www.nhh.no
November 1 2011Paul Gooderham NHH – The Norwegian School of Economics
What Really Motivates Employees? LESS 2011 Stockholm
What Really Motivates Employees?
•Findings from two research projects:
– ‘GOLD’-project - what motivates employees in multinational companies (MNCs) to share knowledge?
• Gooderham, P.N., Minbaeva, D, Pedersen, T. (2011) Journal of Management Studies
–‘ELITE-student’ project – what are elite business students seeking to obtain from their employment?
• Work-in-progress
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‘GOLD’-project - what motivates employees in multinational companies (MNCs) to share knowledge?
• Theoretical background (1): Changes to driving forces behind MNCs.
• The traditional driving forces behind MNEs
• Access to cheap labor – –subsidiaries are ”off-shores”
• Access to markets – –subsidiaries are ”servers”
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Assumed knowledge contribution to the MNC
Degree of knowledge in subsidiary
Off-shores
Servers
LOW HIGH
LOW
HIGH
The new driving force • Increasingly firms are investing abroad to enhance and augment their knowledge
• MNCs are trying to buy into foreign created knowledge assets
• MNCs aim to increase their core competencies by incorporating the knowledge of their subsidiaries.
• Subsidiaries are knowledge sources: –“enhancers” & “centers of excellence”
Assumed knowledge contribution to the MNC
Degree of knowledge in subsidiary
Off-shores
Servers
Centres of excellence
Enhancers
LOW HIGH
LOW
HIGH
Theoretical background (2): RBV• Resource-based view (RBV) of the firm (Jay Barney; 1991)
• Competitive advantage is explained by resources that are
– V - Valuable, – R - Rare, – I - Imperfectly imitable, – N - Non-Substitutable
– Externally available resources do not confer competitive advantage (i.e. the “market”).
– Most RBV scholars argue that it is intangible resources - such as firm-specific knowledge - that confer competitive advantage
(i.e. the “firm advantage”)
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The ”Firm Advantage” – The Knowledge Based View (KBV) of the Firm
• Kogut and Zander (1993): MNCs as “social communities”–Qualitatively different to markets
• “Shared identities” and “established routines of cooperation”
• Through transfer and sharing - new & unique knowledge can be created
–BUT! declined to explore the finer details of the organizational capabilities peculiar to the efficient transfer and sharing of knowledge.
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Typical ”early” research questions• Given that each business unit across the MNC has particular
knowledge strengths:
• Typical early research questions:
– Why is knowledge so difficult to transfer between units?
–Why are knowledge synergies - via “sharing” - that could generate product innovation so difficult to create?
Knowledge as a ”thing” that is transferred from one person (the sender) to another (the receiver) through ”pipelines”
Sender Receiver
Knowledge flow
Potential barriers
Knowledge that confers competitive advantage is ”Collective” and therefore locally “Embedded”
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Individual Social
Explicit Conscious Objectified
Implicit or Tacit Automatic Collective
Spender, 1996
Collective knowledge can only be shared through the dynamic interaction of groups of people
No sender or receiverKnowledge is shared between groups of people – through interaction
Barriers: lack of networks; lack of trust, lack of shared mindset.
Valuable knowledge?
Three dimensions of social capital(Nahapiet & Ghoshal, 1998)
• Structural: linkages; networks
• Cognitive: shared understanding and shared norms
• Relational: trust, identification, relationships
Enhanced Social Capital across
the MNC
Enhanced Performance for the
MNC
Enhanced Knowledge Sharing across
the MNC through interaction
Social Capital Where are we now?
• “We still don’t know nearly enough about what processes & practices are important for building & sustaining social capital & in what contexts”
– Janine Nahapiet, GOLD Workshop, NHH, November 2008
• But what we do know is that because of:
– cultural, institutional and physical distance
• MNCs are particularly demanding contexts in which to develop social capital - and facilitate knowledge transfer.
Our contribution
• We look into the black box of how social capital emerges and is developed
• We propose knowledge governance mechanisms that can be deployed to promote social capital and ultimately intra-MNE knowledge transfer
• We conduct empirical testing of the developed model
Governance Mechanisms
• Three governance mechanisms are available to managers (cf. Adler & Kwon, 2002).
