Culture at work: how culture affects workplace behaviors

Purpose - – The purpose of this paper is to give structure to the argument that “culture matters.” Further, the aim is to show how cultural differences shape the use of incentives within firms and point toward culturally affected degrees of efficiency. Design/methodology/approach - – The paper incorporates differences in the evaluation of the stimuli money, order, and monitoring into a simple efficiency wage model. Profit maximizing firms are assumed. Findings - – It is found that the use of incentives should respect the cultural surrounding. Data from a real-world analysis can partly be explained with this model, which was not done before. Research limitations/implications - – The major limitation lies in the abstract nature in which economic models deal with incentives. Practical implications - – The theoretical predictions are tested against the findings of Bloom and van Reenen (2007). Although the model may apparently contribute to the explanation of differences in the relative use of monitoring and pay, it fails in do so for directives. The reason for this shortcoming is identified in the impossibility to clearly compare the empirical notion of directives as found in Bloom and van Reenen (2007) to the theoretical notion of directives applied in the model. Originality/value - – The paper is one of the few approaches dealing with cultural differences on an individualistic basis. Most findings on the importance of intercultural variation offer econometric analysis, leaving open how exactly culture affects individual behavior such that the observed differences can be explained. The model presented offers exactly such a link.