present work, in order to ensure and test

for equivalence

Level of equivalence

Design techniques to ensure equivalence (a priori)

Statistical techniques for testing equivalence (post hoc)

Construct equivalence

• The results of interviews with HR managers from Germany, the USA, Japan, and China are included in the development of items.

• Review and adaptation of items by US-American, French, and German researchers.

• All items are in English.

• Cronbach’s alpha values

• • Structural equivalence

• The results of interviews with HR managers from Germany, the USA, Japan, and China are included in the overall conception of the questionnaire.

• Review and adaptation of the questionnaire by US-American, French, and German researchers.

• Explorative factor analysis (pretest)

• Confirmative factor analysis (main study)

• • Measurement unit equivalence

• Control of organizational variables by focusing on one MNE.

• Sample equivalence (similar positions, similar educational background).

• Online questionnaire spares discussion about experimenter effects.

• Scatter plot of country means (pretest)

• Correlations (main study)

Source: Referring to Byrne and van de Vijver (2010); Kostova and Roth (2002); Van de Vijver (2003b).

In spite of the strong argument for ensuring equivalence, post hoc techniques are not without

criticism, as Fischer (2009) emphasizes: “Paradoxically, emerging item and construct bias may

indicate important cultural differences, such as the meaning and structure of specific items and

constructs […] for this reason, I argue that non-isomorphism should not be the end, but the

beginning of further cross-cultural research” (p. 34-35). However, this thesis follows the

required steps to address equivalence in accordance with the broadly shared opinion in the

literature.

In the following section, the sample of the main study is described, thus providing

additional background information on the chosen MNE.


36

6.3 The sample: the case of an MNE

Based on the requirements of the research design, the following criteria guided the search for

and acquisition of an appropriate sample for this research project. First, as mentioned above, in

order to avoid an uncontrolled impact caused by organizational differences (e.g. different sizes

or industries), the survey was planned to be conducted within one company. Second, the

comparative approach inherent in some of the leading research questions requires comparable

data from China, Germany, and the USA (and optional, additional culturally- and institutionally-

spread countries). Hence, the target company should operate in at least these countries. Third,

we looked for a company by applying a localized approach with respect to GPM, since we

expected a standardized GPM system to create bias in the comparative results. Furthermore, as

noted earlier, we controlled for individual variance in terms of educational background and

experience with the GPM system by targeting only one level within the company, and we chose

the middle management level to ensure that the survey participants knew the GPM system from

both perspectives, namely assessing others and being assessed themselves.

During the acquisition of a cooperating MNE, a number of obstacles appeared. As a

major issue, several companies reported their keen interest in this topic and in cooperation but

finally refused to participate because of various problems concerning the GPM system in the

past and the resulting insecurities they feared would come to the fore with another survey.

Furthermore, aiming to approach middle management was an issue for some companies, since

the working time for this level is seen as particularly limited and costly. Besides, some

companies, willing to cooperate, were too small for the empirical purpose of the survey and

could not provide an appropriate sample at the respective management level in the three

(or more) countries.

Finally, one company was found that fulfilled all required criteria and was willing to

cooperate. It is a French company that operates in over 130 countries, in the energy sector, and

has about 96,000 employees, out of which about 30% are women. Table 5 provides an overview

of the company’s details based on the annual report 2011 and additional interview data.


37

Table 5. Company data (for 2011) of the MNE cooperating in this survey

Industry

Energy

Products Mainly oil and gas exploration and production, refining, and chemicals

Internationality Operates in over 130 countries

Headquarters‘ location France

Sales ~185 Billion Euro

Profit ~ 12 Billion Euro

Total number of employees ~ 96,000

Women in management positions 22%

Total number of female employees 29.7%

Source: Adapted from the company’s annual report 2011 and additional interview data.

A link referring to the online questionnaire was sent out by the respective HR department to

employees on the middle management level in China, Germany, the USA, South Africa, and the

French headquarters. The latter two locations were chosen due to the company’s interests, and

they were also included in the third and fourth manuscripts of the present work. The text of the

cover letter that was sent with the link can be found in Appendix A. The managers had four

weeks to answer the questionnaire and were reminded by the HR department four days before

the deadline (for the reminder, see Appendix B).

In total, 508 managers were asked to participate in the survey, and 210 questionnaires

were answered. Table 6 gives an overview of the distribution and responses for the whole

sample as well as for single countries.

Table 6. Distribution and responses of the online questionnaire for the whole sample as well

as for the single locations

Overall China Germany France

South Africa

USA

Number of questionnaires sent out 582 102 110 98 118 154 Number of answered questionnaires 241 49 44 31 43 74 Female participants 39% 55% 17% 44% 40% 37% Response rate 39% 43% 37% 32% 36% 48% Expatriates 11 5 3 0 1 2

As the theoretical and methodological foundations have been clarified in detail, the four

manuscripts that build the core of this thesis are presented in the following.

