A model of multinational enterprise subsidiary staffing composition

A large proportion of the multinational enterprise (MNE) literature focuses on parent country national (PCN) expatriates. The high costs of managing and supporting PCNs on foreign assignments, however, have made these assignments less attractive for MNEs and, as a result, MNEs are more actively exploring ways to effectively utilize third country nationals (TCNs) and host country nationals (HCNs), as well as PCNs to satisfy international subsidiary staffing needs. Grounded in the person–environment (P–E) fit theory, we delineate three environmental dimensions (strategic, national and organizational) to offer some propositions that may serve to guide this exploration. These propositions are based on an integrative model that examines the MNE subsidiary staffing composition under different combinations of strategic, national and organizational dimensions. We conclude with suggestions for future research.     

Diversificationas a Strategic Preemptive Weapon

This article examines the role that multimarket operations play in a firm's ability to preempt entry into new markets when presence in a market does not commit the firm to remain there. Success in one market affects a firm's incentives and, in turn, strategic power, to fight a rival fur survival in a related market. This is modeled as a way of attrition, and the risk-dominant equilibrium is derived. The model supports brand proliferation as a credible preemptive strategy for an established firm and also has implications regarding the strategic role of economies of scope and "deep pockets."     

What Constitutes the Costs and Advantages of Firms Investing Overseas?

Different theoretical perspectives offer conflicting views regarding the sources of costs and advantages of firms investing overseas. Empirical analyses of financial services affiliates in London illustrate considerable inconsistencies with the predictions of Multinational Enterprise (MNE) theory regarding the significance of these attributes and their classification as costs or advantages. These analyses suggest that the performance consequences of the costs and advantages depend on a variety of contingencies and change significantly over time, questioning the categorical assignment of these attributes as costs or advantages in MNE theory. The findings provide a basis for adequate and nuanced strategic treatment of the costs and advantages. Copyright © 2011 John Wiley & Sons, Ltd.     

MNE competitiveness: A scenario-driven technology transfer construct

To compete effectively, multi-national enterprises (MNEs) must establish market presence in their global rivals' home courts and/or profit sanctuaries. Technology transfer is often used as a means toward that end. The technology adoption decisions of an aggressor MNE and a defender MNE are investigated in a model that features indirect moves and changes in strategy through technology transfer. Each firm may adopt a strategy that incorporates the transfer of high technology or appropriate technology. The strategic decision situation is modelled as a closed-loop sequential equilibrium in discrete time. In contrast to results in the technology adoption literature, the aggressor MNE may successfully transfer technology first, to be imitated later by the defender MNE. This and several other scenarios emerge from the model which, by incorporating the cost of social adjustment and risks involved in technology transfer, ties technology to the competitive interaction of MNEs and specifies conditions for creating competitive advantage through technology, both locally and worldwide.     

An investigation into international assignment directions of R&D MNE employees: evidence from Greece

In this study, we explore the effects of the roles of research and development (R&D) laboratories, roles of subsidiaries and level of technological intensity of the sector in which multinational enterprise (MNE) subsidiaries operate on international assignment directions of R&D employees. International assignments are an underinvestigated issue in the international human resource management literature despite its significant research and managerial importance. In particular, to the best of our knowledge, no prior research on international assignments of R&D employees has been undertaken and so the current study aims at filling this void in the literature. Based on a large quantitative research on MNE subsidiaries operating in Greece, the findings suggest that variables of the aforementioned categories of factors influence different international assignment directions, with roles of the R&D subsidiary exerting the most crucial effect. Researchers may examine the unexplored issue of R&D employee international assignments to a larger extent, while MNE management can particularly take into account the micro (laboratory) context of R&D international assignees when developing effective international human resource management programmes.     

Adherence to environmental law: the strategic complementarities of compliance decisions

In this paper we address why firms comply with environmental regulations when enforcement is weak by suggesting that firms choose their level of environmental compliance strategically. Our theoretical model shows that compliance decisions among firms are strategic complements—increased compliance by one firm will positively influence the compliance rate of its rival. In our empirical analysis we find that the compliance rates of other regulated entities have a positive and significant effect on a regulated source's compliance behavior in three of our four heavily regulated industries. If compliance decisions are strategic complements, this may partially explain high compliance rates in the presence of limited regulatory pressure.     

