An Examination of Attributions,Performance Rating and Reward Allocation Patterns: A Comparative Study of China,India,Tanzania and the United States

Abstract

In this study, using a sample of 191 individuals with significant work and supervisory experience from four countries (China and Tanzania—highly collectivistic, India—moderately collectivistic and the United States—highly individualistic), we examined whether cultural orientations of individualism and collectivism predicted performance ratings, internal attributions made to the poor performing employee and adherence to equity norm in reward allocations. Multiple regression analyses indicated that collectivist Chinese and Tanzanian raters provided more lenient performance ratings to a poor performing employee than individualistic Americans with the Indian raters providing more lenient ratings than Americans but more stringent ratings than Chinese or Tanzanians. Further, American raters made greater internal attributions than Tanzanians or Chinese. Chinese raters made relatively greater internal attributions to the employee than Tanzanians though both cultures are collectivistic cultures. Americans adhered to the equity norm the most and Indians adhered to equity norm but to a lesser extent than Americans but more than Tanzanians and Chinese. Implications are discussed.

Keywords

Individualism collectivism equity theory performance rating internal attribution

In the field of human resource management (HRM), performance appraisal and reward allocation decisions have profound implications for managing employee behaviours and for aligning the individual behaviours with the strategic outcomes of organizations. The need for a performance appraisal system to be free from errors has been well documented in the literature on performance appraisal (Murphy & Cleveland, 1995). Also, from an administrative perspective, an objective performance evaluation is instrumental to the allocation of rewards in organizations and other administrative decisions such as promotions or disciplinary actions. In evaluating and rating an employee’s performance, both cognitive and motivational biases tend to play a role (Longnecker, Sims, & Gioia, 1987). While cognitive biases focus on perceptual issues in terms of what the rater observes and how they attribute meaning to the observed performance behaviours, motivational biases tend to be more intentional with a view to punish or reward employees. Though motivational biases may be harder to correct, cognitive biases may be overcome by training the raters to provide a more objective rating and/or providing incentives for the raters to provide an objective evaluation of the subordinates’ performance. Hence, in this article, we specifically focus on one aspect of cognitive biases: attributions individuals make about a poor performing employee.

Within the framework of cognitive influences on performance appraisal, attribution theory has been shown to influence employee performance ratings by the supervisors or managers. Attribution theory deals with how the social perceiver uses information to arrive at causal explanations for events. It examines what information is gathered and how it is combined to form a causal judgement (Fiske & Taylor, 1991). Furthermore, attribution theory also suggests that observers may attribute the causes of observed behaviours to either the individual such as one’s ability or motivation (internal attribution) or situational factors or events outside of one’s control such as lack of raw materials, natural disasters, and system failures, among others (external attribution). Performance ratings of managers may become distorted depending upon whether the managers make greater use of internal or external attributions.

While attribution theory in performance appraisal has received considerable support, its application in a cross-cultural setting has not been explored adequately. Triandis (2001) suggests that in individualistic cultures, individuals are more likely to make internal attribution than in collectivistic cultures; on the other hand, in collectivistic cultures, individuals are more likely to make external attribution than in individualistic cultures. Thus, one goal of the present study is to examine differences in attributions individuals make and their effects on performance appraisal ratings in a cross-cultural setting using samples from Tanzania, India, China and the USA that vary on Hofstede’s (2001) individualism–collectivism (IC) dimension.

Additionally, IC orientations of national cultures have also been shown to be related to equity norm in reward allocations. Briefly, individualistic cultures tend to emphasize equity norm in reward allocations and tend to adhere to the principle of pay for performance (Kim, Park, & Suzuki, 1990; Ramamoorthy & Carroll, 1998; Ramamoorthy & Flood, 2002). Collectivist cultures, on the other hand, place lesser emphasize on equity norm in reward allocations wherein factors other than job performance such as loyalty, need and seniority may also play vital roles in reward decisions that individuals make. For a strong pay for the performance system (PFP) to be implemented, objective evaluation for performance is a necessity and any attribution error is likely to affect the success of such a system. Hence, the present study also examines whether raters from India, China, Tanzania and the United States adhere differently to equity norm in reward allocations.

The research questions addressed in the present study are both timely and relevant to the HRM and organizational behaviour literatures. The past couple of decades have seen tremendous growth in global trade and expansion of multinational corporations (MNCs) across the globe. International mergers, acquisitions and joint ventures have contributed to this expansion. As a result, mobility of labour across the globe has also increased. Thus, employees are becoming global assets for organizations and individuals may work for a manager from a different cultural setting. Alternatively, managers may have to evaluate and make reward allocation decisions for employees from a different cultural background which may impact the effectiveness of the performance appraisal and reward system. Thus, an understanding of the dynamics of performance rating and reward allocation of individuals from different cultural orientations should have implications for both research and practice.

