COMPENSATION SYSTEMS IN EUROPEAN TRANSITION STATES: AN

ANALYSIS OF PATH DEPENDENCE, ISOMORPHIC EFFECTS,

AND AGENCY-BASED DETERMINANTS

Inaugural dissertation

submitted to attain the academic degree

doctor rerum politicarum

(Doktor der Wirtschaftswissenschaften)

at the

ESCP Europe Wirtschaftshochschule Berlin

by

Ihar Sahakiants

Berlin

2013

Doctoral examination committee:

Chairman: Prof. Dr. Ulrich Pape

Examiner: Prof. Dr. Marion Festing

Examiner: Prof. Stephen J. Perkins, DPhil (Oxon)

Date of oral defense: June 14, 2013

Acknowledgments

Looking back at the years devoted to working on this dissertation, I think about the many

people who have filled me with enthusiasm and supported my academic endeavors.

First of all, I would like to thank Prof. Marion Festing, my supervisor and co-author

of the articles presented in this dissertation, for her advice and willingness to share her

knowledge and expertise. I also thank Prof. Stephen Perkins for reviewing my dissertation

and for his constructive comments during several conferences dedicated to international

human resource and reward management, as well as during the oral defense of my

doctoral thesis. I am grateful as well to Prof. Allen D. Engle and Prof. Peter Dowling for

their cooperation, support, and fruitful discussions.

I would also like to thank all the professors and my current and former colleagues

at ESCP Europe Berlin for their support, comments, and suggestions on different projects

included in this dissertation.

Finally, I express my foremost gratitude to my parents, my wife Tanya, and my

sons Andrei and Alexander for their love and support.

Contents

iv

Contents

Figures ................................................................................................................................... vi

Tables .................................................................................................................................... vii

Abbreviations ........................................................................................................................ viii

1. Introduction ....................................................................................................................... 1

1.1. Description of the papers ............................................................................................ 2

1.1.1. Conceptual papers ............................................................................................... 4

1.1.2. Empirical papers ................................................................................................... 4

1.1.2.1. Research questions ...................................................................................... 5

1.1.2.2. Theoretical backgrounds .............................................................................. 7

1.1.2.3. Methods used ............................................................................................. 11

1.2. Structure of the dissertation ...................................................................................... 13

2. Paper I. HRM Activities: Pay and Rewards ...................................................................... 14

3. Paper II. Compensation Practices in Central and Eastern European EU Member

States—An Analytical Framework Based on Institutional Perspectives, Path

Dependencies, and Efficiency Considerations ...................................................................... 15

4. Paper III. Path-Dependent Evolution of Compensation Systems in Central and Eastern

Europe: A Case Study of Multinational Corporation Subsidiaries in the Czech Republic,

Poland and Hungary ............................................................................................................. 16

5. Paper IV. Determinants of Share-Based Compensation Plans in Central and Eastern

European Public Companies: An Institutional Analysis ........................................................ 17

6. Paper V. The Use of Executive Share-Based Compensation in Poland: A Study Based on

Institutional and Agency Theory Perspectives ..................................................................... 18

Contents

v

7. Discussion ........................................................................................................................ 19

7.1. Discussion of Results .................................................................................................. 19

7.1.1. Results related to the path dependence perspective ....................................... 21

7.1.2. Results related to the isomorphism theory ....................................................... 22

7.1.3. Results related to the agency perspective ......................................................... 23

7.2. Limitations ................................................................................................................. 24

7.3. Avenues for future research ...................................................................................... 25

8. Conclusion ....................................................................................................................... 27

8.1. Theoretical contributions .......................................................................................... 27

8.2. Implications for managerial practice ......................................................................... 28

8.3. Closing remarks .......................................................................................................... 30

References ............................................................................................................................ 31

Figures

vi

Figures

Figure 1-1. Principal-agent and principal-principal conflicts ................................................ 10

Figure 7-1. Interrelation between the results of the papers constituting the

dissertation ........................................................................................................................... 20

Figure 7-2. Interplay of principal-agent and principal-principal conflicts in CEE

companies ............................................................................................................................. 24

Tables

vii

Tables

Table 1-1. Summary of papers composing the dissertation .................................................. 3

Table 1-2: Summary on empirical studies .............................................................................. 5

Table 1-3. Pillars of institutions .............................................................................................. 8

Table 1-4. Descriptions of samples ....................................................................................... 12

Abbreviations

viii

Abbreviations

BRIC Brazil, Russia, India, China

BUX Budapest Stock Index

CEE Central and Eastern Europe

CEO chief executive officer

EU European Union

HRM human resource management

IHRM international human resource management

MNC multinational corporation

PX Prague Stock Exchange Index

SOE state-owned enterprise

WIG 20 Warsaw Stock Exchange Top 20 Index

Introduction

1

1. Introduction

Compensation management represents not only a key organizational practice, but is also

one of the most extensively investigated fields of management science. Academic work on

both monetary and non-monetary incentives dates back to as long as a century ago

(Myers, 2011; Wagner-Tsukamoto, 2007). Recently, there has been a growing body of

research in the field of international rewards, ranging from research on expatriate pay

(Reynolds, 1986) to transnational compensation (Festing, Eidems, & Royer, 2007). To date,

research on the topic has been dominated by studies conducted in industrialized

economies—countries with stable institutional environments. However, multinational

corporations (MNCs) are often faced with the challenge of designing and implementing

pay systems “within the context of shifting political, economic, and social conditions”

(Lowe, Milliman, De Cieri, & Dowling, 2002, p. 46), or in countries with less stable

institutional contexts, such as emerging economies.

In this respect, the analysis of the impact of institutional environments on

organizations is especially relevant in European post-state socialist economies, which are

often referred to as European transition states (Brewster & Bennett, 2010; Hoskisson,

Eden, Lau, & Wright, 2000). It is not only political, social, and economic transformation in

these countries, but also the sheer magnitude of this transformation from state-socialist

regimes to democratic and free market societies—often referred to as “institutional

upheaval” (Newman, 2000; Roth & Kostova, 2003)—which makes research in this field

especially challenging. Indeed, the pace of transformation from centrally planned

economic organization to free market economies in the transition countries of Central and

Eastern Europe (CEE) is stunning. However, now, more than two decades after the fall of

state-socialist regimes in Europe, research on the evolution and explanations of specific

compensation practices in the region is still scarce. The extant literature is dominated by

mainly descriptive work (cf., for instance, Koubek, 2009; Listwan, Pocztowski, & Stor,

2009; Poór, 2009) or studies referring to the cultural explanations of particularities in

organizational practices in CEE (Kiriazov, Sullivan, & Tu, 2000; Tung & Havlovic, 1996)

consistent with the notion of national culture developed by Hofstede (1980). While the

contribution of these studies to our understanding of organizational practices and

country-specific idiosyncrasies should by no means be underestimated, there is a need for

Introduction

2

alternative explanations, which could deliver answers on the roots, evolution, and current

determinants of compensation practices in the CEE region.