A Blessing and a Curse: Institutional Embeddedness of Longstanding MNE Subsidiaries in Emerging Markets

This article examines the institutional strategies of multinational enterprises (MNEs) operating in an emerging market, drawing attention to how longstanding foreign subsidiaries proactively negotiate their involvement with socio-political actors. We build on institutional logics to explain how MNE subsidiaries develop sustained political, cultural, and cognitive embeddedness. Using an inductive, interpretive study of four century-old Dutch MNE subsidiaries with a colonial legacy in Indonesia, we examine these three dimensions of the institutional environment, finding that local employees embedded in both the MNE and the host country sets of logics ‒ rather than expatriate managers ‒ most effectively facilitated sustained institutional embeddedness. Our findings also suggest that embedding practices in host institutional contexts and developing structures that align with host institutional expectations provided a platform for the unfolding of institutional strategies by local employees. However, MNE subsidiaries face contrasting logics between home and host country institutions, placing significant strains on MNEs’ ability to enact change.     

The choice between greenfield investment and cross-border acquisition: A real option approach

The purpose of this study is to formalize the choice of market entry strategy for an individual multinational enterprise (MNE) from a dynamic perspective. It is argued that incorporating a suitable treatment of irreversibility, uncertainty and flexibility related to a MNEs investment decision gives further insights to the choice of cross-border acquisitions to greenfield investment as the preferred entry mode. In most cases, the initial entry strategy serves as a platform allowing the firm to make subsequent investments to exploit host-country advantages and capabilities. We allow for this by taking a two-step expansion strategy explicitly into account. The evolutionary process of the value of the foreign direct investment includes two stochastic elements as well as the timing that triggers the transition from export to foreign direct investment. The results suggest that uncertainty and future investment opportunities play an important role when it comes to transit from export to the first phase of the foreign direct investment commitment as well as have an impact on the choice of entry strategy.     

A theory-based framework for strategic global human resource staffing policies and practices

As multinational enterprises increasingly globalize their operations, managing international human resources strategically becomes a critical factor contributing to overall organizational performance. The strategic management of international human resources has received extensive attention, focusing on staffing issues related to expatriate assignments. However, empirical findings indicate limited success of expatriation as an effective method for managing the breadth of international human resource opportunities. As market opportunities increasingly shift to countries with high cultural distance from the parent organization and as organizations evolve their strategic orientation from multinational to global activities, it appears that an exclusive reliance on expatriation-based staffing will impede effective management of international human resources staffing. The objective of this article is to review and clarify a theory base that can support a range of international human resource staffing systems that might be implemented in a global environment. This discussion uses the combined perspective of agency and expectancy theories and discusses conditions under which specific strategic staffing choices might be most effective.     

Multinational Enterprises and the Competitiveness of Transitional Host Economies

Abstract

The paper re-examines a hypothesis that multinational enterprise (MNE) subsidiaries in Poland make a significant contribution to host country competitiveness by raising overall export performance. Multiple indicators based on UNCTAD methodology are used by the authors to analyze Poland's export competitiveness and link this competitiveness to MNE subsidiaries export propensity and innovativeness. They find a confirmation of the positive impact of MNEs on the Polish export sector that has substantially strengthened the country's capacity to compete in world markets and speeded up the transition process to the market-led system.     

Talent management and dynamic view of talent in small and medium enterprises

Talent Management (TM) has become one of the key strategic issues for leaders in global organizations and the majority of research on TM focuses on the large multinational enterprise (MNE) context. Despite the importance of small and medium-sized enterprises (SMEs), research in the area of talent management in this context is scarce, particularly conceptual research. This paper tries to address this gap by a) providing a theoretical rationale for the difference between large and SME firms in their talent management and human resource practices; b) exploring the applicability of the notion of talent management conceptualised in large firms to the SME context. c) Proposing a framework that helps identify the characteristics of talent in SMEs. We are critical of the best practices approach and we argue that the notion of talent management is likely to be different in SMEs compared with large firms mainly due to distinct institutional and structural factors.     