Global performance management in the MNE Research manuscript No. 1

38

7 RESEARCH MANUSCRIPTS

7.1 Global performance management in MNEs –

conceptualization and profiles of country-specific characteristics

in China, Germany, and the USA

Manuscript No. 1

This manuscript is published as: Festing, M., Knappert, L., Dowling, P. J., Engle, A. D. (2012).

Global performance management in MNEs – conceptualization and profiles of country-specific

characteristics in China, Germany, and the United States. Thunderbird International Business Review,

Vol. 54 (6), 825-843.

DOI: http://onlinelibrary.wiley.com/doi/10.1002/tie.21506/abstract


39

7.2 Country-specific profiles of performance management

in China, Germany, and the USA – an empirical test

Manuscript No. 2

This revised manuscript is accepted for publication as: Festing, M. & Knappert, L. (2014).

Global performance management in MNEs – an empirical test of country-specificities in China,

Germany, and the USA. Thunderbird International Business Review, 56 (4).

Available from the author upon request.


40

7.3 Do global ‘best practices’ in performance management meet employees’

preferences? Empirical evidence from China, Germany, South Africa, and the USA

Manuscript No. 3

This manuscript is under review as: Knappert, L. & Festing, M.. Do global ‘best practices’ in

performance management meet employees’ preferences? Empirical evidence from China,

Germany, South Africa, and the USA.


A short version of the manuscript is accepted for publication as: Knappert, L. & Festing, M.

(2013). Do global ‘best practices’ in performance management meet employees’ preferences?

Empirical evidence from China, Germany, South Africa, and the USA. In A. Toombs (Ed.),

Proceedings of the Seventieth Annual Meeting of the Academy of Management (CD), ISSN

1543-8643.


41

7.4 Gender-specific preferences in global performance management –

an empirical study of male and female managers in a multinational context

Manuscript No. 4

This manuscript is accepted for publication in Human Resources Management as: Festing, M.,

Knappert, L. & Kornau, A..Gender-specific preferences in global performance management –

an empirical study of male and female managers in a multinational context.


Global performance management in the MNE Conclusion

42

8 CONCLUSION

After presenting the four manuscripts at the core of this thesis, the following final sections aim

to provide an encompassing idea of the overall contributions, implications, and limitations of

this research. After a summary of the major contributions and findings is given, the practical

implications and limitations of this thesis are discussed. This work ends by deriving perspectives

for future research. For all conclusions and implications it is important to emphasize once again

that this research project uses the unique organizational context of one single MNE to answer

its research questions. Consequently, we cannot exclude company-specific explanations for

variance, which is a clear restriction of this work. Nonetheless, this project provides findings

which question some of the existing research results and may inspire the reader to think about

new research approaches.

8.1 Summary

As stated initially, MNEs dominate today’s globalized economy and employ large parts of the

global workforce. As one central management tool for managing their people, PM links

corporate strategy to individual objectives. However, when implemented in the global context

of an MNE, several challenges of balancing standardized solutions and diverse preferences

occur. While this issue has rarely been addressed before, during the past years several scholars

have emphasized its practical relevance and its importance for research to come (e.g. Varma et

al., 2008; Engel et al., 2008; Cascio, 2012a). It is the goal of this thesis to contribute to this

growing body of knowledge by analyzing practices and preferences in GPM on a country-level,

as well as with respect to gender. Therefore, cultural and institutional perspectives (referring to

e.g. Festing & Barzantny, 2008), the convergence and divergence debate (referring to e.g.

Pudelko & Harzing, 2007), and the dominant and critical perspectives on GPM (according to

McKenna et al., 2011) have been integrated into the analyses. Since GPM is a global

phenomenon, several countries are included in this thesis’s sample, consisting mainly of

Chinese, German, US-American, and South African participants. By focusing on these

countries, the economically most relevant countries in their respective regions have been chosen

(Collier & Venables, 2008; World Trade Organization, 2011), and South Africa and China are

two out of five of the world’s leading emerging economies, i.e. the BRICS countries (Cassiolato

& Martins Lastres, 2009). Thus, we further aim to contribute to the scarce empirical knowledge

on GPM in BRICS countries as compared to developed countries. Moreover, we deliver data

from four different continents and four different cultural clusters, by which we do not aim to


43

provide representative findings for the clusters (as criticized as assumed cluster homogeneity by

Paik et al., 2000; see chapter 4.2.1) but to contribute results from maximally spread contexts.