The present dissertation is an attempt to address this research deficit. In doing so, I

focus on a wide range of compensation practices included in the notion of total rewards

(cf., for instance, Manas & Graham, 2003) in CEE transition states: Base pay, variable and

non-monetary compensation, and share-based pay schemes. Taking into consideration the

heterogeneous nature of organization and management studies as an eclectic field (Corley

& Gioia, 2011), this dissertation features a multifaceted analysis, which uses various—

both economic and sociological—theories and research methods to probe into the area of

pay systems in CEE. In doing so, the overall work was conceived as an attempt to extend

the application of the relevant theoretical approaches used in the academic fields of

human resource management and organization studies to the context of European

transition states. In the following subchapters I describe respective research papers which

build the body of the present dissertation, including the research questions, theoretical

backgrounds, and methods used.

1.1. DESCRIPTION OF THE PAPERS

This dissertation is based on five papers comprising one published book chapter (Festing,

Engle, Dowling, & Sahakiants, 2012), three published journal articles (Festing &

Sahakiants, 2010b, 2011, 2013), and one research paper currently under review in the

International Journal of Human Resource Management. All the papers were written in co-

authorship with my supervisor Professor Marion Festing and—in the case of Paper I—

additionally in co-authorship with Professor Allen D. Engle, Sr. and Professor Peter

Dowling. Therefore, in the following introduction, discussion, and conclusion sections of

this dissertation, I will refer to these studies from the first-person plural perspective

(“we”), meaning all the co-authors of the respective collaborative work. However, the

first-person singular pronoun (“I”) will be used to summarize, discuss, and draw

conclusions on the papers.

Table 1-1 presents a summary of articles constituting the dissertation. The papers

are listed in the order in which the respective studies were conducted.

Introduction

3

Table 1-1. Summary of papers composing the dissertation

Paper Nr. Full reference Type of paper

Paper I Festing, M., Engle, A. D., Dowling, P. J., & Sahakiants, I. (2012).

HRM Activities: Pay and Rewards. In C. Brewster & W.

Mayrhofer (Eds.), Handbook of Research in Comparative

Human Resource Management (pp. 139–163). Cheltenham:

Edward Elgar Publishing.

Conceptual book

chapter

Paper II Festing, M., & Sahakiants, I. (2010). Compensation Practices in

Central and Eastern European EU Member States—An

Analytical Framework Based on Institutional Perspectives, Path

Dependencies, and Efficiency Considerations. Thunderbird

International Business Review, 52, 203–216.

DOI: 10.1002/tie.20325.

Conceptual journal

Article

Paper III Festing, M., & Sahakiants, I. (2013). Path-Dependent Evolution

of Compensation Systems in Central and Eastern Europe: A

Case Study of Multinational Corporation Subsidiaries in the

Czech Republic, Poland and Hungary. European Management

Journal, 31, 373–389. DOI: 10.1016/j.emj.2013.01.005.

Empirical journal

Article

Paper IV Festing, M., & Sahakiants, I. (2011). Determinants of Share-

Based Compensation Plans in Central and Eastern European

Public Companies: An Institutional Analysis. Journal for East

European Management Studies, 16, 338–357.

Empirical journal

Article

Paper V Festing, M., & Sahakiants, I. (2012). The Use of Executive Share-

Based Compensation in Poland: A Study Based on Institutional

and Agency Theory Perspectives. Manuscript under review in

the International Journal of Human Resource Management.

Empirical journal

Article

In the following, these papers will be referred to according to the consecutive

numbering used in Table 1-1 (e.g., Paper I or Paper V).

The first two publications are conceptual papers presenting the particularities and

research on comparative international rewards and theoretical explanations of

compensation systems in CEE. The remaining three papers introduce the results of

Introduction

4

empirical research on two different aspects of rewards management in CEE: Total pay

systems in the foreign subsidiaries of multinational corporations (MNC) and share-based

compensation schemes in CEE publicly traded companies.

1.1.1. Conceptual papers

The first paper presented in this dissertation is a book chapter dedicated to the discussion

of comparative international compensation from the total rewards perspective (Manas &

Graham, 2003). Here, we emphasize the importance of a special consideration of national

contexts as a major determinant of pay practices. It is suggested that local contexts should

be analyzed at different levels of analysis, including individual, organizational, and

environmental variables. The literature review on international and comparative pay is

supported by official statistical and compensation benchmark data provided by Hewitt

Associates.

The second paper deals with more specific issues related to international

compensation, namely to the adoption of pay practices in CEE-based companies on the

examples of the Czech Republic, Poland, and Hungary, which were selected for this and

two further studies (Papers III and IV) as being representative of the CEE region in general

(cf. Paper II for an explanation of the rationale behind country choice). Based on a

literature review and compensation data provided by Hewitt Associates, we analyzed

major impact factors affecting the transfer of Western-type compensation practices, such

as high-performance variable pay schemes, by paying special attention to the path

dependence (Deeg, 2005; Sydow, Schreyögg, & Koch, 2009; Whitley & Czaban, 1998) of

organizational practices and mechanisms of isomorphic institutional change (DiMaggio &

Powell, 1983). Efficiency or rational choice considerations (Abrahamson, 1991) were

additionally introduced to separate market-based arguments from the remaining

institutional factors.

1.1.2. Empirical papers

The empirical papers included in this dissertation build on the assumptions of the first two

conceptual articles (Papers I and II), including a specific consideration of total rewards

components in international pay comparisons, the existence of mechanisms promoting

the isomorphism of organizational practices in CEE companies, and the organizational path

Introduction

5

dependence of pay systems in the region. These empirical studies were conceived to

contribute to the understanding of various aspects of total rewards management in CEE:

The general path-dependent evolution of pay practices in CEE (Paper III), share-based

practices in listed publicly traded companies in the Czech Republic, Poland, and Hungary

(Paper IV), and executive share-based pay in Polish listed companies (Paper V).