MNE regional head offices and their affiliates: talent management practices and challenges in the Asia Pacific

The paper explores the processes and challenges involved in multinational enterprise (MNE) establishing and operating regional headquaters (RHQs) as bridges between the parent HQ and their subsidiaries within a region. The role of regional structures has been neglected in research on international management, and, until recently, especially in research on HRM and talent management (TM). We know little about how MNEs develop, introduce and adapt TM (global TM (GTM) in this context) to accommodate local/country/regional contexts and challenges. The paper addresses these lacunae by reviewing the literature on GTM, MNE regional structures and GTM in the Asia Pacific region, and by presenting our findings from a study of the recent establishment by a multinational vehicle manufacturer of a regional headquarters in the Asia Pacific region. Four main challenges were identified: setting up the regional headquarters, legitimacy and contribution issues relating to the role of the RHQ, specific regional TM matters and centralisation versus decentralisation within the region.     

Dynamic competitive retail pricing behavior with uncertainty and learning

When competing retailers lack full information about rivals' decision processes, how will dynamic pricing behavior vary from patterns observed in more traditional static or full-information models? We investigate this question in a dynamic alternating-moves duopoly model. Retailers update (linear) conjectures about rivals' future prices in a Bayesian fashion. We show that as observed and expected prices converge, a pricing equilibrium is always achieved, whether or not the conjectured and actual values of the slope of the rival's best response function are consistent. Assuming specific parameter values, we compare equilibrium prices and associated profits in our Bayesian learning model with those obtained under the assumptions of static Nash behavior, collusive behavior and dynamically optimal behavior with full information. We apply the notions of strategic substitutability and strategic complementarity to the analysis and find that when products are strategic complements, conjectures of higher rival price responsiveness lead to higher steady-state prices and profits. The reverse is true for strategic substitutes. We also find that learning about a rival's behavior proceeds more quickly, the less intensely related in demand are products. We find, in general, that equilibrium pricing patterns and profits can vary considerably from those in full-information environments, but that even with grossly wrong beliefs about rival behavior, competing retailers are still attracted to an equilibrium. The analysis suggests not only the value of investigating lessthan-full information situations but also the potential incremental value of signalling greater or less aggressiveness than truly characterizes one's behavior as a strategic option.     

A Global Value Chain Analysis of the ‘Regional Strategy’ Perspective

In this counterpoint paper we argue that the findings presented by the ‘regional strategy’ literature do not capture the full array of global activities of the multinational enterprise (MNE). While this literature makes an important contribution to the field by showing that sales and production activities in the MNE are regionally structured, we argue that this assessment is biased for two reasons. First, this approach overly focuses on geographical location of downstream activities, while disregarding that of knowledge creation and other relevant upstream activities in the MNE. Second, the approach associates the firm's value creation only with its internalized activities and does not capture the value created through any activities that are externalized. Many MNEs rely to a significant extent on value creation outside the firm's legal boundaries. We argue that such omissions are likely to lead to biased interpretations using different theoretical lenses, such as the knowledge‐/resource‐based view, internalization theory and more general transaction cost economics. Based on our reasoning, we provide recommendations for future research both within and beyond the ‘regional strategy’ literature.     

MODELING EQUILIBRIUM REGIONAL INTEGRATION BY ENDOGENISING MARGINAL COST IN THE COURNOT FRAMEWORK

This paper examines the formation of endogenous alliances between local firms and multinational enterprises (MNE), which in turn drives regional integration in the global economy. The proposed model is an extension of the Cournot duopoly with linear demand, in which the cost function is predicated on the size of local alliance that can be interpreted as the scale of operation. The paper also makes a departure by assuming managers are not only motivated by profits, but also by the scale of operation or "empire building". Forward-looking MNEs strategize their current alliance formation activities from whence we derive a Nash equilibrium configuration of regional integration. We demonstrate that the equilibrium can be beset with multiplicity, indeterminacy, fragility, and chaotic regimes.     