We should emphasize that our interest in the present study is to compare managerial attributional tendencies and reward allocation patterns across national cultures as opposed to treating IC as an individual difference variable. We chose the following four countries to test the effects of IC orientations of national cultures on performance appraisal practices and reward allocations: the USA, India, China and Tanzania. According to Hofstede (2001), the United States, with a score of 91, ranked number one on individualism, India with a score of 48 tended to be moderately individualistic with Tanzania and China with scores of 25 and 20, respectively, leaning more towards the collectivist side. Although not exhaustive, our ability to gather data from more than four countries was limited due to both funding issues and willingness of collaborators to participate in the study. Nevertheless, the four countries we chose for the study covered three continents (Africa, Asia and North America). Hence, we can say with some reasonable confidence that the national cultures chosen for the present study represent the spectrum of IC dimension and afford an opportunity for adequate comparison.

The rest of the article is organized as follows: First, we review the literature on IC and attribution theory from which we develop our hypotheses. Next, we describe the method used to test the various hypotheses and then proceed to present the results of our study. Finally, we will discuss the implications of our study for managerial practice and future research.

Review of the Literature and Hypotheses Development

Attribution Theory

Heider (1958) introduced attribution theory to the social psychology literature and suggested that individuals act as naïve psychologists in the social world and tend to make causal attributions even when none might be present. Although he did not develop the theory much, his notion of internal and external attribution has come to stay in the social psychology literature. Internal attribution refers to an observer (individual) assigning the causes of an event or behaviour to internal characteristics of the actor (the person being observed). Such internal characteristics may be factors such as ability, motivation, personality and effort. External attribution, on the other hand, refers to the assignment of causes of an event to situational factors that are beyond the control of the actor (e.g., luck, destiny, lack of opportunities, lack of resources, etc.).

Kelley (1967) enhanced the attribution theory into a logical model in order to make judgement about a particular action and whether the action should be attributed to internal factors or external factors. He suggested that individuals consider three types of evidence in order to make judgements about causes of behaviours: consensus, distinctiveness and consistency. Consensus refers to the extent to which other people behave in a similar situation and thus a group of individuals becomes the reference norm in judging the behaviour of the focal individual (e.g., most employees are late to work on a given day due to disruption of transportation services). Distinctiveness relates to whether an individual behaves in the same way in similar situations (e.g., an employee is a poor performer on different but similar tasks assigned to him/her) and thus, the focus is on the salience or uniqueness of the behaviour. Finally, consistency refers to the behaviour of the person every time the situation occurs (e.g., an employee is late for any event such as work or social gatherings at all times) and hence, the time element comes into play in influencing the judgement about a person’s behaviour. The more stable the person’s behaviour across time, in similar situations, and unique with reference to a group, the more likely the behaviour is attributed to the individual than to situational factors.

In the context of performance appraisal ratings, managers can attribute the causes of poor performance to the person (internal) or situational factors (systemic issues, work processes, lack of availability of raw materials or resources, etc.). From an attribution theory perspective, when an employee’s performance is consistently poor over time, lower compared to other similar workers and poor on different tasks, it would be reasonable to suggest that managers should assign causes of poor performance to the employee than to situational factors. On the other hand, when the entire work group is performing poorly, the employee’s poor performance is only on certain tasks or only occasional, then it would be reasonable to assume that managers should attribute the causes of poor performance to external factors. Struthers, Weiner, and Allred (1998) found that the type of managerial actions taken against a poor performing employee depended on the extent to which raters made internal attributions to the employee such as effort or ability. Similarly, Johnson, Erez, Kiker, and Motowildo (2002) found that attributions individuals made partially mediated the relationship between employee reputation and reward decisions.

In spite of the fact that attributional tendencies may influence performance appraisal ratings, most studies have been conducted in the USA or Western Europe and the findings may not hold true in other cultures. The cultural dimension of IC may be one such variable that could influence performance ratings through different attributions managers may make (Fletcher, 2001). In the next section, we review the literature on IC and examine how IC may influence attributional tendencies of individuals in different societies that differ on individualism versus collectivism.

Individualism–Collectivism and Attributions

Hofstede (1980) introduced the cultural dimension of IC that distinguishes national cultures from one another as one of the four dimensions with power distance, masculinity-femininity and uncertainty avoidance being other dimensions. Hofstede later identified long-term orientation as the fifth dimension that distinguishes cultures from one another. Of the five dimensions identified by Hofstede (1980), IC has dominated the literature in cross-cultural psychology in the areas of HRM and organizational behaviour. Stated broadly, in individualistic cultures, an individual is the focal unit of analysis and he/she is considered as bounded by one’s own skin (Wagner, 1995). In collectivist cultures, on the other hand, the focal unit of analysis is considered to be the group or the larger collective itself and an individual’s self-identity stems from him/her being a member of the larger collective itself. Thus, individualistic cultures emphasize independence and self-reliance whereas collectivist cultures tend to emphasize interdependence and cooperation (Triandis, 2001). As a result, collectivist cultures tend to emphasize group harmony and placing the interests of the group ahead of one’s own interests. That is, in collectivist cultures, when an individual’s interest conflicts with the interests of the group, an individual is expected to subordinate his/her own interests to the group’s interests. In individualistic cultures, on the other hand, an individual is free to pursue one’s own interests in life when the group’s interests may conflict with that of the individual, even if such an action affects the group adversely.

