Pay Referent Selection in an International Context: The Role of East Asian versus Western Collectivism

Abstract

The study used U.S. and Chinese samples of Host Country Nationals (HCNS) to examine the pay referent selection process of HCNs in multinational enterprises (MNES). Given that previous research on HCNS pay comparison was based on Western-born social comparison theories, the study first addressed the question of the generalizability of these theories in non-Western settings. By replicating Yuck (2003)'S study, the study confirmed the conceptualization of East Asian vs. Western collectivism: individuals from different cultures engage in different social identity processes in an intergroup context. Specifically, the Chinese sample exhibited more ingroup sociometric knowledge about their ingroups than the U.S. sample, and sociometric knowledge was significantly correlated to ingroup loyalty and identity. It indicated a relationship-based ingroup identification with an intragroup focus--East Asian collectivism. Meanwhile, the U.S. sample exhibited more perceived ingroup homogeneity about their ingroups than the Chinese sample, and ingroup homogeneity was significantly correlated to ingroup loyalty and identity. It indicated a category-based ingroup identification with an intergroup focus--Western collectivism. Recognizing the role of national culture in social identity processes, and based on the distinction between East Asian and Western collectivism, the paper predicted that people from different cultures differ in the type of comparison they engage in when the outgroup is salient, and thus the national culture of HCNS moderates the effect of the salience of expatriate outgroup on pay referent selection in MNEs. Specifically, collectivist culture's strong intragroup orientation (East Asian collectivism) will lead HCNs from these cultures to make intragroup pay comparisons with HCNs working for other foreign companies. Individualist culture's strong intergroup orientation (Western collectivism) will lead HCNs from these cultures to make intergroup pay comparisons with the salient expatriate outgroup. Results of regression analysis support the predictions of different pay referent selection for the U.S. and Chinese samples. Theoretical and managerial implications of the study were discussed.