Does pay matter to everyone? A national culture analysis of relative pay and job satisfaction

This study examines how national culture moderates the relationship between relative pay and job satisfaction. While pay is traditionally seen as a primary work motivator, our research, using the PIAAC dataset across 24 countries, considers a cultural-psychological perspective, revealing a complex interplay of societal values. We explore the effect of Hofstede’s cultural dimensions, particularly masculinity/femininity and individualism/collectivism, on this dynamic. We draw on a psychological framework that examines two fundamental human motivations: the drive for individual achievement and success (agency) versus the drive for social connection and cooperation (communion). Our findings indicate that in individualistic and masculine cultures, where financial achievement is highly valued, relative pay significantly affects job satisfaction. Conversely, in societies with a focus on cooperative and relationship-oriented values, this relationship is less pronounced. This study contributes to understanding the role of national culture in shaping the influence of pay on job satisfaction. It highlights the need for culturally sensitive compensation strategies, particularly in global organizations. Competitive salaries and monetary incentives may be more effective in individualistic and masculine societies, whereas in community-focused and relationship-oriented cultures, a holistic approach prioritizing social bonds could be more beneficial. This approach can significantly enhance employee satisfaction, essential for effective business operations.