Another distinguishing characteristic of individualistic versus collectivistic societies is the notion of competitiveness versus cooperativeness (Ramamoorthy & Carroll, 1998; Triandis, 2001). Individualistic societies promote competitiveness and personal achievements of the individual to a much greater extent than collectivist societies. Collectivist societies, on the contrary, tend to emphasize the achievements of the group; cooperation and harmony within the group are considered instrumental to the group’s achievement and maintenance of group cohesiveness. Thus, personal achievements, individual self-concept, competitiveness, emphasize on individual goals and independence tend to characterize individualistic cultures; group’s achievement, group’s self-concept and cooperation, emphasize on group’s goals and interdependence tend to characterize collectivistic cultures.

Prior research has also shown that individualistic versus collectivistic societies differ in terms of the relative emphasize placed on agency versus moralistic aspects of employment relationships (Gomez-Mejia & Welbourne, 1991). In individualistic societies, employment relationships tend to be more contractual and arms’ length in nature and emphasize economic exchanges. In collectivistic societies, employment relationships are based on mutual moral obligations with an emphasize on long-term employment relationships, loyalty and commitment (Ramamoorthy & Carroll, 1998). In individualistic societies, employees often place the advancement of their own career and personal growth ahead of organizational loyalty or obligations to their groups or social network. In collectivist societies, employees are expected to sacrifice their own personal goals for the sake of the group, organization or social entity. In return for the sacrifice made by the individual and loyalty exhibited towards the group, organizations are expected to reciprocate by valuing such loyalty and commitment. Such reciprocity may be reflected through practices such as lifetime employment, treating the employees as part of the extended family and taking care of their needs beyond contractual obligations.

As a result of the aforementioned differences, Triandis (2001) suggests that in individualistic societies, the tendency of the members of the society to make internal attributions should be stronger than in collectivistic societies; and in collectivistic societies, the tendency of the members of the society to make external attributions should be stronger than in individualistic societies. Al-Zahrani and Kaplowitz (1993) found that more collectivistic Saudis made lesser internal attributions than the more individualistic Americans. Menon, Morris, Chiu, and Hong (1999) also reported that biases towards attributing success to personal attributes were stronger in Western cultures. Morris and Peng (1994) also reported that Americans tended to be more person-centred and Chinese tended to be more situation-centred. That is, personal characteristics tended to be more prominent in attributions among Americans and situational contexts tended to be more prominent in attributions among Chinese.

In collectivist societies, it would also make sense that when an individual employee subordinates his/her self-interests for the welfare of the group, it would be contrary to group’s norm and expectations to attribute an individual’s performance to internal factors such as his/her own ability or effort. Such an internal attribution would make logical sense in individualistic societies wherein the individual is considered as an independent entity and responsible for his/her own actions. Therefore, we can reasonably suggest that the tendency of individuals to make internal attributions should be stronger in individualistic societies than in collectivistic societies. The tendency of individuals to make external or situational attributions should be stronger in collectivist as opposed to individualistic societies. This, in turn, should also affect the performance ratings provided to the employees.

In light of the above, under the assumption that Americans are the most individualistic, and Chinese and Tanzanians are the most collectivistic with Indians falling in the middle, we propose the following hypotheses with regard to performance ratings and attributional tendencies:

H₁: Chinese, Indians and Tanzanians will rate a poor performing employee higher than Americans.

H₂: Americans will make greater internal attribution of poor performance to the employee than Indian, Chinese and Tanzanians.

IC and Equity Norm

In the organizational literature, distributive justice refers to an individual’s evaluation of the fairness of the outcome (distribution of rewards). The original conceptualization of distributive justice norm was grounded in equity theory (Adams, 1965). The equity rule is based on the premise that rewards should be consistent with the inputs and contribution of the individual to the organization. Thus, the norm of equity suggests that each individual must be rewarded in proportion to his or her contribution. In the organizational justice literature, researchers often use the term equity or pay for performance interchangeably to reflect equity norm in reward allocation. Critiques of equity theory (Cox, 1993; Pfeffer, 2007) argue that distributive justice norm based on the principle of equity tend to promote competition among employees. Yet, equity theory, with its focus on the fairness of the exchange relationships, can make employees feel obliged to reciprocate when they perceive that they have been treated fairly. Meta-analytic studies (Cohen-Charash & Spector, 2001; Colquitt, Conlon, Wesson, Porter, & Ng, 2001) show that distributive justice perceptions result in increased organizational commitment, job satisfaction, lower employee turnover and organizational citizenship behaviours. Further, a system that focuses on equity norm and rewards individuals for good performance and fails to reward poor performance may also signal to the employees that the organization values good performance regardless of other characteristics such as longevity, loyalty to the firm and contributions to maintenance of group cohesiveness.

