Cultures' Impact on Incentive Programs - a Comparison between Swedish and American Companies

Abstract

Background and problem: Many multinational companies have experienced a significant growth during the last few decades, which has resulted in more heterogeneous and geographically widespread organisations. This has lead to a more complex decisionmaking for the senior executives, especially when new cultures enter into the company. People’s cultural belonging and values affect their preferences, even work-related ones. Since the individual preferences differ between cultures one would expect to find that work related factors, such as incentive programs, differ. Purpose: The main purpose of this thesis is to analyse in what way the incentive programs for senior executives differ between Swedish and American public companies. The secondary purpose is to analyse to what degree these differences are the result of cultural differences between the two countries. Method: Sixteen Swedish and sixteen American companies were selected for review. The selection of companies in this survey was made so that the comparison between Swedish and American companies would be as little affected as possible by factors such as company size, industry, ownership and employee occupation. The basis of the survey consists of the annual reports of the selected Swedish companies and the proxy statements of the selected American companies. Analysis and conclusions: The empirical results have shown similarities but also significant differences between Swedish and American incentive programs. The largest differences between the two countries can be traced to the characteristics of the dimension masculinity. The results in this thesis suggest that the variation in the design of incentive programs to a certain degree can find support in cultural differences between the two countries. Suggestion for further studies: To be able to determine contingent trends concerning the design of the incentive programs in the two countries, a longitudinal study over several years would be of interest.