Table 1-2 presents the research objects, theoretical backgrounds, and methods

used in the empirical papers and described in the following subsections.

Table 1-2: Summary on empirical studies

Paper

Nr.

Research object Theoretical

background

Data collection

method

Data analysis

method

Paper III Evolution of compensation

systems in the Czech

Republic, Poland, and

Hungary

Path dependence

theory

Interviews,

secondary data

(company

documents,

academic

research)

Exploratory

thematic

analysis (within

case study

design)

Paper IV Share-based pay schemes

in the Czech Republic,

Poland, and Hungary (in

listed public companies)

Neo-institutional

(isomorphism) theory

Secondary data

(company annual

reports)

Content

analysis

Paper V Executive share-based

compensation in Poland

(in listed public

companies)

Principal-agent

theory,

neo-institutional

(isomorphism) theory

Secondary data

(company annual

reports)

Logistic

regression

analysis

1.1.2.1. Research questions

As described above, the research questions underlying the empirical papers cover a broad

area of knowledge pertaining to compensation systems in the CEE region. They range from

more general issues on the developmental paths (Sydow et al., 2009) of compensation

systems and the reasons for the persistence of historical legacies with respect to pay

Introduction

6

practices, to more specific questions relating to the determinants of current share-based

pay practices, which have an at least novel or even “institutionally contested” (Sanders &

Tuschke, 2007) character in post-state socialist economies. These research questions are

complementary in a sense that they address various aspects of compensation systems in

the CEE region with different levels of organizational continuity: From general pay

practices—including basic and variable pay, social benefits, and other non-monetary

rewards, which existed prior to transformation and underwent at times radical

transformation thereafter—to completely novel practices such as share-based pay, which

did not exist in the state-socialist period.

Paper III presents an analysis of pay practices in CEE companies from a dynamic

evolutionary perspective, following the often cited notion of the path dependence of the

transformation process and organizational practices in CEE (Aguilera & Dabu, 2005;

Czaban, Hocevar, Jaklic, & Whitley, 2003; Stark, 1992; Whitley & Czaban, 1998), and seeks

to answer the following questions:

What major institutions during the state-socialist period influenced and formed

a specific path with respect to compensation management in CEE?

What are the reasons for path continuity during the transformation period?

What are the limits and necessary conditions for changing historically

determined organizational practices?

Paper IV addresses the following research question:

What are the determinants of share-based compensation schemes in CEE?

Here, the institutional determinants of share-based compensation schemes in the

Czech Republic, Poland, and Hungary—related mostly to national regulations—are

explored.

In Paper V, we statistically analyze the impact of factors such as state ownership,

financial industry affiliation, ownership concentration, family ownership, and

organizational size, which are institutional and agency-based variables derived from extant

literature on the topic. While the main research question is similar to that of Paper IV,

with the only difference being that this paper focuses on executive share-based pay, we

aim at answering two additional major research questions:

Introduction

7

Can the assumptions of the standard principal-agent theory be used to explain

the use of executive share-based pay in Poland?

What are the most important institutional determinants affecting executive

equity-based compensation schemes in Poland?

1.1.2.2. Theoretical backgrounds

With respect to the choice of theoretical backgrounds, Mintzberg suggested: “*W+e must

choose our theories according to how useful they are, not how true they are” (2005, p.

356). Following this rationale, we applied three major theories, which are—as I believe—

the most suitable for probing into the specific aspects of pay in CEE described above. First

of all, the path dependence theory (David, 1994; Deeg, 2005; Pierson, 2000; Sydow et al.,

2009; Vergne & Durand, 2010) was used in Paper III to analyze and explain the evolution

of pay practices in CEE subsidiaries of a large North-American MNC. Here, the

understanding of organizational path dependence is consistent with the definition given

by Sydow, Schreyögg, and Koch (2009), according to which organizational path

dependence is “a rigidified, potentially inefficient action pattern built up by the

unintended consequences of former decisions and positive feedback processes” (p. 696).

In this respect, Deeg (2005) emphasized the predictable character of path-dependent

“pattern[s] of behavior” (p. 29). However, the analytical power of the path dependence

theory lies not only in predicting behavior, but also in explaining the antecedents—

“typical strategies, routine approaches to problems, and shared decision rules” (Deeg,

2005, p. 29)—of an organizational path. Here, self-enforcing mechanisms such as

coordination, complementary, learning, and adaptive expectation effects (Deeg, 2005;

Sydow et al., 2009) play a key role in the creation and preservation of a path. (For a

discussion on the path dependence theory, including self-reinforcing mechanisms, cf.

Paper III).

The second theoretical approach used in empirical Papers IV and V to explain

institutional pressures promoting the application of share-based compensation in CEE in

general and executive equity-based pay in Polish public companies in particular is the

isomorphism theory elaborated by DiMaggio and Powell (1983). According to this theory,

organizations are exposed to pressures towards isomorphism within their organizational

fields, i.e., with respect to “organizations, that, in the aggregate, constitute a recognized

Introduction

8

area of institutional life” (DiMaggio & Powell, 1983, p. 148). These isomorphic effects are

induced by coercive, mimetic, and normative mechanisms of institutional change, which

correspond to the regulative, cultural-cognitive, and normative conceptions or pillars of

institutions (cf. Table 1-3 below) conceptualized by Scott (2001, 2003).

Table 1-3. Pillars of institutions

Regulative Normative Cultural-Cognitive

Basis of compliance Expedience Social obligation Taken-for-grantedness

Shared understanding

Basis of order Regulative rules Binding expectations Constitutive schema

Mechanisms Coercive Normative Mimetic

Logic Instrumentality Appropriateness Orthodoxy

Indicators Rules

Laws

Sanctions

Certification

Accreditation

Common beliefs

Shared logics of action

Basis of legitimacy Legally sanctioned Morally governed Comprehensible

Recognizable

Culturally supported

Source: Scott (2001, p. 52).

Although we integrated the path dependence perspective as explaining resistance

to change and institutional isomorphism considerations relating to sources of change, in

conceptual Paper II, and notwithstanding the fact that the theories of institutional

isomorphism and path dependence are sometimes considered to be related theories

(Kominek, 2009; Sydow & Schreyögg, 2013), we strictly separated these two theoretical

perspectives in our empirical work presented in Paper III. For instance, assumptions of the

neo-institutional theory could have been used to analyze the process of isomorphic

change within the path-building process during the state-socialist period. However, I

believe that the use of the isomorphism theory would have significantly complicated

Introduction

9

reasoning without significantly contributing to the analysis of the ultimate research

question, i.e., the path-dependent evolution of compensation practices in CEE.