Though equity theory has received ample support in the literature, norm of equity may also be culture-bound and may be more appropriate in individualistic societies. Several researchers have suggested that justice perceptions are inherently norm-based that may vary across different cultures (Bolino & Turnley, 2008; Colquitt et al., 2001; Greenberg, 2001). One of the important cultural norms that may influence justice perceptions is the IC dimension (Hofstede, 1980). Triandis (2001) suggests that individualistic cultures may emphasize equity norm more than collectivistic cultures.

As discussed earlier, individualistic cultures emphasize individual rights, achievements, autonomy, pursuit of individual interests and goals. Collectivist cultures emphasize the rights of the group or collective, group harmony, affiliation, interdependence, and pursuit of collective welfare and goals (Hofstede, 1980). As a result, individualistic and collectivist societies may also differ in terms of the emphasis placed on equity norm in the allocation of rewards with individualistic societies emphasizing equity norm more than collectivist societies (Triandis, 2001). Prior research on IC suggested that individualism is associated with the equity norm to a greater extent than collectivism (Kim, Park, & Suzuki, 1990; Ramamoorthy & Carroll, 1998; Wagner, 1995). Individualistic cultures generally emphasize agency or economic exchange in employment relationships compared to collectivistic cultures which tend to view employment relationships in more moralistic terms (Gomez-Mejia & Welbourne, 1991). Such an emphasis on moral aspects of relationships between the employer and the employee may suggest that collectivistic societies place greater emphasize on the quality of relationships, cooperation among employees, group harmony and group cohesiveness. In a sense, it is reasonable to suggest that collectivistic norms are more concerned with the relationship aspects in an exchange or transaction (e.g., between individuals; between an individual and organization) and individualistic norms are concerned with quid pro quo or outcome aspects of such transaction or exchange (e.g., what a person gets in return).

Adherence to equity norm in reward allocations has an inherent tendency to focus on the individual performance, objective measurement of an individual’s contributions to the task and distinguish between good and poor performance. Such an approach would result in a competitive environment within the workgroup and the organization (Cox, 1993) which is more compatible with the competitive nature of individualistic societies than cooperative nature of collectivist societies. Evidence also supports the notion that individualistic cultures emphasize adherence to equity norm, task performance and personal achievements more than collectivistic societies (Parkes, Bochner, & Schneider, 2001; Ramamoorthy & Carroll, 1998; Ramamoorthy & Flood, 2002; Tower, Kelly, & Richards, 1997). Cohn, White, and Sanders (2000) reported that collectivistic Central and Eastern European respondents made lesser use of deservingness than the Western respondents in the allocation of rewards suggesting that adherence to equity norm may be less emphasized in that part of the world. Ramamoorthy and Carroll (1998) reported that individualistic orientations were positively related to equity norm. Fadil, Williams, Limpaphagyom, and Smatt (2005) suggest that collectivistic cultures emphasize inputs to group harmony and solidarity of work groups and employees are rewarded based on inputs such as group membership, loyalty, seniority, adherence to group norm, among others. Therefore, adherence to equity norm may be construed as appropriate or inappropriate depending on the cultural context in which such behaviours take place. In light of this, we propose the following hypothesis:

H₃: Americans will adhere to equity norm more than Indians, Chinese and Tanzanians.

Method

Overview of Procedure

The participants for the study were enrolled in the executive education programme of the business schools in these four countries with the significant work experience. Participation in the study was voluntary and surveys were distributed to the participants with a near 100 per cent response rate, barring a few surveys that were unusable due to lack of missing information on work experience. We employed a cross-sectional survey design to gather data from the participants. In the survey, we collected information on the demographics such as age, gender, nature of job and number of employees supervised from the participants.

We provided the participants with three performance charts which they were asked to study carefully. The performance charts were carefully designed to indicate that the raters should make internal attribution to the individual rather than external attribution. In the performance chart provided to the raters, they were given three different productivity data: (a) productivity of employee C in comparison to four other employees (A, B, D and E); (b) performance of employee C on five different tasks (1 through 5); and (c) employee C’s performance over a 15 months period. The design was such that employees A, B, D and E performed well above the expected level with C’s performance well below the expected level. Further, the participants were given the performance of employee C on five different tasks and he/she performed well below the expected level on all five tasks (tasks 1 to 5). Finally, the participants were given employee C’s performance data of over a 15 months period and he/she performed well below the expected level consistently throughout the 15 months period. Thus, across time, tasks and compared to the peer group of four other employees, the focal employee performed well below expected level and hence, the evaluators should have clearly made internal attribution of poor performance to employee C. After studying the performance charts of the five employees, participants were asked to assume that they were the managers and to: (a) rate the performance of employee C (the focal employee); (b) rate the extent to which performance of employee C can be attributed to internal causes such as lack of skill, ability and motivation; and (c) allocate an amount of US$10,000 among the five employees as bonus payment.