Four manuscripts build the core of this thesis. The first provides a literature review

summarizing the various elements of GPM from a contextualist perspective. Based on this

review, PM is categorized into criteria, actors and appraisal methods, as well as the way in which

feedback is provided and the purposes of the appraisal. Analyzing these elements in the three

major and culturally institutionally spread economies China, Germany, and the USA, country-

specific PM profiles are derived and tested later, in the second manuscript. Contrary to these

country-specific peculiarities, and applying a critical perspective to the universalist paradigm and

the idea of convergence, the third manuscript delivers an overview of the so-called best

practices in PM that promise to be the most efficient and effective as well as globally valid

solutions. However, this global applicability is questioned and the relevance of including

employees’ perspectives from various countries in the research and guidelines on GPM is

emphasized. To examine not only the contextual variety of GPM but also the different

perceptions of PM due to individual characteristics, the fourth manuscript includes an analysis

of gender-specific preferences. Again, a critical perspective is applied and the potential impact of

GPM on discrimination against women is described. In order to test the various propositions

and hypotheses of this thesis, a measurement tool is developed, thus reflecting the above

mentioned conceptualization of PM and meeting the requirements of cross-cultural equivalence

at the same time. In order to analyze employees’ perspectives, the tool is built to target both

perceived practices and employees’ preferences.

The results of this thesis reveal some crucial country-specific practices as indicated by the

previous literature. In particular, network-oriented criteria, appraisals by actors other than the

supervisor, and the purpose of the appraisal vary across China, Germany, and the USA.

However, it was highly surprising that overall only six out of 16 investigated GPM elements

showed significant country-specific differences, and the categorization of the Western approach

in the USA and Germany versus the Chinese approach could not be confirmed. Instead, more

similarities concerning PM practices between China and Germany than between Germany and

the USA were identified. These findings question the propositions of stable cultural and

institutional influences as supposed by the large body of divergence literature in this field.

Furthermore, these findings underline the relevance of discussions about the impact of

contextual influences (Gerhart & Fang, 2005; Weller & Gerhart, 2012) and the possibility of

global best practices (Pudelko & Harzing, 2007; Pudelko & Harzing, 2008; Von Glinow et al.,

2002). With respect to the latter, this thesis indeed identifies common preferences in PM across

countries. However, out of six global best practices identified in the literature, only the elements


44

‘appraisal by a supervisor’ and ‘direct and participatory feedback’ meet the preferences of

Chinese, German, South African, and US-American employees. Contrary to what current best

practices let us assume, the other common preferences we found indicate a priority for the

rather ‘soft’ PM elements: teamwork-oriented criteria, interactive and direct feedback, and

motivation and development purposes of the appraisal.

Moreover, when comparing the number of significant differences between the countries,

we found more differences on the level of practices compared to those on the level of

preferences. According to the conceptualization posited by Von Glinow et al. (2002), this may

indicate common trends or tendencies for future GPM systems. Hence, with respect to the

convergence divergence debate, this observation indicates a converging tendency in GPM.

However, contrary to the assumption that ‘hard’ GPM best practices lead the process of

convergence (see chapter 4.3.3), our data suggest a convergence towards ‘soft’ features. The data

question, for example, the trend towards results focus, as stated by Pulakos (2009), by

emphasizing teamwork-oriented criteria. This common tendency towards soft GPM features is

in line with descriptions of crossvergence, conceptualized as “a unique value system that is

different from the value set supported by either national culture or economic ideology” (Ralston

et al., 1997, p. 183). Concerning GPM, Vance (2006) suggests female values to be of high

relevance in this new value system. For example, with respect to the USA, he says that the

growing importance of the supervisor’s role as a coach and mentor underlines the relevance of

the “dimension of femininity to what has often been considered as an overpowering results-

focused masculine cultural orientation of global convergence” (Vance, 2006, p. 50). Indeed, in

our sample, common preferences correspond to female priorities, compared to their male

colleagues’ answers. Women prefer, for example, a stronger group focus in an appraisal, the

higher relevance of soft interventions, and more directness and involvement in feedback

communication. Given the optimistic outlook presented by Goodman et al. (2003), assuming

that sex segregation in management will give way to the growing presence of women in

management roles, these gender-specific findings underline the assumption of this crossverging

trend towards ‘soft’ GPM systems.

Besides possible future trends, these results also underline the mismatch between

currently applied practices and preferences. These discrepancies seem to be even greater for

minorities, whose interests and values are not consulted when PM systems are designed and

implemented (Alimo-Metcalfe, 1993; Metcalfe & Woodhams, 2012). Applying the example of

women as a minority in management (OECD, 2008), we found that PM practices meet male

preferences better. Since this effect was found in the USA, China, Germany, France, and South

Africa, this finding highlights unequal opportunities for women on a global level and establishes


45

the discriminatory impact of GPM systems, because the most crucial decisions about the

distribution of resources and careers are made within this system (Alimo-Metcalfe, 1993).

Moreover, these results contribute to the very limited knowledge on gendered practices in

international HRM (Hearn et al., 2012).