• These will impact on social capital.
• Based on different exchange mechanisms:– Market-based relations:
• The pecuniary exchange of products or services: mechanism e.g. bonuses
– Hierarchical relations:• The exchange of obedience to authority for security: mechanism e.g. rules
– Social relations:• Free exchange of favors: mechanisme.g. acknowlegement
Social capital
Hierarchical
mechanisms
Socialmechanisms
Market-based
mechanisms
The hypothesized model
+Knowledgesharing
Social capital
-
-
+
Hierarchical
mechanisms
Socialmechanism
s
Market-based
mechanisms
Data• Two Danish MNCs operating in the same industry - food ingredients
• (Internet-based) survey distributed via the respective firm’s internal email system
• Individual respondents – Danisco: 77.94%; 219 respondents– Chr. Hansen: 72.75%; 251 respondents – Multiple respondents within the same unit
• I.e. we are measuring individuals’ perceptions.
Knowledge sharing and social capital – examples of items
• Knowledge sharing: –To what extent have:
• You used knowledge from colleagues in other departments?
• Colleagues in other departments used knowledge from you
• Social capital: – In my company:
• People cooperate across departments• Sharing of knowledge is valued
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Governance mechanisms – examples of items• Hierarchical mechanisms
– In my company, people are expected to stick to rules and procedures even when there are better solutions.
• Social mechanisms – To what extent are you currently rewarded for transferring
knowledge in your company…• by acknowledgement of your contribution?
• Market mechanisms – To what extent are you currently rewarded for transferring
knowledge in your company…• by increments/bonuses?
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Results (LISREL)
0.47***Knowledge sharing
Social capital
-0.16**
-0.12*
0.56***
Hierarchical
mechanisms
Socialmechanism
s
Market-based
mechanisms
-0.23***
0.53***
Conclusions• Social governance mechanisms - involving
acknowledgement practices - clearly promote social capital
• Excessive use of hierarchical control – “perfunctionary compliance” - has the opposite effect
• The effect of market-based mechanisms – e.g. bonuses - is more mixed
• Implications for management of knowledge-intensive organizations
• Weakness: Cross-sectional data; Scandinavian MNCs
Cultural values• In the 1970s Geert Hofstede identified 4 value dimensions along
which national cultures can be grouped.
– Power Distance– Uncertainty avoidance– Individualism-collectivism– Masculinity-femininity
Masculinity-femininity
•Masculine societies value assertiveness, competitiveness and materialism. –Organizations are task oriented.
•Feminine societies: harmonious relations with a strong emphasis on social partnership. –Organizations are process-oriented.
Use of ‘calculative’ HRM
source: Cranet: 2009 survey of firms
USA NorwayFormal appraisal system for:Management 92% 54%Professional 96% 44%Clerical 94% 44%Manual 72% 42% Performance related pay for:Management 77% 32%Professional 74% 20%Clerical 67% 15%Manual 52% 10%
Research strategy• Matched samples for Norway and the USA. • Preferably individuals
– that have not been socialized into any particular company culture
–who can choose either to maximize materialistic-oriented outcomes or socially oriented outcomes
–who will potentially engage in knowledge sharing
• ”Elite” business-school students– NHH-The Norwegian School of Economics– Equivalents in USA
•
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www.nhh.no28
Business Students in Norway and the US: Job-related Values and Preferences
Paul Gooderham, Odd Nordhaug, Olav Kvitastein
www.nhh.no29
The US and Norway samples: Schools
At NHH data was collected from 360 students in their final year of the bachelor degree program January 2009. In the US, data was collected from approx. 290 students in either the final year of their BA program or year on or two of their Masters programs. Thus, resp. rates of approx. 77% and 63% for NHH and the US schools respectively
School Bachelor Master Missing TotalDuquesne 59 3 4 66Indiana 0 16 0 16Michigan 39 3 3 45NHH 264 13 3 280TCU 30 23 3 56Total 392 58 13 463
Degree program
www.nhh.no30
The US and Norway samples: Gender
Gender US NorwayFemale 33.0 31.3Male 67.0 68.7Total % 100.0 100.0N = 182 278
Country
Job-related Values and Preferences
• On a scale from 1 (not important) to 10 (very important)
