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Assessment Task 1 – Individual research and critical analysis task

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Assessment Task 1 –Individual task — ‘Individual research and critical analysis’

Tutorial (Day & Time):

Haiying Kang1.

Jie Shen2.

Year of publication: 2015

Volume. 21, Issue. 2, Pages: 211-227.

International Reward and Compensation Practices of South Korean Multinational enterprises in China.Transfer or Localize?Title of Article:

Journal of Asian Pacific Business Review, volume 21, issue 2.Title of Journal Publication:

Identify at least three key issues, concepts (ideas), propositions or theories that have been discussed in the literature review. How have these issues informed or influenced the current paper and its research questions? (Paraphrase – i.e., use your own words)

International reward and compensation approach

Reviewing international reward and compensation approach is informative indicating why organization prefer to use home-based or host based technique in issuing the compensation and rewards policies (Sims 2013, p. 98). Since the research was conducted in Multinational enterprise (MNEs) in emerging South Korean economy and china, the review is essential in aligning the respondent’s feedbacks in international compensation and reward and that of the review. Additionally, the review is important in understanding why South Koreans MNEs has to adopt the host-based technique in managing the international compensation and reward and, transferring too Chinese MNEs through subsidiaries. The outcome has been important to understanding and critique information while meeting the demand of the research questions

Institutional Theory

The theory argues that the national institutional environment influences the organization behaviour through normative, cognitive, activities and regulative structures (Najeeb 2014, p.25). The theory further posits that MNEs must confirm to the social norms of the multicultural environment for the organization to be successful. Such an argument showcase how multinational organizations are under pressure to meet the demands of both the home-based and host-based expectations. As such, the literature indicates that countries tend to engage into international balance, standards and to a certain level in the localizing the host country (Sims 2010, p. 108). As such, the institutional theory contributed towards the understanding why subsidiaries of salaries based on economic strengths and cultural differences is important towards compensation and rewarding of employees.

3. Advantages and disadvantages of both the home-based approach and host-based approach

Literature indicates that home-based approach benefits expatriates because they don’t incur financial shortcomings after being assigned duties in foreign country (Semere 2013, p. 6). Contrarily, the technique poses challenges in salary disparities and the rule of administration towards expatriates of different nationalities hence compensation inequality (Trivendi 2016, p. 49). Conversely, the host-based technique advocates for sense of equality both to local and international expatriates hence easy to administer and cost-effective in expatriate’s costs. Contrarily, the system may contribute towards income discrepancies to employees working at home hence possibilities of high employee turnover (Rahim 2014, p. 24). The analysis indicates why it is important to engage in subsidiaries while observing international standards

:Discuss the data collection and analysis methods

The collection of data technique entailed semi-structured interview. The research used snowball technique to recruit respondents from companies thus, 10 HCN managers and 10 expatriate managers from 10 South Korean MNEs. Each respondent’s data was tape-recorded. From the tape-recording, the data is analysed through response code in analytic framework. The analysis involved an interview profile, coding and statements which were structured through sorting of columns indicating respondent’s information based on themes.

Who was studied in this research?

The study examines Multinational enterprises (MNEs) in South Korea emerging economy and South Korean MNEs in China and Host Country Nationals (HCNs) based on reward and compensations policies issued to the expatriates.

:List and describe the research findings

Base pay- The base payment of both the HCNs and MNEs expatriates’ is based on work position and grade. Generally, the percentage pay ranged between 30% to 35% of the employee total compensated percentage. An example, based on findings, indicated that marketing manager base pay is around US$ 29, 091 per annum, constituting around 35% of the total payable salary (Suff 2013, p. 3)

Performance based pay-This type of compensation and reward payment system is issued based on employee’s appraisal grade. As such, the performance base pay is segmented into four sections thus from 8%, 5%, 3% and 0% of the total employee base pay. Based on the total compensation of the 10 sampled companies, companies indicated a 20% to 35% (Suff 2013, p.4)

Bonuses- Different companies such as Telecom A, prefer payment of performance bonuses annually against individual performance based pay. The argument advocated that the individual performance related payments does not motivate employees and creates work environment conflicts. As such, employees receive hefty bonuses at the end of the year hence a strong motivation approach towards employees.

Allowance and benefits- Allowances and benefits differ across the examined companies. The differences are based expatriates position and the type of allowances and benefits being issued. Findings indicated that each company has a 27% to 30% allowances and benefits of the sum compensation (Bradshow 2015)

Payment subsidiaries- The expatriates’ salaries are paid using Chinese subsidiaries and Southern Korean salary standards though it is converted to the Chinese currency, RMB.

How has this research study contributed to knowledge of your chosen topic?

The author analysis indicating that there is a relative strong bond between the host and home economies on the component aspects of reward and compensation of expatriates. This implies that countries would prefer to use home-based approaches in compensation and rewards of employees if the host economy is weaker or to use the host economy if it is stronger to determine focal components of rewards and compensation. As such, it can be argued that the main determinant aspect as to whether localization or transferring of compensation and reward system is based on relative strong economic bond between the host nation and home nation, cultural shortcomings and the focal components of the HCNs.

Based on institutional theory, the research further expounds and critics on the technique of using institutional theory towards the factors that influences MNE to transfer or localize the compensation and reward policy through the International Human Resource Management (IHRM) practices. As such, the research advocates that it is the economic strengths and cultural differences determine the compensation and reward policies of the expatriates and HCNs respectively. As such, it is right to imply that the localization or transfer of the payment policies needs to meet the home structured standards while it is still the policy align with the host country context.

:What suggestions/recommendations are made for future research

The future study need to advocate for multinationals originating from different nations while functioning in variety host countries. In the process, the data gathered will showcase a convincing outcome for analyse based on the cultural systems and its dominance towards international rewards and compensation of countries. Additionally, the sampled size of respondents is small hence future research needs to involve wider scope of respondents for high generalization of the findings. Thirdly, future research should entail the collection of data from all departments in an organization to effectively understand the implementation of HRM in compensation and rewards at all level in organization. Lastly, the use of snowball sampling method has challenges in sampling representatives hence it is wise to use random sampling because it increases data representativeness.


Brandshow, H 2015, ‘What to Expect in Expat Compensation Packages,’ AESC.

, pp. 25.A Window into Business ResearchNajeeb, A 2014, ‘Institutional Theory in Human Resource Management,’

, vol. 6, no. 2. p. 24’ ASA University ReviewRahim, S 2014, ‘Compensation Issues Relating to Expatriate Managers: A Review of Related Literature,

, vol. 3, no. 1, p.6.The African Economic and Business ReviewSemere, H 2013, ‘Challenges in International Benefits and Compensation Systems in Multinational Corporations,’

, vol. 10, no.2, pp. 98-108Career Development InternationalSims, R 2013, ‘Expatriate Compensation: An Exploratory Review of Salient Contextual Factors and Common Practices,’

Suff, P 2013, ‘Paying for Performance: New Trends in Performance-Related Pay,’ HR Network, Brighton. UK, pp.3-4.

, vol. 4, no. 5, p. 49.International Journal of Management, Information, Technology and EngineeringTrivendi, A 2016, ‘Designing Expatriate Compensation Structure and Comparison Study between the Two Approaches of International Compensation,’

(Words count: 1000, NOT including references)