Furthermore, we found that employees’ preferences are neglected, not only in the actually

applied PM practices in our sample but also in the best practice literature. This correspondence

between applied practices and the best practices literature is not surprising, since best practices

tend to reflect mainly the male and managerial perspectives (Maier, 1999; McKenna et al., 2011),

and these guidelines are in turn used as an orientation when setting up PM systems. Hence,

major stakeholders’ perspectives (employees’ voices in general and minorities’ perspectives in

particular) are missing in this circle. Furthermore, features such as competitiveness and

efficiency have been described previously as stereotypical masculine values (Loden, 1985; Maier,

1999) and as the characteristics of best practices (e.g. Festing, 2012). Therefore, PM practices are

in danger of discriminating against those individuals who do not share these principles as

priorities, be it due to their culture, their gender, or other variables.

Of course, preferences for the softer features in PM in our data could also be a reaction

towards the poor management of soft control mechanisms in MNEs (Fee et al., 2011).

However, the need to consider employees’ expectations has been made clear before. Several

scholars report a lack of trust in the PM system, a mismatch between applied practices and

expectations, and significant dissatisfaction with PM (Brewster et al., 2011; Pulakos, 2009;

Service & Loudon, 2010; Von Glinow et al., 2002). Though US dominance in the business

environment and in academia (Festing, 2012; Smith & Meiksins, 1995) could have led to the

assumption that US-American participants’ priorities would be closer to best practices, this

preference for soft PM elements also holds for the US sample. This supports those

contributions showing that, even in the USA, the majority of employees are dissatisfied with

their company’s PM system (for an overview, see Brewster et al., 2011).

8.2 Practical implications

Due to the already mentioned restriction on company-specific data, the practical implications of

this project are limited. However, the findings at least indicate that several general assumptions

about GPM in previous literature do not meet all cases in practice. With respect to the case of

our sample, the following summarizes where local variations can be expected, which practices

might be considered as globally applicable, and which best practices should not be adopted


46

uncritically. Moreover, several implications can be drawn in order to overcome the

discriminatory danger of PM.

In particular, local variations can be expected with respect to the actors in (other than the

supervisor) and purposes of the appraisal. For example, in our sample the relevance of the

appraisal by subordinates and peers is rated significantly higher in China and Germany

compared to the USA. Additionally, US-American and South African employees prioritize

individually focused appraisals, while their German and Chinese counterparts are found to

prefer a group focus in an appraisal. Companies operating in these countries should consider

local customs and preferences in order to meet any cultural requirements (House et al., 2004)

and take a chance on local employees’ internalization (Kostova & Roth, 2002) of the GPM

system.

At the same time, several practices and preferences were found to be of similar high

priority across the investigated countries. On the level of practices, these are appraisal by a

superior, output criteria, individual focus, and direct and participative feedback. These features

reflect four out of five best practices that have been identified in the literature and underline the

assumption that best practices are used by practitioners as an orientation (Pudelko, 2005).

However, on the level of preferences, these rather ‘hard’ elements no longer hold, which places

emphasis on the suggestions made by Fee et al. (2011), stating that highly international MNEs

“would be wise to direct attention to the soft control mechanisms” (p. 380). Furthermore, these

results express the need to consider employees’ perspectives when establishing and managing a

PM system and, moreover, to foster – not to adopt – best practices uncritically (McKenna et al.,

2011). From our sample, this seems to be especially true for output-oriented criteria, the

individual focus of the appraisal, and for salary purposes. These latter elements can be found in

several guidelines on PM (e.g. Armstrong, 2009; Pulakos, 2009), though they do not meet all

employees’ preferences, as identified in this survey.

This seems to be particularly relevant for female employees, who prefer ‘softer’ PM

elements than their male counterparts. Therefore, the discrepancy between practices and

preferences is even higher for women than for men, indicating a gender bias on the

organizational level that might be part of the glass ceiling (Morrison et al., 1987), thus hindering

women from advancing to top management. Consequently, the practical relevance of

overcoming this discriminatory effect of PM is as big as its challenges. Similar to the general

implication to consider employees’ preferences, a major step might be to include female

expectations and priorities in the design of PM systems, although their ideas might not seem to

fit into existing standards in business settings at first glance. Therefore, a first and courageous

step could be the systematic identification of discriminatory PM practices in a company. As


47

Meyerson and Fletcher (2000) emphasize, “it is time to start searching for causes. Such diagnosis

involves senior managers probing an organization’s practices and beliefs to uncover its deeply

embedded sources of inequity” (p. 132). This diagnosis could be used also to broaden the

awareness of discriminations other than sexism, for example racism or religious discrimination,

and could also be transferred to other HR practices besides PM.

Hence, another practical implication can be drawn from a methodological point of view,

since this thesis provides a measurement that might be applied not only by future research

projects but also by practitioners, who aim to determine and include other stakeholders’

perspectives or who want to evaluate existing practices. For many practitioners – as for most

researchers in this field – PM is “known as the ‘Achilles’ Heel’ of human capital management,

and it is the most difficult HR system to implement in organizations” (Pulakos, 2009, p. 3).

In reported employee surveys, only 30% said that the respective PM system actually helps to

improve their performance (Pulakos, 2009), while other scholars state that “over 80% of the

respondents’ experience with appraisals is perceived as ‘a joke’” (Service & Loudon, 2010, p.

