Academic journal article Management International Review

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

Academic journal article Management International Review

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

Article excerpt

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). …

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