A comparative study of performance appraisals, incentives and rewards practices in domestic and multinational enterprises in the country of Brunei Darussalam

Abstract

Very little work in the past has focused on the comparative analysis of human resource management (HRM) practices between domestic and multinational enterprises (MNEs). The majority of the work in this area has instead concentrated on comparing the HRM practices utilised by the subsidiaries of MNEs, and has mostly been conducted in the context of developed countries. In this paper, we examine how the HR practices of appraisals, rewards and incentives are offered, explained and monitored in domestic enterprises (DEs) versus MNEs, and how they are similar or different in nature. This paper is based on primary data collected from a cross-section of firms operating in the country of Brunei Darussalam – a context within which no previous work of this nature has been undertaken. An analysis reveals several interesting results: HR practices are more advanced and better structured in MNEs that conduct performance appraisals (PA) more frequently than DEs, and their feedback system is also rapid; incentives and rewards systems in MNEs follow market ethos and principles; the HR directors and employees of MNEs are more receptive to PA than those in DEs whilst, in contrast to DEs, incentives and rewards systems in MNEs follow market ethos and principles. Furthermore, with regard to size, younger firms are more likely to be following market principles in terms of explaining incentives and rewards systems to their employees, whilst older firms claim that working for them carries social and psychological benefits for employees.

Keywords::

• competitive advantage
• HR practices
• human resource management
• Mann–Whitney U test
• multinational enterprises
• t-test

Acknowledgements

Authors are indebted to an anonymous referee and to the editor of this journal for providing valuable feedback on an earlier draft of the paper, which led to several useful alterations. Authors also wish to record their gratitude to Mark Casson and Raymond Loveridge with whom work on similar lines was earlier conducted by one of the authors at Department of Economics, University of Reading, UK. All shortcomings are ours.

Notes

^1. The three recognised drivers of globalisation are MNEs via their foreign direct investment activities, international trade and international movement of people. In the last count, there were 82,053 parent MNEs with 807,363 foreign affiliates worldwide (440,482 in non-developed world); the value of their outward foreign direct investment stock stood at US$18.982 trillion (US$2.58 trillion in non-developed world; UNCTAD 2009). In this paper, we have sometimes used the term MNE and foreign firm interchangeably.