Abstract
This study investigates performance reward preferences of employees in Germany and the USA. The investigation uses the following three constructs: The Institutional Framework and its formal and informal implications for incentive compensation, Di- minishing Marginal Utility of individuals related to performance rewards, and Incen- tive Schemes as motivational devices in organizations. Our empirical investigation is based upon survey data collected from employees of a MNC in Germany and the USA using an enriched form of Hofstede's cross-cultural questionnaire. Our results show that employees from these countries have different preferences on incentives and further that incentive plans designed for one country might have non-motivating consequences in the other. We also find that the logic of diminishing marginal utility applies to certain rewards. Referencing these results, we suggest a method for organi- zations to develop effective and efficient incentive systems.