Equity in non-North American contexts Adapting equity theory to the new global business environment Robert Konopaske * , Steve Werner 1 Department of Management, College of Business Administration, University of Houston, Houston, TX 77204-6283, USA Abstract This paper represents a first step in understanding which factors influence the perceived equity of pay and benefits of expatriates from advanced industrialized nations (AINs) and developing countries (DCs). We explore this issue within the framework of equity theory. Specifically, we analyze and extend equity theory to non-North American contexts. This may help further our understanding of which factors expatriates use when comparing their input/outcome ratios to that of their referent others. We identify three potential factors and develop six propositions regarding how these factors will influence perceived inputs and outcome expectations of expatriates. D 2002 Published by Elsevier Science Inc. Keywords: Equity theory; Expatriate compensation; Global business 1. Introduction The world has entered a new stage of worldwide economic activity which includes strategic alliances, global production, and worldwide distribution (Adler, 1991). In order to compete in this highly competitive and complex business environment, US firms strengthen their relative positions by employing their international human assets in a manner which helps them establish and sustain competitive advantage (Barney, 1991; Schuler & Rogovsky, 1998). An annual survey by Windham International and the National Foreign Trade Council (1997) 1053-4822/02/$ – see front matter D 2002 Published by Elsevier Science Inc. PII:S1053-4822(02)00067-0 * Corresponding author. Tel.: +1-713-743-4668; fax: +1-713-743-4652. E-mail addresses: robk@uh.edu (R. Konopaske), swerner@uh.edu (S. Werner). 1 Tel.: + 1-713-743-4672; fax: + 1-713-743-4652. www.HRmanagementreview.com Human Resource Management Review 12 (2002) 405 – 418