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Lincoln Electric
Incentive System
Cultural implications for the Netherlands
1. Company Background
Lincoln Electric Holdings, Inc. (LE) is a publicly held company founded in 1895 in Ohio, USA. LE is the world leader in designing, developing and manufacturing welding and cutting products and systems, reporting net sales of almost 2 billion dollars in 2006. Headquartered in Cleveland, the firm has 30 manufacturing locations in 18 countries, of which one is located in Nijmegen, the Netherlands. LE markets its products in more than fifty countries, in every inhabited continent and employs more than 7000 people worldwide. Geographic dispersion is managed with the help of an organizational structure based on regions. Top executives of the company are exclusively American nationals, including the CEO and fifteen vice-presidents, of which five are the heads of the regional divisions. Lincoln has established its worldwide presence in terms of sales and production by pursuing a dynamic international expansion strategy mainly based on joint ventures and acquisitions of existing capacities. It seems that the company is evolving towards a geocentric structure in the future with a high degree of local responsiveness and global integration (Heenan, 1979) but the current stage of this development is characterized as a mixture of ethnocentric (top management) and domestic/regioncentric IHRM approaches (Caligiuri, 1995). Lincoln's success has been largely attributed to the company's unique incentive system that will serve as the basis for this report. As LE sees itself as an American company this analysis will assume that the company implements the core of its HR systems worldwide, although local manag ...