63). These findings as well as the results of this survey urge the questioning and evaluation of

the practices applied by organizations and the guidelines used as an orientation. The

measurement developed in this thesis might provide a first tool achieve this aim.

As with all scholarly work, this study has its limitations, which are now discussed in detail

in the following.

8.3 Limitations

This section provides an overview of the limitations of this thesis and is structured into

methodological and conceptual limitations.

8.3.1 Methodological limitations

As indicated earlier, this project provides data from one single MNE, which has the advantage

of controlling for organizational variables, but also conveys the disadvantage of company-

specific data, while confounding effects by industry, global policy, and nature of the firm cannot

be controlled and remain potentially influential (Budhwar & Sparrow, 2002). Since the sector in

which this company operates (the energy sector) can be characterized as male-dominated

(Carlsson-Kanyama et al., 2010), gender-specific data especially has to be interpreted against the

background of the male-oriented culture of this industry. At the same time, our findings might

be influenced by the organizational culture of this particular MNE. Though we chose a


48

company with a localized approach, in order to avoid bias towards standardization efforts, a

potential influence by the country of origin and the French cultural heritage of the firm’s culture

cannot be excluded completely. In this context, it can be assumed that certain organizations

attract individuals with certain values, since the choice of the employer also underlies an

estimation of the person-organization fit and a self-selection by employees (Weinert, 2004).

Consequently, our survey might show different results when conducted in another company of

another industry, size, structure, or country of origin.

Besides this main design restriction, some other methodological issues limit the

generalizability of our findings. First of all, the pretest sample’s composition did not match the

main study sample in terms of its internationality – while German and French participants’ data

were compared in the pretest, the target countries in the main study were Germany, China, and

the USA, as well as South Africa and France. However, the pretest possessed an international

composition, and therefore it provided a first indication of cross-cultural equivalence (Harkness,

Van de Vijver, et al., 2003), which was essential in order to assess the constructs in terms of

their intercultural equivalence (Byrne & van de Vijver, 2010; Hinkin, 1995). Furthermore, we

found conforming factor structures and acceptable Cronbach’s alpha values (DeVellis, 1991) in

the pretest groups as well as in the group samples of the main study, hence supporting the

conceptual equivalence of the scales (Byrne & van de Vijver, 2010). According to the majority

of literature on cross-cultural research, the most sophisticated assessment of equivalence is the

application of SEM with multiple group comparisons (see chapter 6.2). Since the group sizes of

both our pretest and our main study sample were smaller than the required minimum for a valid

conduction of SEM (N = 100 per group, see Hox & Mass, 2004), we applied confirmatory

factor analysis and reliability analyses instead (Van de Vijver, 2003b). Whenever possible, future

research should ensure the possibility of SEM when developing a cross-cultural survey, in order

to meet the highest standards in equivalence assessments. We have to acknowledge that sample

sizes were small, in particular with respect to the sample-to-variable ratio, which was lower than

3:1 on the group level. In future research, larger sample sizes are needed, to rely on even more

valid findings.

Since all survey participants use English in their daily work, the survey was conducted in

one language only. Our limited time for conducting the survey, and the case of South Africa

alone, in which eleven different but equivalent official languages exist, convinced us to deliver

the questionnaire in English only. Therefore, we did not meet the cross-cultural research

suggestions, as suggested by Harkness, Van de Vijver, et al. (2003) for example, to distribute the

questionnaire in the participants’ respective mother tongue.


49

Moreover, as with most surveys, ours potentially underlies the influence of social

desirability, meaning that some items and constructs might be more or less biased towards

“the tendency of some people to respond to items more as a result of their social acceptability

than their true feelings” (Podsakoff et al., 2003, p. 882). This is of particular relevance when data

are compared with respect to gender (since women have been cited as providing more socially

desirable responses, see e.g. Dalton & Ortegren, 2011) or across different cultures with diverse

social values and norms (Johnson & Van de Vijver, 2003). Hence, one could argue that the

priority for the soft PM elements, such as team-based assessment or motivational purposes, is

more socially desirable, which would then provide an alternative explanation for the higher

scores of soft PM elements on the level of preferences in general and in the female sample in

particular. We addressed this challenge by employing ex-ante procedural remedies and ex-post

statistical evaluations. According to Podsakoff et al. (2003), we followed the recommended ex-

ante remedies of a careful item development on the one hand (avoiding moral dilemmas) and

the confirmation of the participants’ anonymity and confidentiality on the other, in order to

avoid the apprehension of an evaluation. As for statistical remedies, factor analyses were

conducted and revealed several factors, excluding the possibility of one underlying factor of

social desirability. Furthermore, the correlation matrixes (e.g. in manuscript No. 4) show that

correlations between soft PM elements are not higher than for those between soft and hard

features. Therefore, we propose the impact of social desirability as an alternative explanation of

the found effects to be indecisive. However, future research should consider further ex-ante

measures, for example by including an extra scale to control for social desirability response (for

a review of existing scales and potential problems, see Thompson & Phua, 2005).