Finally, the principal-agent theory (Jensen & Meckling, 1976) was used to probe

the organizational and contextual determinants of executive share-based compensation

schemes in Polish listed public companies (Paper V). According to the assumptions of this

theoretical approach, principals (owners, shareholders, etc.) use long-term incentives for

agents (managers, directors, etc.) to mitigate goal conflicts between these two parties

(Eisenhardt, 1989). The respective theoretical assumptions have been used widely in

research related to executive, including share-based, compensation (Filatotchev & Allcock,

2010; Pennings, 1993).

However, recently, the validity of standard agency assumptions in a context

beyond the industrialized world has been increasingly questioned (McCarthy & Puffer,

2008; Wright, Filatotchev, Hoskisson, & Peng, 2005). As a result, there have been calls to

use a combination of the principal-agent and institutional theories to study organizational

practices in emerging economies (Kang & Yanadori, 2011; Wright et al., 2005), and thus in

CEE transition countries. These calls are based on the assumption of the different nature

of corporate governance conflicts in CEE, which have been identified as principal-principal

conflicts (Yoshikawa & Rasheed, 2010; Young, Peng, Ahlstrom, Bruton, & Jiang, 2008).

According to Young et al., these conflicts arise “between controlling shareholders and

minority shareholders [and] result from concentrated ownership, extensive family

ownership and control, business groups structures, and weak legal protection of minority

shareholders” (2008, p. 196)—features, as a whole typical of emerging economies as

opposed to industrialized countries in general and the USA, the birthplace of the principal-

agent theory, in particular. The difference between standard principal-agent conflicts and

principal-principal conflicts is presented in Figure 1-1 below.

Introduction

10

Figure 1-1. Principal-agent and principal-principal conflicts

Source: Adapted from Young et al. (2008, p. 200).

The intensity of principal-principal conflicts seems to be dependent on institutional

antecedents—such as formal and informal institutions—and ownership concentration

(Young et al., 2008), which can be regarded as representing the regulative, normative, and

cultural-cognitive aspects of local institutional contexts (Scott, 2001) and thus relate to the

coercive, mimetic, and normative isomorphic mechanisms described by DiMaggio and

Powell (1983).

While the first two theoretical perspectives described above (theories of path

dependence and institutional isomorphism) can be considered as related, the principal-

agent theory is different from both the path dependence and neo-institutional approaches

in at least two ways. Firstly, unlike the neo-institutional and path dependence theories,

which primarily represent macro perspectives (Heikkila, 2011; McKinley & Mone, 2003),

the principal-agent theory concentrates on the micro level. Secondly, while the path

dependence and neo-institutional theories represent sociological approaches to

organizational theory, the agency theory is classified into the area of organizational

economics (Swedberg, 2003). However, our decision to apply a combination of neo-

institutional and principal-agent theories in Paper V was based initially on the quite

extensive use of these two theories to study organizational phenomena in emerging

economies (Douma, George, & Kabir, 2006; Kang & Yanadori, 2011), which can serve as

proof of both of these theoretical approaches’ compatibility.

Professional

managers

(agents)

Controlling

shareholders

Managers

affiliated with

controlling

shareholders

(principals)

Principal-agent conflicts

Principal-principal

conflicts

Wid

ely- disp

ersed

shareh

old

ers

(prin

cipals)

Min

ority

shareh

old

ers

(prin

cipals)

Introduction

11

1.1.2.3. Methods used

According to Buchanan & Bryman (2007), method choices in organizational research

should be contingent on a number of considerations. Apart from the research objectives,

these considerations include epistemological positions and paradigms, as well as

organizational, historical, personal, and other properties related to focal organizations.

Similar to the choice of the theoretical perspectives described above, our decisions on the

methods used for our empirical work were problem-driven rather than paradigm-driven

(for a discussion on the shift from paradigm-driven to problem-driven work in organization

theory, cf. G. F. Davis & Marquis, 2005). As Gioia and Pitre wrote: “*T+raditional positivist

theory building and deductive approaches… are relevant when issues are defined

according to their basic assumptions. However, using different theory-building approaches

to study disparate issues is a better way of fostering more comprehensive portraits of

complex organizational phenomena” (1990, p. 587).

With respect to the “ultimate goal of analysis” (Shah & Corley, 2006), the empirical

work presented in this dissertation is based on the assumptions of two of the four main

paradigms (Burrell & Morgan, 2005): The interpretive and functionalist approaches. While

the first two empirical studies presented in Papers III and IV are qualitative exploratory

studies based on rather limited sample sizes characteristic of qualitative research, the last

paper, Paper V, is structured as a classical theory-testing study based on a final sample of

362 companies (cf. Table 1-4 below).

It should be mentioned, though, that the divide between the functionalist-

interpretive paradigms underlying the papers included in this dissertation is more complex

than the mere differentiation between the quantitative and qualitative methodologies

sometimes suggested in the literature (cf. Shah & Corley, 2006). In accordance with the

differentiation between positivist/post-positivist and non-positivist (non-critical)

paradigms suggested by Brand (2009), both Papers III and IV, presenting qualitative

research, build partly on post-positivist assumptions, not only with respect to the post-

positivist methodology, which has relied increasingly on qualitative methods (Guba &

Lincoln, 1994), but also ontologically and epistemologically. For instance, the path

dependence of compensation practices in CEE explored in Paper III reflects the

“functionalist logic [which] identifies predictable self-reinforcing processes” (Mahoney,

2000, p. 519), and it can thus be partly attributed to the functionalist paradigm. On the

Introduction

12

other hand, the socially constructed nature of path creation (Garud, Kumaraswamy, &

Karnøe, 2010) fits our research into the framework of the non-positivist—especially,

interpretative—paradigm (Brand, 2009).

Table 1-4. Descriptions of samples

Paper

Nr.

Interview partners/Companies studies Initial

sample

Final

sample

Paper III Global level (Headquarters): managers at the compensation and

benefits department, vice-president

Regional level: employee of the shared-services unit

Local level (subsidiaries): representatives of local top

management, HR management, and employee representatives

13 13

Paper IV Public companies representing the major stock market indices

of the Warsaw (WIG 20), Prague (PX), and Budapest (BUX) stock

exchanges (as of December 2, 2010) and incorporated in the

respective CEE countries.

