The dimensionality and determinants of pay satisfaction : a cross-cultural investigation of a firm's group incentive plan

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The dimensionality and determinants of pay satisfaction : a cross-cultural investigation of a firm's group incentive plan

 

Author: Fong, Chi-leung Sunny
Title: The dimensionality and determinants of pay satisfaction : a cross-cultural investigation of a firm's group incentive plan
Degree: D.B.A.
Year: 1999
Subject: Wages -- Cross-cultural studies
Incentives in industry -- Cross-cultural studies
Hong Kong Polytechnic University -- Dissertations
Department: Dept. of Management
Pages: ix, 125 leaves : ill. ; 30 cm
Language: English
InnoPac Record: http://library.polyu.edu.hk/record=b1500118
URI: http://theses.lib.polyu.edu.hk/handle/200/260
Abstract: Although recent empirical studies have demonstrated that pay satisfaction is a multidimensional construct, researchers have not considered satisfaction with group incentive plans as a distinct dimension of the construct. In addition, cross-cultural pay satisfaction research is scarce and the applicability of the pay satisfaction models and measures derived in the US in other cultures is yet to be validated. This study proposed and empirically examined a conceptual framework for investigating employees' pay satisfaction, including satisfaction with group incentive plans, in a US petrochemical company. Cross-cultural comparisons were made by collecting data from the company's US and Hong Kong operations. To examine the dimensionality of pay satisfaction, exploratory factor analysis was conducted and the results strongly supported that satisfaction with group incentive plans is a distinct dimension. Before testing hypotheses, measurement equivalence of all constructs was established. All constructs, except benefits satisfaction, were found to operate in the same manner in both the US and Hong Kong. To test the discriminant validity of different pay satisfaction dimensions, their determinants were examined. Building on the literature, pay-for-performance perception and organizational justice were proposed as significant determinants of the various pay satisfaction dimensions. As hypothesized, procedural justice and expectancy perception were found to be significant determinants of satisfaction with group incentive plans. Satisfaction with pay level was predicted by distributive justice, whereas satisfaction with pay raise/administration was influenced by both distributive justice and interactional justice. Taking into account recent organizational justice research findings, this study also examined the interaction effects among distributive, procedural and interactional justice on pay satisfaction. Interactional justice was found to moderate the impact of distributive justice and procedural justice on pay satisfaction. National culture had both direct and moderating effects on pay satisfaction. Reflecting the characteristics of a collective and high power distance culture, the Hong Kong respondents reported a higher level of pay-for-performance perception towards the group incentive plan, and they perceived the procedures in the company as fairer. On the whole, they were more satisfied with the plan. Regarding the moderating effects of national culture, it was found that the pay satisfaction of the US respondents was generally more positively related to organizational justice and pay- for-performance perceptions. This was probably due to the highly individualistic and low power distance culture of the US. This study contributes to existing literature by opening up a new area for pay satisfaction research. Future studies should probably consider satisfaction with group incentive plans as a distinct dimension of pay satisfaction. It is also worth investigating other elements of the compensation and benefits package as separate pay satisfaction dimensions. The findings of this research also provide practical implications for organizations to design their group incentive plans and other reward programs. Organizations have to recognize that employees may form a distinct perception towards group incentive plans and their satisfaction with the plans may be influenced by unique factors. Multinationals also have to keep in mind the impact of national culture when implementing reward programs globally.

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