Strategic Delegation with Multiproduct Firms

This paper shows that a multiproduct firm may find it optimal not to delegate the sales of all products and therefore to employ different distribution channels for different products. It faces the following trade-off: There is a strategic effect associated with delegation, but if both products' sales are delegated, intrafirm competition is not internalized. By delegating the sales of just one of the products while selling the other product directly—partial delegation—the multiproduct manufacturer strikes just the right compromise: The externalities between its owns products are internalized partially while a strategic advantage is achieved against its rival single-product manufacturer. Partial delegation also holds if both products are sold by a common retailer; it dominates full delegation when both manufacturers are multiproduct firms .     

Examining the ‘black box’ of human resource management in MNEs in China: exploring country of origin effects

We examine the impact of HPWS on the attitudes and retention of Chinese employees in multinational enterprises (MNEs) operating in China. More specifically, we examine the extent to which the degree of HPWS and the impact of these practices differ according to the country of origin of the MNE. We surveyed a sample of 410 Chinese employees currently working in Western and Asian MNEs. The findings indicate significant ‘country of origin’ effects, where employees of Western and Asian MNEs perceive different levels of HPWS are in operation in their respective organisations. Employee trust, job satisfaction and affective commitment are all important factors in the retention of Chinese employees of MNEs, with high levels of commitment being the most significant factor. However, the relative impact of these factors on employee retention differs by country of origin of the MNE.     

How strategic considerations influence decision making on e-HRM applications

Although numerous studies indicate that the added value of human resource management is strongest when HRM decisions are linked to the organizational strategy, practical knowledge about how strategic considerations influence decision-making processes relating to e-HRM is limited. Therefore, the purpose of this study is (1) to examine in three case studies how strategic considerations influence the decision-making process around the introduction of e-HRM applications, (2) to present propositions for further research, and (3) to offer recommendations on how to better include strategic considerations in the decision-making process. Three in-depth case studies of companies' e-HRM implementation were performed using a model on e-HRM strategy formulation (Marler, 2009). The case studies reveal that when specific business drivers are absent from the decision-making process, the main role of e-HRM becomes to provide an infrastructure with a focus on preventing dissatisfaction. In order for e-HRM to be used in a more strategic way, business and HRM should be aligned.Based on the findings, we offer research propositions for academics studying this emerging field of the interconnections between strategy, human resource management and IT systems. In addition, we offer recommendations for HR practitioners on how to optimize the match between business and HRM.     

Modeling an HR shared services center: Experience of an MNC in the United Kingdom

An increasing number of large and multinational organizations are moving to shared services models in delivering the human resource function. It is commonly believed that the adoption of an HR shared services model can transform the role of HR by enabling the HR function to be more strategic at the corporate level and more cost‐effective at the operational level. However, few academic studies have been carried out to investigate challenges to implementing an HR services center successfully and the impact of adopting an HR shared services model on different groups of employees. Through a case study of a multinational corporation, this article reveals that there remains a significant gap between literature espousing the efficacy and utility of HR shared services and the extent to which the adoption of such a model is successful. The financial and emotional cost of moving to a shared services model can outweigh the tangible cost savings predicted by firms. The idea of separating the HR function into strategic, operational, and administrative components may prove to be too simplistic, although it underpins the initiative of HR shared services. © 2006 Wiley Periodicals, Inc.     

The reluctant bargainers? McDonald’s,unions and pay determination in Germany and the UK

There is growing evidence that multinational enterprises (MNEs) increasingly develop organisation-based employment strategies, which promote the transmission of employee relations practices across national borders. This article provides an analysis of one MNE’s employee relations practice and what appears to be its preference for operating, where possible, independently of national industrial relations systems. The findings, which draw on a UK/German comparison, raise a number of questions about the adequacy of even highly juridifed national systems to protect workers rights in practice.