Besides, some limitations on the conceptual level need to be discussed as well, as

presented in the following.

8.3.2 Conceptual limitations

Firstly, a structured categorization of the local (cultural and institutional) context was missing in

the previous literature on GPM, forcing us to echo the sometimes broad and eclectic

foundations of the propositions and hypotheses in the first and second manuscripts. In seeking

a complete understanding of GPM, we argued that both the cultural and institutional aspects of

a context are important. However, at this point, our analysis allows us to answer how PM

features differ on the level of the artifacts, but not necessarily why these differences occur, since

some of our hypotheses were supported and others rejected. These findings question the

previous theoretical categorizations in the literature and urge more consideration in the future.


50

Furthermore, issues resulting from contextual differences are inherent in a cross-

contextual research project like this, namely differences between groups of participants, between

authors and considered countries, and between cited sources and considered countries. While

we could include practitioners and scholars’ voices from other countries in the design of the

survey (see chapter 6.2), in order to foster equivalence from the very outset, we also sought to

include a broad variety of literature in the review, thus providing the basis for the following

efforts. However, as most top rank journals are North American (Festing, 2012; Metcalfe &

Woodhams, 2012) and academic quality standards, for example journal rankings, are discussed

as “yet another form of discriminatory practice in the higher education sector” (Özbilgin, 2009,

p. 113), articles from other parts of the world or from scholars with more diverse backgrounds

and perspectives are scarce. This, in turn, means that we cannot exclude a general tendency of

our work towards the North American or European standards in terms of conceptualizations

and research questions, though these standards are the very research object of manuscript

No. 3.

A related question that remains open is whether or not the country context and culture in

particular can be taken into account as an independent variable at all. Scholars’ own cultures and

positions are assumed to influence their work in the form of a lens that cannot be taken away or

changed. With regard to the related language issues, Tsui et al. (2007) state that “the best

example of context-specific research is the work by local scholars using local language” (p. 468).

Of course, this requirement is hard to fulfill in comparative and cross-cultural research, and as

such it could not be met within this thesis. However, for future research, teams of scholars from

the considered countries would be advisable.

A final important matter on the conceptual level goes back to the ongoing discussion

about the relationship between practices and values measured in organizational research. Here,

it has been supposed that ‘should be’ data are “shaped, in part, by existing practices” (Brewer &

Venaik, 2010, p. 1316) or are even contrary to ‘as is’ data. The underlying assumption is that the

status quo might provoke participants to answer in the opposite direction when asked for their

preferences (Brewer & Venaik, 2010). Consequently, it has been questioned whether ‘should be’

items that originally have been developed in order to measure values (House et al., 2004) indeed

operationalize the targeted values (Maseland & van Hoorn, 2010). However, from this

discussion it can be deduced that these items measure at least preferences, which is why we

focused on the analyses of preferences in this work. From an empirical viewpoint, the above

described nature of ‘should be’ data as the mere reaction to existing practices would imply

negative correlations between ‘as is’ and ‘should be’ scores. This negative correlation was found

neither in the pretest nor in the main study data, so we can suppose that ‘should be’ data stand for


51

what the items seek to measure, namely participants’ preferences in PM. Nevertheless, the

current discussion about the measurement of (cultural) values and preferences (JIBS, 2010,

special issue, No. 8) requires further fruitful outcomes and suggestions in future research.

8.4 Perspectives for future research

As mentioned earlier, research in GPM is in its early stages and there are several topics that

should be examined further. Firstly, several pragmatic implications for future research evolve

from this thesis’s limitations. Consequently, for a more general picture of GPM in MNEs, more

countries, more companies, and more industries should be included in prospective projects.

Moreover, as concluded earlier, with special relevance to cross-cultural equivalence, larger

sample sizes and cross-cultural research teams would be advisable (Byrne & van de Vijver,

2010). On a conceptual level, the results of this research project underline the need for a

stronger integration of approaches and research streams when studying GPM, as explained in

the following sections.

8.4.1 Integrating institutional and cultural approaches

With respect to the contextualist paradigm, the combination of cultural and institutional

approaches is a largely accepted and promoted step, in order to obtain an all-encompassing

picture of country-specific peculiarities in HRM practices (e.g. Aycan, 2005; Farndale & Paauwe,

2007; Festing & Barzantny, 2008). However, as the results in manuscript No. 2 contradict

several previous contributions, further analyses are required to determine and structure

contextual factors and their respective impact on GPM practices. In order to do so, we suggest

the consideration of mixed methods approaches, delivering country-specific data that reflect the

complexity of influences by in-depth information and draw a comparable picture of GPM

practices with quantitative data. We expect this approach to be particularly fruitful regarding