46 32

Paper V Public companies listed on the Warsaw Stock Exchange on

December 12, 2011 and registered in Poland.

426 362

The research presented in Paper III builds on an embedded single case study (Yin,

2003) based on interviews and secondary data. The major rationale for choosing this

methodological approach was the necessity to understand and interpret the evolution of

organizational practices starting from the respective systems prior to transformation. The

data analysis technique used in this study can be described as exploratory thematic

analysis (Onwuegbuzie & Tedllie, 2003). Our research based on multiple interviews

conducted with actors in different units of an embedded case study, the analyses of

company documents, and academic research on historical and current compensation

practices in CEE, had an iterative character, which is a common feature of analysis within

case study design (Yin, 2003).

In the second empirical article (Paper IV), a qualitative study of share-based

compensation schemes in Czech, Hungarian, and Polish companies belonging to major

Introduction

13

stock indices was performed based on the content analysis (Krippendorff, 2013) of

company annual reports. Also in this case, we aimed at exploring those factors affecting

the analyzed compensation schemes, rather than at theory testing.

On the contrary, the research presented in Paper V builds on logistic regression

(Hosmer & Lemeshow, 2000) tests of hypotheses based on the assumptions of the agency

and neo-institutional theories. The independent variables for this study were derived from

studies conducted in the contexts of industrialized economies (Alves, 2011; Berrone,

Makri, & Gomez-Mejia, 2008; Pendleton, 2006; Porac, Wade, & Pollock, 1999; Rankin,

2010; Ryan & Wiggins, 2000; Yoshikawa & Rasheed, 2010) and the extant research on the

particularities of corporate governance systems in emerging economies—including CEE

transition states (Peng, Wang, & Jiang, 2008; Weinstein & Obloj, 2002; Young et al., 2008).

By selecting this approach, we aimed at verifying the applicability of the agency theory in

CEE post-state socialist economies, i.e., within specific institutional settings in the region.

1.2. STRUCTURE OF THE DISSERTATION

Following the introduction section of the present dissertation, the bibliographical

information on each of the five papers is provided. In the discussion section, I summarize

and discuss the main findings, limitations, and avenues for future research. Here, the

discussion is organized according to the theoretical perspectives used in the respective

papers: Path dependence, isomorphic pressures, and agency considerations. Finally, I

draw conclusions and suggest implications for academic research and practice.

Paper I. HRM Activities: Pay and Rewards

14

2. Paper I. HRM Activities: Pay and Rewards

Published as: Festing, M., Engle, A. D., Dowling, P. J., & Sahakiants, I. (2012). HRM

Activities: Pay and Rewards. In C. Brewster & W. Mayrhofer (Eds.), Handbook of Research

in Comparative Human Resource Management (pp. 139–163). Cheltenham: Edward Elgar

Publishing.

Paper II. Compensation Practices in CEE EU Member States

15

3. Paper II. Compensation Practices in Central and

Eastern European EU Member States—An

Analytical Framework Based on Institutional

Perspectives, Path Dependencies, and Efficiency

Considerations

Published as: Festing, M., & Sahakiants, I. (2010). Compensation Practices in Central and

Eastern European EU Member States—An Analytical Framework Based on Institutional

Perspectives, Path Dependencies, and Efficiency Considerations. Thunderbird International

Business Review, 52, 203–216.

DOI: 10.1002/tie.20325.

Paper III. Path-Dependent Evolution of Compensation Systems in CEE

16

4. Paper III. Path-Dependent Evolution of

Compensation Systems in Central and Eastern

Europe: A Case Study of Multinational Corporation

Subsidiaries in the Czech Republic, Poland and

Hungary

Published as: Festing, M., & Sahakiants, I. (2013). Path-dependent Evolution of

Compensation Systems in Central and Eastern Europe: A Case Study of Multinational

Corporation Subsidiaries in the Czech Republic, Poland and Hungary. European

Management Journal, 31, 373–389.

DOI: 10.1016/j.emj.2013.01.005.

Paper IV. Determinants of Share-Based Compensation Plans in CEE Public Companies

17

5. Paper IV. Determinants of Share-Based

Compensation Plans in Central and Eastern

European Public Companies: An Institutional

Analysis

Published as: Festing, M., & Sahakiants, I. (2011). Determinants of Share-Based

Compensation Plans in Central and Eastern European Public Companies: An Institutional

Analysis. Journal for East European Management Studies, 16, 338–357.

Paper V. The Use of Executive Share-Based Compensation in Poland

18

6. Paper V. The Use of Executive Share-Based

Compensation in Poland: A Study Based on

Institutional and Agency Theory Perspectives

Under review as: Festing, M., & Sahakiants, I. (2012). The Use of Executive Share-Based

Compensation in Poland: A Study Based on Institutional and Agency Theory Perspectives.

Manuscript under review in the International Journal of Human Resource Management.

Available from the author upon request.

Discussion

19

7. Discussion

The research presented in the papers constituting this dissertation shows that

idiosyncrasies found within compensation systems in CEE countries can be explained

effectively using various theoretical perspectives and methodological approaches. In the

following, I will discuss the results of the studies by showing the interrelation between the

single papers of the present dissertation and by addressing each of the theoretical

approaches used in the above studies, as well as present limitations and avenues for

future research.

7.1. DISCUSSION OF RESULTS

Figure 7-1 below presents the major results and relationships between the findings of the

papers constituting the present dissertation.

The analysis of international comparative rewards presented in Paper I showed

that international comparisons of various pay systems should be performed under the

specific consideration of both the monetary and non-monetary elements of total rewards

and take into account national contexts. This holistic view on comparative rewards and

the consideration of contextual factors was instrumental in analyzing the adoption of

Western-type compensation systems in CEE (cf. Paper II), a region in which pay systems

underwent and still undergo transformation with respect to both monetary and non-

monetary rewards. Here, the adoption of compensation systems is influenced by

isomorphic pressures (DiMaggio & Powell, 1983) resulting mainly from local institutions

such as legal regulations and trade unions. International companies represent a further

important source of change in CEE. The influence of sources of isomorphic change is

contingent on specific labor market conditions, particularly with respect to skilled labor

shortages, and the path dependence (Flanagan, 1998; Whitley & Czaban, 1998) of the HR

function in CEE organizations. Furthermore, the intensity of this path dependence, which

denotes the historical legacies of state-socialist organizations, varies depending on

company characteristics within the four major organization types present in segmented

post-state socialist capitalist systems (Martin, 2008): SOEs, privatized, de novo, and

international companies.

