The Comparative Study On Incentive Mechanisms Of U.S. And Japanese Multinational Companies

This paper aims to provide useful information and reference for the incentives mechanism reform of China's service industry multinational corporations (MNCs) through comparative analysis of the U.S. and Japanese service MNCs. According to Dunning's OLI paradigm, this paper presented three dimensions for the incentives mechanism comparative analysis: ownership advantage, internalization advantage and location advantage. On the basis of these three dimensions, the paper mainly explored the"manager sovereignty-based"type as the representative of the United States companies and"worker sovereignty-based"type as the representative of Japanese companies, and the effects of these two different incentive mechanisms on three advantages in OLI theories. Through comparison, we can arrive as a conclusion as following: (1)"Manager sovereignty-based"type focused the efficiency, individual ability and individual motivation or constraint, the foothold of incentive and control is the managers; while"worker sovereignty -based"type focused on fair distribution, individual knowledge formation in corporate culture and the formation of knowledge flows within companies. (2)"Manager sovereignty-based"type incentive goals are accomplished through share holding by managers;"worker sovereignty-based"type incentive goals are accomplished through life-long employment, year wages and internal promotion. (3) In the"Manager sovereignty-based"mode, the location and advantages of cross-border operation are obvious, while internalization advantages are weak; in the"worker sovereignty-based"mode, the ownership and internalization advantages are strong, while location advantages are weak. Besides, this paper selected two typical services MNCs---Citigroup and Japan Post as good examples for comparative analysis. By using the acquisition of additional shares or funds in the stock exchange and other means of directional equity stake in large-scale movement and expansion, due to relatively rapid employee movement, the employment of local personnel makes Citigroup more favorably using the location advantage. As for Japan Post, in the worker sovereignty-based incentive mechanism, system takes"staff capacity development"incentives towards employees, it will leads to higher employee specific skills, employee loyalty to the company and better stimulations of the source of competitiveness in the process of internalization. Finally, this paper related to the development of Chinese multinational companies in service sector, presented that the joint incentive system can better integrated three kinds of advantages, which is a viable choice of incentive mechanisms for our service MNCs.