Sample

The total sample consisted of 191 respondents with 50 participants from Tanzania, 53 from China, 30 from India and 58 from the USA. The average years of full-time work experience across the four countries were as follows: Tanzania = 7.75 years; India = 8.26 years; USA = 9.49 years; and China = 7.85 years. The participants also had supervisory experience with the mean number of employees supervised as follows: Tanzania = 171.21; India = 14.55; USA 7.77; and China = 16.63. The gender distribution of the participants across the four countries was as follows: Tanzania (male = 33 and female = 17), India (male = 20 and female = 2), USA (male = 24 and female = 30) and China (male = 26 and female = 10), with the rest of the participants not identifying their gender.

Measures

Performance rating: Participants were asked to rate the performance of employee C using a single item with 5-point Likert scale. Participants were asked to respond to the question “How would you rate the performance of employee C?” with “1 = well below expectations” and “5 = well above expectations” as anchors. Thus, a higher score indicates a higher rating of employee performance.

Internal attribution to employee: In order to measure internal attribution to employee C (the focal employee of interest in the study), we asked the participants to respond to a single question: “What is the likelihood that employee C’s performance has to do with himself or herself (e.g., effort, ability, attitudes, etc.)?” The responses were collected using a 7-point Likert-type scale with “1 = least likely”, “4 = moderately likely” and “7 = extremely likely” as anchors. Thus, a higher score indicates a higher level of internal attribution by the respondent.

Adherence to equity norm: We operationalized equitable reward allocation as the difference between what the focal employee C was paid by the participants and what s/he ought to have received in proportion to actual job performance. We converted employee C’s performance relative to the other four employees and computed the proportion of the US$10,000 s/he ought to have received (deserved bonus) and calculated the difference between the actual bonus amount allocated by the raters and the deserved bonus. A smaller difference on this variable indicated a greater adherence to equity norm with a larger difference indicating adherence to deviations from equity norm. That is, an overpayment to employee C implies that the other four employees were underpaid since the total bonus amount was fixed at US$10,000.

Country: Since there were four countries, we created three dummy variables for countries as follows: Tanzania = 1 and other countries = 0; India = 1 and other countries = 0; USA = 1 and other countries = 0.

Control variables: In order to test the hypotheses, we used age and gender as control variables. We created a dummy variable with 0 = male and 1 = female to represent rater’s gender. Age was measured using the following scale: 1 = 18 to 25 years of age; 2 = 26 to 35 years of age; 3 = 36 to 45 years of age; 4 = 46 to 55 years of age and 5 = over 56 years.

Data Analyses Strategy

We used one-way analysis of variance (ANOVA) to test whether nature of job of the raters had any effect on the dependent variables: performance rating, internal attribution and adherence to equity norm. ANOVA results indicated that there were no statistically meaningful differences due to nature of job on performance rating (F = 0.79, p > 0.05), internal attribution raters made (F = 1.21, p > 0.05) and adherence to equity norm (F = 0.75, p > 0.05). In order to test the hypotheses formulated in the present study, we used multiple regression analyses. We entered the two control variables (age and gender) in the first step and the three dummy variables representing the three countries (Tanzania, India and the USA) in the second step. In order to test H₃ relating to the adherence to equity norm, we also included the actual performance rating provided by the raters in the second step since subjective appraisal rating given by the raters should have an influence on the allocated merit bonus. We assessed the statistical significance of the variance explained in the step using F ratio test for incremental variance. We assessed the overall model fit using the omnibus F ratio test with all the variables in the equation. Statistical significance of the regression coefficients of individual predictors were tested using the conventional one-tailed t-statistics.

Results

Table 1 presents the means, standard deviations and correlations among the variables used in the study and Table 2 presents the results of the multiple regression analyses.

H₁ states that Chinese, Indians and Tanzanians will rate a poor performing employee higher than Americans. In the regression equation predicting performance rating, the pattern of results rendered support for H₁. The regression coefficient for Tanzanians (β = –0.08, t = 0.81) was not statistically significant and the regression coefficients for India (β = –0.16, t = 1.72, p < 0.05) and USA (β = –0.38, t = 3.78, p < 0.001) were both negative and statistically significant indicating both Indians and the Americans gave lower performance rating to the poor performing employee. That is, collectivist Chinese and Tanzanians overrated the performance of poor performing employee compared to moderately individualistic Indians and highly individualistic Americans. Further, the effect of individualism on performance rating was stronger for Americans (β = –0.38) than Indians (β = –0.16) thus rendering support for H₁.