Discussion

20

Figure 7-1. Interrelation between the results of the papers constituting the dissertation

While the analysis presented in Paper II shows—along with the need to consider

specifically institutional influences on organizational practices—the primary importance of

the notion of path dependence for the study of pay practices in CEE mainly as a force

resisting organizational change promoted by isomorphic mechanisms, Paper III explores

the nature and origin of organizational path dependence in CEE. However, the analysis

and results of this paper go beyond the idea of HR function path dependence in CEE

companies, developed in Paper II, and deliver insights into the pre-transformation

evolution of the organizational path with respect to compensation practices in CEE as well

as existing conditions supporting this specific developmental path during the

Paper I Total rewards perspective is a valuable tool

for valid comparisons of international pay systems

Importance of contextual factors for a comparative analysis of international rewards

Paper III The initial sources of pay systems’ path

dependence in CEE were related to mechanisms complementary to central wage planning

Currently, national laws, worker representations, and organizational legacies maintain path dependence

MNCs, international management consulting companies, professionalization of the HR function, and generational change are potential sources of path dissolution

Paper IV Share-based compensation schemes in the Czech Republic, Poland, and Hungary are contingent on:

local national legislation and

ownership structures

Paper V Executive share-based compensation in

Polish public companies is influenced by: - state ownership, irrespective of the

state’s share in the company - company size

The impact of industry affiliation on executive share-based pay in Poland is moderated by company size

Paper II The transfer of pay systems in CEE is dependent on:

coercive, normative, and mimetic sources of isomorphic change (including both national and international institutions)

labor market pressures, and

path dependence of the HR function (the intensity of path dependence varies depending on the company type—state-owned, privatized, international or de novo)

Direct contribution to the respective papers

Discussion

21

transformation period. Here, the analysis covers historical developments with respect to

both monetary and non-monetary pay elements, in accordance with the approach

presented in Paper I.

Papers IV and V build partially on the findings of conceptual Papers I and II, in the

first instance with respect to the requirement to consider specifically institutional contexts

(in particular, relating to national legislations). The results of Paper V confirm statistically

the major finding of Paper IV, which demonstrates the impact of state ownership on the

existence of share-based compensation plans in Poland. However, the impact of the state,

described in Paper V, goes beyond mere legislatively mandated limitations on executive

pay levels and structures (according to the results of Paper IV) and also pertains to share-

based compensation in companies in which national states have only minority shares—

thus confirming the strong informal influence of the state in (mainly) post-privatization

companies in emerging economies reported in the literature (Dharwadkar, George, &

Brandes, 2000). Another important finding of Paper V is the significant impact of company

size on the existence of equity-based executive pay in Poland, which is in line with

assumptions based on the standard principal-agent theory (Jensen & Meckling, 1976).

These and a further partial effect related to financial industry affiliation are discussed in

the following subchapters, which are structured in line with the major theories used in the

papers constituting this dissertation.

7.1.1. Results related to the path dependence perspective

In conceptual Paper II we analyzed the notion of the HR function’s path dependence,

which—as described above—could be one of the factors facilitating or hampering the

adoption of specific compensation practices. This assumption of path dependence, used in

a rather metaphorical sense (Sydow et al., 2009), i.e., denoting the legacies of pre-

transformation organizational practices, was developed further in Paper III. The latter

paper, in which we specifically considered the complementary effects of self-reinforcing

mechanisms (Deeg, 2005; Sydow et al., 2009), explores the evolution of the

developmental path with respect to compensation practices in CEE. Our analysis showed

that although the major complementary institutions which enhanced and sustained the

path in the state-socialist period—such as central wage planning and an extensive

socialist-type welfare system—do not exist in their original form in CEE transformation

Discussion

22

countries, the path dependence of organizational practices is still maintained by a number

of institutions, including national laws and trade unions. Furthermore, based on our

findings, we suggest several possible ways to break the paths, which include both

exogenous (headquarters of MNCs or international management consulting companies)

and endogenous (generational change or the professionalization of the HR function)

sources.

Although the theory of path dependence was not applied explicitly in our

investigations presented in Paper V, one more interesting result of this study could also be

analyzed using this theoretical approach, namely the significant influence of the state on

pay decisions in companies co-owned by the state. However, the findings of the study

with respect to the informal influence of the state—through former managers of SOEs

employed by the companies, activities of current state officials in management or on

supervisory boards, etc.—could reflect organizational path dependence in CEE not

exclusively with respect to share-based compensation in listed public companies but

rather in relation to decision-making and organizational processes in general. This

phenomenon represents a challenging avenue for future research, as described in

subchapter 7.3 below.

7.1.2. Results related to the isomorphism theory

The assumptions of the neo-institutional, or, more precisely, the isomorphism theory

developed by DiMaggio and Powell (1983), were applied in Papers II, IV, and V. In Paper II,

this perspective was used to conceptualize the analytical framework for the study of

compensation practices in CEE countries, especially pertaining to the transfer of Western-

type—notably, pay-for-performance—pay schemes. Building on an extant literature

review, we attributed the impact of national and EU legislation, and well as trade unions

to a coercive impact; the influence of foreign investors or multinational corporations was

identified as mimetic pressure, while attitudes to the HR function in CEE enterprises were

determined as a normative impact on pay practices in CEE.

This conceptual differentiation between mechanisms of isomorphic change was

adopted in the analysis of share-based compensation in CEE listed public companies

(Paper IV). Here, we found that the coercive impact of national states was the most

powerful force affecting the implementation of the respective schemes in public

Discussion

23

companies, represented on the major stock exchange indices in the countries analyzed.

This finding was refined further by the results of the last paper in this dissertation: The

impact of the state in the CEE country studied (Poland) is not so much coercive but more

subtle—rather mimetic or normative—in nature. However, the expected impact of

financial industry affiliation, which could be attributed either to mimetic or normative

mechanisms of organizational isomorphism, was significant only when company size was

not controlled.

7.1.3. Results related to the agency perspective

The results of Paper V, which builds on a combination of agency and neo-institutional

theoretical approaches, are interesting in a number of ways. On the one hand, only one of

our agency-based hypotheses proved to be significant, namely the one related to the

impact of company size on the existence of executive share-based compensation. On the

other hand, no significant impact of the two remaining variables based on this theoretical

perspective, i.e., ownership concentration and family as the major shareholder, could be

found.