GPM in emerging markets (e.g. the BRICS countries), as these are expected to draw the

increasing attention of scholars and practitioners in the years to come (Cassiolato & Martins

Lastres, 2009). On the one hand, this growing interest is explained by the rising relevance of

foreign MNEs’ subsidiaries in these countries, while our understanding of local HRM challenges

is still very limited. The requirement of further knowledge is underlined by the escalating degree

of expatriations to emerging markets (Collings & Scullion, 2012), while at the same time Russia,

China, and India remain the most challenging locations for expatriates (Brookfield GMAC,

2012). On the other hand, developing countries bear a growing number of MNCs that enter and


52

position themselves successfully into the global market (Dicken, 2011). We suggest that the

analysis of both sides of the coin – the peculiarities of GPM in MNEs originating from

emerging markets on the one side, and GPM practices applied by foreign MNEs’ subsidiaries in

those countries on the other – would deliver highly valuable knowledge. Moreover, a focus on

emerging markets and so-called ‘developing’ countries from a native perspective (Tsui et al.,

2007) has the potential to relieve the traditional comparison of Western versus ‘other’ HR

practices (Björkman, 2002; Giangreco et al., 2010; Leat & El-Kot, 2007; Shen, 2004) that could

not be confirmed in our data.

8.4.2 Integrating the convergence divergence debate and the standardization localization discussion

Another approach that could be employed to bundle together knowledge from different

research streams is to link the arguments of the convergence and divergence debate to the

discussion about standardization and localization (referring to Pudelko & Harzing, 2007). For

example, by doing so in our manuscript No. 3, we identified preferences that are shared by

employees in China, South Africa, the USA, and Germany which might indicate a converging

trend on the one hand and point toward the potential for standardization on the other. We

propose this integration to be an important step towards a comprehensive understanding of

GPM in future research. In this line of research, a valuable orientation might be Vance’s (2006)

differentiation into the standardized upstream elements (e.g. coordination and organizational

learning) and the more localized downstream features of GPM (e.g. the choice of actors), which

have been supported empirically by Claus and Hand (2009). In accordance with Vance (2006),

Claus and Briscoe (2008) describe the link between balancing standardization and localization

and crossvergence and emphasize its relevance for future research: “Although the limited

research indicates that PA [performance appraisal] practices may be converging, there is still a

great deal of divergence (in the few countries studied). Within an MNC [Multinational

Corporation], the notion of crossvergence may be more applicable when it comes to PA

practices. The use of standardized PA principles with local cultural and contextual adaptation is

worthy of further research” (Claus & Briscoe, 2008, p. 192). Therefore, MNEs following a fully

standardized approach should be targeted by future research efforts. Here, academics can

examine where the boundaries of standardization lie and where a local adaptation inevitably

occurs. The differentiation of subsidiaries and their degrees of implementation and

internalization by Björkman et al. (2009), as well as the empirical evidence presented by

Mamman et al. (2009), might provide additional inspiration to apply this approach.

Furthermore, an investigation of MNEs seeking a balanced approach could facilitate a better


53

comprehension of the strategic process of balancing the various influences shaping the GPM

system on the organizational level (Engle et al., 2008), while on a broader, contextual level, such

an analysis could reveal potential future trends and describe how crossvergence in GPM might

appear (Vance, 2006). With concern for the developmental aspect inherent in the concepts,

“obviously, researching convergence [as well as divergence and crossvergence] seriously would

require a longitudinal comparative research programme – but these are expensive and rare”

(Brewster et al., 2011, p. 90). According to previous contributions (Von Glinow et al., 2002;

Milliman, Nason, et al., 2002; Pudelko, 2005), we differentiated practices and preferences to

derive cautious statements about potential future trends. In order to capture and validate these

developments, prospective projects should apply long-term research designs, if feasible.

Especially in the field of GPM, these approaches are scarce and focus on comparisons within

Europe (Boselie et al., 2012), while the global perspective is missing altogether.

8.4.3 Integrating critical and dominant perspectives

Moreover, the integration of critical perspectives into mainstream discussions is an important

step within this thesis and points to the relevance of this integration into future research efforts.

Firstly, the gap between practices and preferences, which has been reported by others and was

confirmed in our study, underlines the need to include employees’ perspectives in future

research agendas and guidelines. Therefore, digressing from the managerial and functionalist

perspective and applying a rather employee-oriented lens, academics can help to overcome the

currently missing perceived justice of PM systems (McKenna et al., 2011), the lack of trust

therein, and a great deal of dissatisfaction (Brewster et al., 2011; Pulakos, 2009). In the long run,

these efforts could help to increase the acceptance of the PM system, and they might fulfill their

intended goal: Facilitating and improving performance (Von Glinow et al., 2002). In this

context, integration of the concepts of employees’ engagement and PM, undertaken by Gruman

and Saks (2011), might provide fruitful ideas for combining the economic relevance of

managing performance with the room and leeway for employees to express and apply their

authentic and holistic self.