–The importance of 25 job-related factors when choosing one’s first job after graduation
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Rotated factor matrix
Cronbach's 1 2 3 4 5 6 Alpha
Individual, performance-based bonuses 0.788 Stock options for managers 0.780 Employee stock ownership 0.769 0.873Cost-sharing schemes 0.709 Performance-based team bonuses 0.687 Pay based on individual performance 0.629 There is a friendly culture 0.798 Employer cares about employees as individuals 0.735 0.784Good personnel policy 0.630Good social relations among colleagues 0.627 A lot of variety in work tasks 0.746 Interesting work 0.722 A lot of freedom to work on your own initiative 0.598 0.744Scope for creativity in the job 0.558 Good opportunities to develop competence 0.545 Clearly defined annual targets to work towards 0.858 Clearly defined annual targets to be evaluated on 0.849 0.770Frequent feedback on work performance 0.431 Opportunities to move around in the organization 0.707 Opportunities for long-term career progression 0.667 0.715Systematic career planning 0.559 Opportunities for personal development 0.516 High annual earnings/salary 0.704The position has a high status 0.685 0.744Opportunities for getting fast promotion 0.630
Component
Instrumental work orientation
Social orientation
work orientation
Fast-track orientation
Expressive
Well-defined task
Career opportunities
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Factors expressed as summates, i.e., as means over items involved, and sorted by magnitude:
Note:10 = Very important, 1 = Not important
Factor Label Mean Std. Dev.f2 Social orientation 8.14 1.205f3 Expressive work orientation 7.82 1.106f5 Career opportunities 7.47 1.238f4 Well-defined tasks 7.03 1.384f6 Fast-track orientation 6.90 1.422f1 Instrumental work orientation 5.96 1.620N = 463
Ranking of factors by country USA Norway
• Social orientation 1 1• Expressive work orientation 2 2• Career opportunities 3 3*• Well-defined tasks 5 4• Fast track orientation 4 5*• Instrumental work orientation 6 6*
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Conclusions• Implications for management of employees who “ought” to
engage in knowledge-sharing
• Social governance mechanisms promote social capital and knowledge sharing
– Socially oriented values are ranked highest
• Hierarchical control has the opposite effect– Well-defined tasks are ranked low
• Market-based mechanisms also has a negative direct impact on social capital and knowledge sharing
– Instrumental work orientation is ranked lowest.
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Rotated factor matrix
Cronbach's 1 2 3 4 5 6 Alpha
Individual, performance-based bonuses 0.788 Stock options for managers 0.780 Employee stock ownership 0.769 0.873Cost-sharing schemes 0.709 Performance-based team bonuses 0.687 Pay based on individual performance 0.629 There is a friendly culture 0.798 Employer cares about employees as individuals 0.735 Good personnel policy 0.630 0.792Good social relations among colleagues 0.627 High job security 0.491 Employer has a dynamic approach to business 0.419 A lot of variety in work tasks 0.746 Interesting work 0.722 A lot of freedom to work on your own initiative 0.598 0.744Scope for creativity in the job 0.558 Good opportunities to develop competence 0.545 Clearly defined annual targets to work towards 0.858 Clearly defined annual targets to be evaluated on 0.849 0.770Frequent feedback on work performance 0.431 Opportunities to move around in the organization 0.707 Opportunities for long-term career progression 0.667 0.715Systematic career planning 0.559 Opportunities for personal development 0.516 High annual earnings/salary 0.704The position has a high status 0.685 0.744Opportunities for getting fast promotion 0.630
Fast-track orientation
Expressive
Well-defined task
Career opportunities
Component
Instrumental work orientation
Social orientation
work orientation
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Factors expressed as summates, i.e., as means over items involved, and sorted by magnitude:
Factor Label Mean Std. Dev.f2 Social orientation 7.96 1.121f3 Expressive work orientation 7.82 1.106f5 Career opportunities 7.47 1.238f4 Well-defined tasks 7.03 1.384f6 Fast-track orientation 6.90 1.422f1 Instrumental work orientation 5.96 1.620N = 463
Note:10 = Very important, 1 = Not important