I suggest that the reason for the insignificance of the latter two results and the

significance of the impact of organizational size can be explained by the existence of

principal-principal conflicts characteristic of corporate governance systems in emerging

economies (cf. subsection 1.1.2.2 of this dissertation). On the one hand, it seems that the

magnitude of principal-principal conflicts in CEE is not contingent on either ownership

concentration or the fact that the company is predominantly owned by a family, but is

actually dependent on more subtle, informal power constellations. On the other hand, the

findings of Paper V with respect to company size suggest that even in CEE companies with

predominant principal-principal conflicts, there is still a place for principal-agent conflicts

between the controlling principal and the manager controlled by this principal, and these

are more acute in companies whose operations are more complex. Figure 7-2 below

shows both principal-principal and principal-agent relations in CEE public companies.

Discussion

24

Figure 7-2. Interplay of principal-agent and principal-principal conflicts in CEE companies

Source: Adapted from Young et al. (2008, p. 200).

Conversely, the bigger the company in terms of sales, the more complex its

operations. Thus, controlling principals tend to increasingly utilize long-term incentives in

line with the standard principal-agent theory (Jensen & Meckling, 1976).

Overall, although all the papers constituting this dissertation used different

theoretical lenses and methods to study various aspects of compensation systems in CEE

post-state socialist economies, they have one feature in common with respect to the

major results—they all develop respective theories for application in CEE transition states

in particular and emerging economies in general. Thus, the dissertation as a whole

contributes to the fields of human resource management and organization studies,

especially with respect to the analysis of pay practices in post-state socialist economies.

Several specific implications both for theory and practice are presented in the conclusion

section of this dissertation.

7.2. LIMITATIONS

Research presented in this dissertation has a number of limitations relating mostly to

journal articles (Papers II-V). Firstly, in Papers II and V, we used a combination of various

theories, including path dependence and neo-institutional perspectives in the first case

and neo-institutional and principal-agent theories in the second case, to build an analytical

framework for the study of compensation systems in CEE and to study executive share-

based pay systems in Poland, without testing the compatibility of assumptions underlying

the respective theoretical approaches. Secondly, the data used for our empirical research

in Papers IV and V reflect the situations at specific moments in time, and—strictly

Controlling

shareholders

(principals)

Managers

affiliated with

controlling

shareholders

(principals/agents)

Min

ority

shareh

old

ers

(prin

cipals)

Principal-agent

conflicts

Principal-principal

conflicts

Discussion

25

speaking—can deviate from general trends. Thirdly, in all the empirical papers, our

research is based on specific company types: Subsidiaries of a North-American MNC in

Paper III, locally based listed public companies in Poland, Hungary, and the Czech Republic

analyzed in Paper IV, and the same company forms in Poland studied in Paper V. However,

analyses of other company types (i.e., SOEs in Paper III or limited liability companies in

Papers IV and V) or CEE subsidiaries as part of MNCs from other countries of origin (e.g.,

western, southern or northern European on the one hand, and BRIC countries on the

other hand) could deliver results different from those presented in this dissertation.

Finally, there are several limitations related to the methods employed. For

instance, although we sought to minimize the risks of validity problems related to

retrospective interviews, such as faulty memory and rationalization after the fact (Forgues

& Vandangeon-Derumez, 2001), it is still possible that the findings of Paper III are still not

completely free of respective errors, for instance due to the fact that our interview

partners might have presented past events in a way different to what actually occurred.

However, as all the information presented by our interview partners has been carefully

verified during consecutive interviews and by using secondary data, I believe that the risk

of such errors is indeed very small. Further limitations relate to the fact that Paper IV is

based only on an analysis of a rather small number of companies—below the levels

necessary for statistical analysis which could be used to verify the respective findings.

Lastly, in Paper V, we used a dichotomous dependent variable to denote the existence of

executive share-based compensation plans, and thus were not able to analyze either the

monetary value of respective schemes or the percentage of share-based pay in the total

compensation packages of respective directors. However, this limitation reflects data

quality resulting from the current disclosure standards in Poland rather than the method

choice made by the authors. I hope, however, that the further development of

compensation disclosure quality in Poland and other CEE countries will allow for a study of

share-based compensation beyond the mere existence of such pay schemes.

7.3. AVENUES FOR FUTURE RESEARCH

As outlined in Paper I, a very important challenge for comparative compensation research

is the holistic analysis of multiple components constituting total rewards in respective

countries, including both monetary and non-monetary incentives. There is a need for

Discussion

26

more extensive use of this assumption in cross-national research on the determinants of

pay practices, rather than focusing on absolute pay levels or single compensation

elements.

Another challenging avenue for future research is a replication of the studies

presented in this dissertation to different company types, various countries of origin of

the MNCs studied, and further CEE countries. For instance, more dependence on historical

developmental paths is expected to be found in SOEs or in joint ventures with state-

owned partners (Festing & Sahakiants, 2010a). On the other hand, replications of these

studies in other CEE economies as well as Eastern European countries of the former Soviet

Union would allow one to generalize the results of all three empirical studies of this

dissertation to European transition states in general.

A very challenging avenue for further research relates to the findings of Paper V. As

already mentioned in section 7.1.1 of this dissertation, I suggest that the path dependence

theory might be a useful tool for studying the informal influences of national states on

compensation practices in post-privatization CEE firms. Here, an in-depth historical

analysis of management structures and decision-making processes could help to shed light

on the role of the state in post-privatization firms operating in post-state socialist

transition economies.

In the following final chapter, I present the theoretical contributions of the

research presented in this dissertation and its implications for managerial practice.

Conclusion

27

8. Conclusion

To quote Van de Ven, “*a+ central mission of scholars and educators in professional

schools of management… is to conduct research that contributes knowledge to a scientific

discipline, on the one hand, and to apply that knowledge to the practice of management

as a profession, on the other” (1989, p. 486). In the following subchapters I will outline the

theoretical and practical contributions of the present dissertation.

8.1. THEORETICAL CONTRIBUTIONS

Although the theoretical contributions of the research presented in this dissertation are

manifold, they have one thing in common: Based on the assumptions of Paper I and

various theoretical approaches, they all seek to exploit and combine different theoretical

approaches in order to study compensation practices in CEE.