One basic aspect of several HRM practices that has been criticized is the control of

employees and inequalities of power (e.g. Alvesson, 2008; Kamenou & Fearfull, 2006). The

connection between control and inequalities seems to be extremely obvious in PM systems,

since they evaluate and control performance to regulate the distribution of organizational

resources and career developments (Alimo-Metcalfe, 1993). With respect to gender differences,

our results are in line with previous assumptions (Alimo-Metcalfe, 1993; Meyerson & Fletcher,


54

2000; Hind & Baruch, 1997) and show that PM systems carry the discriminatory risk of applying

those standards adapted to the needs of the male-dominated mainstream, while female values

and preferences are neglected. This discrimination on the organizational level of HR practices

requires more critical research, especially when it comes to international HRM (Hearn et al.,

2012). Moreover, other categories of discrimination, for example racist or religious

discrimination, should be addressed by future research in (international) HRM. As Kamenou

and Fearfull (2006) point out, “the rhetoric of equality within HRM has been challenged but

these discussions have typically focused on gender issues, ignoring ethnicity, culture and

religion” (p. 154).

In terms of guidelines and best practices for GPM, future research should also consider

cross-cultural research methods, in order to enhance the equivalence and fairness of suggested

approaches. As our manuscript No. 3 has shown, several so-called ‘best practices’ do not meet

employees’ preferences in China, Germany, the USA, and South Africa. We see several points of

intersection between applied GPM systems and cross-contextual research (see e.g. Byrne & van

de Vijver, 2010; Harkness, Mohler, et al., 2003) that would be useful regarding future

approaches and guidelines for the global application of PM systems. According to Caligiuri

(2006), three key issues of performance measurement can be identified which might be

answered through the concepts and techniques found in cross-cultural survey methods:

Selecting performance constructs that generate meaningful criteria and comparable assessment

dimensions, creating the ‘conceptual equivalence’ of selected performance constructs, and

developing appraisal methods that are able to capture these constructs. Hence, cross-cultural

research methods should be considered not only when measuring PM on a global level but also

when new guidelines or best practices in GPM are developed.

It was the aim of this research project to shed some light on GPM in MNEs by analyzing

the challenges of balancing global standards and adaptations towards country-specific and

individual preferences. Therefore, an integrative approach was chosen, referring to cultural and

institutional perspectives, the convergence and divergence debate, and the dominant and critical

perspectives on GPM. The results reveal some country-specific practices and simultaneously

common preferences with a priority for much ‘softer’ GPM elements than current best practices

might let us assume. Moreover, the discriminatory impact of GPM was confirmed, since gender-

specific preferences were identified and practices still reflect male preferences on a global level.

We very much hope that our work might inspire future projects seeking to delve even deeper

into these issues and the related fields mentioned above.

Global performance management in the MNE References

VIII

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APPENDIX

APPENDIX A

Cover letter main study

Dear Sir or Madam, The Chair of Human Resource Management & Intercultural Leadership at the Berlin Campus of the ESCP Europe is currently working on an international research project concerning “Global Performance Management“. Together with colleagues in Australia, France and the USA we investigate the cross-cultural issues of performance management. We appreciate very much the willingness of the XXX Group to support our survey. Therefore we kindly ask you to take approximately 20 minutes of your valuable time to answer our online questionnaire referring to culture and performance management at your current workplace. Your input is most important to us! Please access the online questionnaire via the following link: http://www.umfragecampus.de/rogator/ESCP-Berlin/Festing_GPMatXXX/

Please answer our online questionnaire by Friday 18th March, 2011. If you are interested in the design of the project or the results of this survey, please do not hesitate to write a short email to [email protected]. Thank you in advance for helping us with developing research in the Global Performance Management field. Sincerely yours, Prof. Dr. Marion Festing Chair of Human Resource Management & Intercultural Leadership Lena Knappert Research Assistant

APPENDIX B

Reminder main study

Dear Sir or Madam, Two weeks ago an online-questionnaire seeking your experiences and opinions about “Global Performance Management” was mailed to you. If you have already completed the questionnaire, please accept our sincere thanks. We are especially grateful for your valuable time and your support because it is only by asking people like you to share your experiences that we can investigate the cross-cultural issues of performance management and find answers to our research questions. If you have not completed the online-questionnaire yet, please do so by Friday 18th

March, 2011. We kindly ask you to take approximately 20 minutes of your valuable time to answer our questionnaire. Your input is most important to us! Please access the questionnaire via the following link: http://www.umfragecampus.de/rogator/ESCP-Berlin/ Festing_GPMat XXX/ If you are interested in the design of the project or the results of this survey, please do not hesitate to write a short email to [email protected]. Thank you in advance for helping us with developing research in the Global Performance Management field. Sincerely yours, Prof. Dr. Marion Festing Chair of Human Resource Management & Intercultural Leadership Lena Knappert Research Assistant

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