Economic Inequality, Cultural Orientation and Base-of-Pyramid Employee Performance at the MNC Subsidiary: A Multi-Case Investigation.

VerfasserAndrews, Tim G.
PostenRESEARCH ARTICLE

1 Introduction

Although there is much research on the social and economic effects of income inequality, there has been a marked lack of work examining its organizational consequences, which remain poorly understood (Bapuji and Neville 2015; Leana et al. 2012; Riaz 2015). Arguably, this is partly because income inequality has not held the same importance in the developed economies of the Anglo-European West from where much of management theory emanates. In recent years, however, as these markets become saturated, Western multinational corporations (MNCs)--among others--are turning increasingly to emerging markets (Giachetti 2016) where the effect of economic inequality and low average income levels combined is often marked, and significantly greater than at 'home' (London 2016).

Against this backdrop, recent research has begun to delineate the causes and mechanisms through which economic inequality manifests itself--particularly its adverse effects--among organizational workers (e.g., Bapuji 2015; Leana et al. 2012). Extending this research at the cross-national level, corporate executives can benefit from exploring how economic inequality affects subsidiary employee performance in conjunction with the other host-context variables with which the MNC will--typically--need to contend, particularly where consistency in terms of stakeholder engagement is considered critical. For Western MNCs operating in emerging Asian markets, dissimilar cultural norms and values are by far the most studied for all those engaged in the design and implementation of cross-national strategy (e.g., Chiang and Birch 2007).

In recent years, researchers have begun to call for studies which examine explicitly the interplay of economic inequality and pay dispersion with the key socio-cultural dimension of collectivism (e.g., Bapuji and Riaz 2013). But while this has been acknowledged as important (largely based on intuitive extrapolation), we lack empirical study. It is thus timely to add both scope and depth to existing knowledge by examining how economic inequality affects employee performance at the MNC subsidiary under conditions of cultural home-host context dissimilarity.

In this study we explore the increasingly common situation facing Western MNC operating subsidiaries in the emerging markets of East and Southeast Asia (e.g., Giachetti 2016)--specifically the management of units embedded in contexts characterized by low average income levels, high economic inequality, and a vertical (hierarchical) collectivist cultural orientation (e.g., Brewer and Venaik 2011; Triandis and Gelfand 2011). Enriching the literature with empirical insight from MNC subsidiaries operating in Thailand, we focus on the lived experiences of base-of-the-pyramid workers (BoPWs) in order to explore how economic inequality and cultural orientation interact to affect their work behaviour. Understanding this interplay opens up our knowledge of both the organizational costs and mechanisms associated with high economic inequality, as well as our understanding of how subsidiary managers can respond using culturally-informed, socially embedded knowledge. We conclude by discussing implications for both theory and practice.

2 Economic Inequality and the Multinational Corporation

Economic inequality, broadly conceived, encompasses a range of factors including income, wealth, social status, education, and healthcare (Alamgir and Cairns 2015; Sen 1997). In a recent review, Leana et al. (2012) suggest that the primary adverse effects of inequality--poverty and deprivation--can have a profound influence on the perceptions, attitudes, and relationships among organizational workers, leading them to behave in ways that do not comport with traditional theories of work motivation and performance. Nonetheless, there remains a marked paucity of empirical work which focuses on the organizational poor, particularly in non-Western contexts (such as emerging Asia) where workers often face extreme living and working conditions (with limited state protection and social assistance) (Andrews and Chew 2017).

In a recent model Bapuji (2015) proposes that economic inequality affects organization-level performance through two main pathways: 'human development' (which indirectly imposes burdens such as healthcare costs and lost productivity) and 'attitudes' (which directly influences workplace interactions--e.g., advantaged versus disadvantaged, in turn suppressing organizational cooperation, trust and citizenship behaviour) (see also Leana et al. 2012).

Concerning human development, meta-analytic reviews suggest that poor physical and psychological health has a negative effect on the job performance of individuals (Ford et al. 2011). Furthermore, individuals in societies with high levels of inequality tend to exhibit greater levels of poor health behaviors such as smoking, drug use and unprotected sex (Wilkinson and Pickett 2009). Together with other antecedents of poor health (such as financial and family problems) these can have an effect on job performance through absenteeism, hospitalization and lack of psychological wellbeing (e.g., Greene and Nowack 1995), as well as higher costs spent on healthcare (Christie and Barling 2010). Poor education among low-level staff can also hinder performance through low cognitive skills (e.g., mathematics, language) as well as non-cognitive skills such as discipline, self-confidence, and a failure to aspire beyond the present (Farkas 2003). By extension, the organization would have to make considerable investments to improve the skill levels of its workforce, which again could have an adverse effect on its financial performance (Leana et al. 2012).