Firstly, in Paper II, we took a first step towards integrating path dependence and

neo-institutional theories for a study of the transfer of pay practices to CEE, a region

which had to rebuild national institutional frameworks after the collapse of state-socialist

regimes. Here, the promotion of novel organizational practices by both endogenous and

exogenous sources of isomorphic change seems to be hampered by historically

determined developmental paths, described by the notion of path dependence. Secondly,

Paper III is an example of the application of path dependence theory to study

organizational practices in CEE. This study contributed to the discussion on path continuity

after a considerable exogenous shock, such as the collapse of state-socialist regimes in

CEE as well as the possibility and limits of breaking an organizational path. Thirdly, the

analysis presented in Paper IV can be regarded as a good example of utilizing the neo-

institutional theory in a study of equity-based pay systems under the specific

consideration of regulatory contexts. Finally, in Paper V, we demonstrated the usefulness

of a combination of standard principal-agent and neo-institutional approaches to studying

executive compensation practices in Poland, first of all, in view of principal-principal

conflicts and informal influences on corporate decision-making in the region. Our results

showed that—unlike agency relationships in industrialized countries—principal-agent

Conclusion

28

relations in European transition states are guided increasingly by informal influences

embedded in the respective institutional contexts.

Taken together, the studies presented in this dissertation can be viewed as an

example of the usefulness of the multiparadigm approach, the value of which is described

by Gioia and Pitre as follows: “Given our multiparadigm perspective, we believe it would

be useful for theory building to be viewed not as a search for the truth, but as more of a

search for comprehensiveness stemming from different worldviews” (1990, p. 587; italics

in original). Thus, we were able to profit from “the multiplicity of perspectives that make

up our field… and take advantage of the diversity organization theory offers” (Schultz &

Hatch, 1996, p. 530) to study the evolution and determinants of compensation systems in

European transition states.

8.2. IMPLICATIONS FOR MANAGERIAL PRACTICE

According to Rynes, Bartunek, and Daft (2001), there is “a considerable gap between

organizational research findings and management practices” (p. 340), which “has been of

longstanding concern to many members of both [the academic and practitioner]

communities” (p. 350). Mohrman, Gibson, and Mohrman Jr. (2001) state: “Today’s world

heightens the need for useful research. Many organizations grapple with new and poorly

understood problems as they adapt to rapidly changing environments… *However,+ as

organizations adopt new approaches to organizing, organizational science has often

lagged behind practice” (p. 357).

Although all of the studies presented in this dissertation are based on the data on

organizational practices in existing organizations, and thus—to some extent—represent a

snapshot of current practices, I believe that my research offers some important

implications for practitioners in the field of HR and for the general management of

companies operating in European post-state socialist economies. On the one hand, a

systemic scientific analysis of organizational practices may bring to light some

relationships and phenomena which are far from obvious to practitioners, thus making

research interesting to the non-academic public. Davis defined “interesting” insights as

those representing “anything which… stands out in their attention in contrast to the

routinized taken-for-granted world of everyday life” (1971, p. 311). On the other hand,

Conclusion

29

implications for practice are related to the dimension of the practical utility of theories,

which, according to Corley and Gioia, “is seen as arising when theory can be directly

applied to the problems practicing managers and other organizational practitioners face”

(2011, p. 18).

I believe that the research presented in this dissertation offers an alternative

perspective to the analysis of organizational phenomena. Rephrasing the assumption put

forward by Ghoshal (2005), whereby bad theories have the potential to destroy good

practices, the unpremeditated use of good theories with undeniable explanatory power—

such as cultural perspectives (Dorfman, Javidan, Hanges, Dastmalchian, & House, 2012;

Hofstede, 1980)—may be non-efficient and lead to stereotyping (Milkovich & Bloom,

1998). Conversely, the use of the path dependence, neo-institutional, and agency

approaches to organizational analysis can in many cases be instrumental in understanding,

predicting, and combating inefficiencies, as well as designing and implementing efficient

organizational systems and practices.

In particular, the studies presented in this dissertation could offer practitioners

concrete guidance in specific issues related to international compensation. For instance,

the total rewards perspective outlined in Paper I could help decision-makers in the field of

compensation and benefits in MNCs design and communicate more equitable pay systems

throughout the globe and thus contribute to increased distributive justice (Bonache,

Sanchez, & Zarraga-Oberty, 2009; Leung, Wang, Zhou, & Chan, 2011) without considering

an equalization of basic pay levels worldwide, which is still a fairly unrealistic undertaking

in view of the current international differences in standards of living (Gross & Wingerup,

1999).

Moreover, an understanding of the nature and mechanics of path dependence,

first outlined in Paper II and developed in Paper III, could help organizations to recognize

inefficient systems and processes related to the respective paths, and then devise

adequate countermeasures. For example, I suggest that HR managers in formerly state-

owned CEE companies should pay special attention to the analysis of existing

compensation structures and incentive systems and—keeping in mind often non-

transparent decision-making processes with respect to pay in CEE enterprises prior to

transformation—focus mainly on procedural justice (Folger & Konovsky, 1989). Moreover,

I suggest that—contrary to the still popular belief that the pay preferences of employees

Conclusion

30

in post-state socialist CEE countries reflect egalitarian attitudes—compensation systems in

the region should be designed to increasingly reward individual performance.

Finally, analyses presented in Papers IV and V offer useful insights into the

considerable impact of both formal and informal institutions on equity-based

compensation systems in CEE, on the one hand, and specific manager-owner relationships

in the region, on the other hand. I believe that of primary importance is knowledge on the

influence of the state on decision-making in CEE post-privatization companies, especially

for HR managers in MNCs that have only recently established operations in the region. An

understanding of such—often informal—influences might be useful for decision-makers

when selecting indicators and benchmarks for designing efficient long-term incentive

packages.

8.3. CLOSING REMARKS

Taken as a whole, the papers constituting the present dissertation represent a single piece

of research consisting of interrelated projects and dedicated to the topic of compensation

practices in CEE transition states. In this work, I addressed various aspects of reward

management in CEE—including both broad-based (i.e., with respect to all employee

groups) and narrow-based (i.e., designed for selected employee groups, above all,

executives) pay systems—by utilizing several theoretical approaches such as the path

dependence, neo-institutional, and principal-agent theories.

I hope that—notwithstanding the limitations of single studies—this article-based

dissertation has the potential to contribute not only to the understanding of pay practices

in the region, but also to the academic fields of human resource management and

organizational studies, on the one hand, and managerial practice, on the other. Still, this

work is only a brick in the foundations of theoretical and practical knowledge on pay

practices in CEE post-state socialist economies, but it can serve as a basis for further

research dedicated to organizational phenomena in European transition states.

References

31

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