Performance management and MNEs: the impact of different economies

We investigate whether certain performance management practices are used more in some national contexts and amongst MNEs rather than in other national contexts or in indigenous companies. We use data from Europe collected as part of the comparative Cranet survey data of HRM practice to focus on the use of performance appraisal, adopting the lens of comparative capitalisms. We find that, in comparison to firms operating in the Anglo-Saxon liberal market economies, performance appraisal (and, notably, systems linking pay to rewards) is considerably less used in the various categories of coordinated market economies found in continental Europe. This may be a reflection of systemic restraints on effective people management, although a look at national productivity rates might suggest otherwise. As expected, foreign owned MNEs tend to use performance appraisal more than organizations in our sample; this may be a reflection of either country of origin pressures (with most originating in LMEs). However, even in the latter, MNEs were likely to make usage of more comprehensive forms of performance management than their domestic counterparts, infusing elements that went beyond rewards, to encompass training and development and career planning. This may either reflect the superior resources MNEs may have at their disposal and/or an emerging best practice model. We found little no tendency for firms worldwide to default to the LME model indicating the continued relevance of national institutional recipes."