Concerning the direct 'attitudes'-derived pathway, high economic inequality is predicted to lead to stress, anxiety and resentment in individuals with lower economic status (Christie and Barling 2010; Wilkinson and Pickett 2009) when they interact with their more advantaged organizational counterparts on workplace tasks. Within this context, mutual trust will be relatively lacking, along with the broader feeling of organizational identification, which can damage the prevalence of cooperative interaction behaviors for accomplishing tasks (Bapuji 2015; Leana et al. 2012).

For multinational corporations--already under pressure to create a more inclusive kind of capitalism--the mitigation of economic inequality has become a key marker of their ethical credentials and wider brand reputation (e.g., Gudic et al. 2014). At the operational level, the ethical treatment of BoPWs is also (increasingly) seen as crucial given not only their prevalence (often 90% + of the employee headcount) but also--especially for service companies--their visibility at the external stakeholder interface (e.g., Andrews and Chew 2017). To date, however, the 'base of the pyramid' in Asia has been focused on either consumers (e.g., Prahalad and Hammond 2002), producers (e.g., Schuster and Holtbrugge 2012), or (outsourced) suppliers (e.g., Hall and Matos 2010; Isaksson et al. 2010). There is a marked paucity of micro-level studies which focuses on the organization's own base-of-the-pyramid employees (Leana et al. 2012).

3 The Role of Cultural Orientation

Prior studies suggest that poverty needs to be seen as a powerful contextual 'force' suffused with the undergirding cultural values which serve to legitimize the allocation of societal and organizational rewards (Leana et al. 2012; Riaz 2015). At its base level culture can be viewed as what has 'worked' in the experience of a group of people such that it was worth transmitting to others. In composition its constituent elements are shared patterns of beliefs, attitudes, norms, values organized as one theme (Triandis and Gelfand 2011), which conceived as such becomes a profound influence on work-related outcomes within the organization (Taras et al., 2016).

As regards the influence and acceptance of poverty among organizational BoPWs, the major facet of culture explicitly acknowledged to date is collectivism (e.g., Bapuji and Riaz 2013). Held to embody the 'deep structure' of cultural dissimilarity between West and Eastern civilizations (e.g., Bhagat et al. 2002), this core distinction denotes the role and importance of the individual vis a vis the group for survival and prosperity (Triandis and Gelfand 2011).

In recent decades, the individualism-collectivism dimension has provided the basis for the comparative, 'etic' approach to national culture along with a number of other value orientations (e.g., high-low context, uncertainty avoidance). These 'national culture models' have dominated the way culture has been used as a means to explain and predict national, organizational and individual differences in the international business literature (e.g., Hofstede 2001; House et al. 2004; Schwartz 1999). However, against a backdrop of globalization, and rapid technological advance such frameworks have been criticized--increasingly--for their stasis, determinism and in particular their assumption of nation-level homogeneity (see e.g., McSweeney 2009; Taras et al. 2016 for reviews). Concerning the latter, whereas globalization is advancing a more common 'global business culture' (Jaeger et al. 2016; Sackmann and Philips 2004), there is mounting evidence for substantial intra-national (and hence intra-organizational) cultural variation (Zander et al. 2016). The limited research based in Asia suggests that at the lower levels of organizations (and society), workers may be far less 'westernized' than their managerial colleagues (Jaeger et al. 2016) upon whom empirical research has so far been centred (Birkinshaw et al. 2011). Against this backdrop, though nation-level collectivism across Asian societies is arguably diminishing as a force for predicting employee behaviour, intuitively it remains more strongly held and expressed among the BoPWs (Yukongdi 2010).

As the cornerstone of...

Um weiterzulesen

FORDERN SIE IHR PROBEABO AN

VLEX uses login cookies to provide you with a better browsing experience. If you click on 'Accept' or continue browsing this site we consider that you accept our cookie policy. ACCEPT