H₂ states that Americans will make greater internal attribution of poor performance to the employee than Indians, Chinese and Tanzanians. In the regression equation predicting internal attribution (Table 2), the pattern of results provided partial support for H₂. As postulated in H₂, Americans (β = 0.22, t = 2.25, p < 0.01) made greater internal attribution to poor performing employee than Chinese or Tanzanians as the slope is both positive and significant. We expected that there should not be any statistically significant difference in internal attribution between Chinese and Tanzanians, but the results indicated that Tanzanians (β = –0.24, t = 2.50, p < 0.01) made lower internal attribution to the poor performing employee than Chinese raters (negative slope). Additionally, Indians (β = 0.09, t = 0.97, p > 0.05) did not differ from Chinese in making internal attribution to the poor performing employee as the standardized regression coefficient for Indians was not statistically significant. Overall, H₂ received partial support with Tanzanians making lower internal attributions than Chinese, Americans making greater internal attribution than Chinese and Tanzanians with no significant difference between Indians and Chinese or Indians and Americans.

Table 1.

Means, Standard Deviations and Correlations Among the Variables used in the Study

Variables	Mean	σ	1	2	3	4	5	6	7
Age	2.23	0.66
Gender	0.36	0.48	–0.08
Tanzania	0.26	0.44	0.20**	–0.03
India	0.16	0.36	0.01	–0.23**	–0.26***
USA	0.30	0.46	–0.10	0.28***	–0.39***	–0.29***
Performance rating	2.06	0.85	0.12	–0.10	0.17**	–0.01	–0.33***
Internal attribution	4.60	1.34	–0.02	0.15*	–0.32***	0.03	0.31***	–0.22**
Adherence to equity norm	404.07	865.92	0.05	–0.22**	0.29***	–0.04	–0.44***	–0.42***	–0.34***

Source: The authors.

Note: Significance levels reported are one-tailed. *p < 0.05; **p < 0.01; ***p < 0.001.

Table 2.

Results of the Regression Analyses Predicting Performance Ratings, Internal Attribution and Adherence to Equity Norm

	Dependent Variables
Predictors	Performance Rating		Internal Attribution		Adherence to Equity Norm
Predictors	β	t-statistic	β	t-statistic	β	t-statistic
Step 1
Age	0.07	0.83	0.07	0.93	0.02	0.24
Gender	–0.05	0.62	0.11	1.32	–0.04	0.53
∆R²	0.02		0.02		0.04
F _2,145	1.87		1.76
Step 2
Performance rating					0.25	3.37***
Country (Tanzania = 1; Non-Tanzania = 0)	–0.08	0.81	–0.24	2.50**	0.03	0.29
Country (India = 1; Non-India = 0)	–0.16	1.72*	0.09	0.97	–0.19	2.26*
Country (USA = 1; Non-USA = 0)	–0.38	3.78***	0.22	2.25**	–0.47	4.94***
∆R²	0.11		0.16		0.33
F _3,142	5.70***		8.83***		16.89***
Model-R²	0.13		0.18		0.37
Overall model F_5,142	4.24***		6.11***		12.64***

Source: The authors.

Note: Significance levels reported are one-tailed. *p < 0.05; **p < 0.01; ***p < 0.001.

H₃ proposes that Americans will adhere to greater use of equity norm than Indians, Chinese or Tanzanians. H₃ is based on the premise that adherence to equity norm in reward allocations should be more in individualistic cultures than collectivistic cultures. In the present study, a lower score on adherence to equity norm variable indicates that the raters followed equity norm to a higher degree in the allocation of bonus money (lower difference between what the individual deserved and what he/she received from the rater). In testing for this hypothesis, we also controlled for the performance rating given by the raters since subjective performance rating of the raters may also influence how the raters make reward allocations. As can be seen from Table 2, performance rating (β = 0.25, t = 3.37, p < 0.001) had a significant and positive effect on the adherence to equity norm. Additionally, as expected, there was no significant difference between Tanzanians and Chinese in the adherence to equity norm as the slope for Tanzanians (β = 0.03, t = 0.29, p > 0.05) was not statistically significant. Therefore, Chinese and Tanzanians did not differ significantly in their reward allocation to poor performing employee and adhered less to equity norm. Furthermore, the slopes for Indians (β = –0.19, t = 2.26, p < 0.05) and Americans (β = –0.47, t = 4.94, p < 0.001) were both negative and statistically significant and indicated that Americans and Indians made greater use of equity norm than Tanzanians and Chinese and hence, rendered support for H₃. Also, the strength of the relationship between culture and adherence to equity norm was stronger for Americans as indicated by the slope for Americans (–0.47) compared to the slope for Indians (–0.19) which provided support for H₃. That is, more individualistic Americans made greater use of equity norm than moderately collectivistic Indians.

To summarize the results: (a) Tanzanians and Chinese did not differ in rating the performance of a poor performing employee but Indians and Americans gave lower rating to the employee than Tanzanians or Chinese with Indians providing more lenient rating than Americans; (b) Tanzanians made lesser internal attribution than Chinese and Americans made more internal attribution than Chinese or Tanzanians; and (c) Americans made the greatest use of adherence to equity norm followed by Indians as compared to Tanzanian and Chinese raters.

Discussion

Performance evaluation and the resultant reward allocations are very crucial HRM activities which can strengthen pay for performance perceptions of employees and can result in motivating employees to enhance their performance in order to benefit organizational strategies and goals. Furthermore, objective evaluation of employee performance and the feedback employees receive may also help reinforce positive behaviours and can act as an intervention for behavioural changes in employees. To that end, elimination of rater biases should be a desirable outcome. In the present borderless world, businesses operate worldwide resulting in supervisor–subordinate relationship transcending national cultures and borders. That is, an employee in a more collectivist culture may be reporting to a manager from a more individualistic culture and vice-versa. From both the rater and ratee perspective, an understanding of the dynamics of performance appraisal in a cross-cultural context is quite critical for human resource managers and MNCs. The present study attempted to address this important research question.

In the present study, we found cross-cultural differences in performance ratings since all the raters were given the same performance charts, but the ratings provided were quite different across the four cultures. In terms of standardized scores, based on identical performance of an employee, we can expect the Americans to provide a rating of 0.38 lower than Chinese raters and Indians to provide a rating of 0.16 lower than the Chinese raters. This may pose a challenge to multinational organizations which may try to harmonize their performance evaluation system on a global basis where identical performance may be viewed differently by the raters based on the cultural mindset through which an observer observes a behaviour and attempts to evaluate that behaviour.

Furthermore, in addition to differences in performance ratings, we can also conclude that cross-cultural differences in how raters attribute the causes of performance to employees may exist. Triandis (2001) suggested that in individualistic cultures like the USA, individuals may have a tendency to attribute the causes of poor or good performance to the individuals rather than external factors. In individualistic societies, the social unit of perception is the individual and what makes an individual different from others. Hence, they tend to focus on the individual more than other reference group members in making causal attributions about individual performance. The present study provided some empirical support about cross-cultural differences in internal attributions. Even though the participants were provided the same data about an employee’s performance, Americans tended to attribute the causes of poor performance to the individual and the Chinese and Tanzanians making lesser internal attributions. As expected, the Indian raters’ attributional tendencies were in the middle between the individualistic Americans and collectivistic Chinese and Tanzanians. One surprising finding was that Tanzanians made lower internal attributions than Chinese although Tanzanians did not differ from Chinese either in the performance rating or reward distribution. This may be due to differences in the nature of collectivism between Chinese and Tanzanians (e.g., vertical versus horizontal collectivism). With the data available to us in the present study, we are unable to take a definitive position as to why these differences might exist. Future studies must attempt to identify the causes of this discrepancy in the rater behaviour.

Finally, how do raters from different cultures reward a poor performing employee? Do they follow equity norm to varying degrees? In spite of controlling for performance rating provided by the raters, we found significant differences in the allocation of bonus to a poor performer in the four countries included in the study. Clearly, the most individualistic Americans tended to adhere to equity norm in reward allocation followed by Indians, although Indians tended to over reward the poor performer compared to Americans. Both the Chinese and Tanzanians seem to ignore performance differences and appear to over reward a poor performing employee, despite objective performance data provided to the raters. Thus, cultural orientation seems to play a role in the subjective performance evaluations, internal attributions and adherence to equity norm in reward allocations.

Implications for Practice

The results of our study point to the challenges MNCs may face in implementing effective performance appraisal and pay for PFPs on a global basis given the rater’s cultural background. Many organizations use the performance appraisal process in making critical organizational decisions related to its human capital: merit raises, career management, layoff decisions, terminations, etc. MNCs must adopt a global standard in performance evaluations and reward management if they need to achieve global integration with its strategy. The present study points out to the challenges MNCs may face due to cognitive differences arising out of cultural factors. Even when the same performance data was provided to the raters, what the raters observed, and how they attributed performance differences seem to influence the raters’ behaviours. That is, a particular rating may mean different things in different cultures. Providing the global managers with a common frame of reference training may partially alleviate such idiosyncratic biases arising out of cross-cultural differences. Alternatively, MNCs may also have to convert the raw ratings to standardized ratings in order to account for rater biases arising out of cultural influences and make reward decisions based on the standardized scores.

A second issue that MNCs may have to address in performance evaluation and reward allocation decisions relates to the feedback about performance employees may receive from the evaluators. Based on our study, it appears that poor performing employees may receive inflated ratings and higher than deserved raises when evaluated by a rater from a collectivist culture. Such an action may also result in the employee perceiving that his/her performance level is acceptable to the organization. If MNCs have to change the mindset and implement a strong pay for PFP, they should have a strong performance appraisal process in place but also clearly link pay raises to performance ratings. In doing so, they may actually be burning bridges with their overseas employees from a different cultural background. For instance, someone from a collectivist culture like the focal employee in our study may have been receiving higher rewards than he/she deserves. How would the employee react when he/she is compared to others in the group and given less than what he has received in the past? Such an organizational action may have a detrimental effect on the employee motivation and perhaps the group itself. Therefore, MNCs, before implementing a revised performance evaluation and the resultant reward allocation system, must clearly communicate to employees beforehand the new expectations, expected behaviours, and the consequences of not meeting the expected behaviours.

Finally, our study also points to the importance of training managers not only on performance appraisal process but also on cross-cultural understanding. In the present business world, employees do not simply work for a boss from the same culture but also may work for someone located distally, separated by geographical and cultural boundaries. Thus, individualistic versus collectivistic cultural orientations may have implications for how performance is defined or measured and how feedback is given and received. Failure to train raters in cross-cultural awareness may actually work against the developmental aspect of performance appraisal and may result in strained relationship between the supervisors and subordinates.

Implications for Research

While concluding, we should also point to some limitations of the present study and provide some directions for future research. First, in our study, the internal attribution condition was clearly designed to elicit adherence to equity norm. We provided the participants with relatively objective performance data, yet the raters seemed to use subjective ratings, attributions and reward allocation which most likely arose from cognitive biases. Prior studies (e.g., Ramamoorthy & Carroll, 1998) indicate that equity and equality norms are positively related to each other as both adhere to different types of distributive justice norm. In our study, we focused only on equity norm due to the nature of the research design. As suggested in the literature (e.g., Triandis, 2001), future studies should try to delineate the equity and equality norms separately and examine if IC orientations influence equity and equality norms differently, with a different study design.

Second, we used a single-item measure for performance which is a global assessment of the performance of the focal employee. We do acknowledge that performance is multidimensional and may encompass quality of work, interpersonal relationships within the workgroup, quantity of work, etc. Due to the nature of our study design and the information available to the participants, we could not study the influence of IC orientations on the multidimensional nature of performance. Though this may sound like a limitation, when raters make internal attribution to the employees as evidenced in our study, the use of multidimensional appraisal scale may not show contrary results. On the contrary, with more subjective performance dimensions, we may observe more distorted appraisal ratings and reward allocations. More subjective performance dimensions may allow the raters to justify their distorted ratings relatively more easily than objective dimensions (e.g., objective sales volume versus customer service). Nevertheless, future studies should attempt to replicate our findings by using multidimensional appraisal rating, preferably in a cross-cultural setting.

Third, in the present study, we portrayed a poor performing employee who consistently performed well below expectations on different tasks, across time and relative to other employees. Thus, the objective was to study how the raters rated the poor performing employee made attributions about his/her poor performance and rewarded the employee. Future research should consider another interesting situation. What if, one employee outperforms other employees consistently across time, on different tasks and compared to other reference group members? How do raters from different cultures rate the outstanding performance, make attributions and allocate rewards? Such a study may well provide additional insights for organizations and enhance our understanding of the cultural dynamics.

Finally, in this study, we used IC as bipolar dimension consistent with the work of Hofstede (2001). That is, Hofstede suggested that at the cultural level, individualism and collectivism exist as dichotomous cultural level variable. Recent conceptualization of IC also introduced vertical and horizontal dimensions of IC (e.g., Singelis, Triandis, Bhawuk, & Gelfand, 1995). Future research may benefit by using the horizontal and vertical IC differences across cultures to expand the results found in our study. For example, why Tanzanians made lesser internal attribution than Chinese although both are highly collectivistic societies? Could this be due differences in the nature of collectivism in these two societies? This may be a worthwhile area of research to be pursued in future.

Conclusion

In conclusion, the present study highlights the cognitive differences in attribution arising out of individualistic versus collectivistic orientations of cultures. Further, the study explored the effects of such attributional differences on performance ratings of a poor performing employee and whether raters from different countries adhere to equity norm or deviate from equity norm in the allocation of rewards. The study results tend to support the hypotheses that cross-cultural differences in attributions exist and that such differences tend to influence performance rating and reward allocation norm relating to equity. Such differences may have some consequences for the design, implementation, and efficacy of performance appraisal and pay for PFPs.

Footnotes

Declaration of Conflicting Interests

The authors declared no potential conflicts of interest with respect to the research, authorship and/or publication of this article.

Funding

The authors received no financial support for the research, authorship and/or publication of this article.

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