MNC's competitive strategies,experiences, and staffing policies for foreign affiliates

This study investigates the relationship between the strategic role of a multinational corporation's (MNC) foreign affiliates and its international staffing policy. Specifically, this study examines how an MNC's decision on expatriation is affected by strategic roles assigned to foreign affiliates: global integration of activities versus local market seeking. An empirical study is conducted using a sample of 808 foreign affiliates of Japanese firms. The research findings suggest that strategic roles of foreign affiliates alone may not adequately explain the international staffing policies of Japanese MNCs. Rather, we found a significant moderating effect of international as well as host country experience on staffing practices for foreign affiliates. While the staffing policies of MNCs striving for improving global efficiency of their operation are moderated by both international and host country experience, those seeking a specific local market position are influenced only by host country experience.     

Expatriates of host-country origin: ‘coming home to test the waters’

Expatriates are an integral part of any multinational company's (MNC) staffing strategy. However, the high failure rate of expatriates has forced these firms to look at alternate or complementary staffing strategies. This paper focuses on one such strategy, i.e., transferring people of host-country ethnic origin from parent-country to manage host-country operations. The purpose of this exploratory study is to ascertain whether and how MNCs have used expatriates of host-country origin (EHCO) as a global staffing strategy, in the context of India, and the extent of its success both for the individuals and the organizations concerned.

Based on a survey and in-depth interviews of human resource managers of 15 MNCs with operations in India, the study concludes that EHCOs are more willing to accept expatriate assignments than parent-country nationals (PCNs); however, their success on the assignment depends on the breadth and depth of their experience both in the parent and host country. With regard to their work effectiveness vis-à-vis PCNs, no significant difference was found. Managerial implications of this staffing strategy are explored and future research directions identified.     

Globalization of HR at function level: four UK-based case studies of the international recruitment and selection process

A series of the changes are being wrought on a range of IHRM functions – recruitment, global staffing, management development and careers, and rewards – by the process of globalization highlighting the difference between globally standardized, optimized or localized HR processes. However, our theoretical understanding of the issues involved is still driven by concepts rooted in global staffing strategies based on the management of small cadres of international managers, such as expatriates. The fragmentation of international employee populations and the changing structure and role of international HR functions has raised three important questions. The first concerns the study of globalization processes at functional level (staffing) and whether this can provide useful insights for the IHRM literature. The second concerns the indicators that best evidence globalization of staffing at the functional level, and whether these might form the basis of useful future research. The third concerns the patterns or strategies within the global HR recruitment activity of organizations across domestic and overseas labour markets and whether these patterns can be explained by existing theory. This paper reports on a study of firm-level developments in international recruitment and selection, drawing upon an analysis of four case studies each conducted in four theoretically derived contexts of centralized or decentralized control and co-ordination, and focus on domestic or overseas markets. It examines the disparities between policy and practice through interview of HR actors at corporate level and in country operations.     

International work in domestic jobs: an individual explanation

Australian firms are attempting to internationalize and to become global companies. One way of staffing the forays into international business is by incorporating international work into domestic jobs. This study sought to understand the factors related to the amount of international work Australians perform in their domestic jobs. Alumni from an Australian university were surveyed, providing 1,046 full-time domestic employees working in a range of industries. Regression analysis showed that, beyond individual and organizational controls, employees performed more international work in domestic jobs when they worked in organizations at higher than at lower international levels with human resource support, worked in jobs at higher rather than at lower managerial levels and had international skills. However, there was no or little link with employees' international attitudes or family situation. As predicted, the managerial level of the job made a difference to the effects of the work environment. Working in MNCs and domestic organizations with operations abroad was related to the amount of international work in domestic jobs performed by senior managers and executives more than by lower and middle managers or subordinates and supervisors. Analysis of open-ended responses shows the major reasons Australians take up domestic international work are money, professional development and challenging content. The major reasons they would not are family commitments and disruption, in contrast to the quantitative results in which family factors are unimportant. The difference between the quantitative and qualitative results and the importance of family factors, international skills versus attitudes and human resource support are discussed.     

Nationality background of MNC affiliates' top management and affiliate performance in Japan: knowledge-based and upper echelons perspectives

Drawing from the knowledge-based view of multinational corporations (MNCs) and the upper echelons perspective along with the theory of job demands, we examine the relationship between nationality background of MNC affiliates' top management (i.e. expatriates or host country nationals) and affiliate performance. Using a sample of 643 foreign MNC affiliates from 31 countries operating in Japan, we found that when the length of an affiliate operation was shorter, the affiliate performed better under the expatriate managing director rather than the Japanese managing director. We also found that when the size of an affiliate was larger and the length of operation was shorter, the affiliate performed better under the larger rather than smaller proportion of expatriates in the top management team. Implications for research and practice on top management staffing of MNC foreign affiliates are discussed.     

Expatriates in their own home: A new twist in the human resource management strategies of japanese mncs

Liaison positions in an overseas subsidiary represent a vital link to the parent company. Staffing this position constitutes a critical HRM decision. Based on exploratory interviews conducted with personnel managers and foreign employees, we examine an emerging approach to meeting this staffing need which entails hiring non-Japanese as employees of the parent company, retaining them at headquarters in Japan for three to four years, then assigning them back to their own countries as expatriates. We discuss this approach's underlying rationale, its advantages and disadvantages, and its potential implications for future IHRM developments within Japanese MNCs.     

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.     

Who's in Charge? An Empirical Study of Executive Staffing Practices in Foreign Subsidiaries

This study investigates executive staffing practices in foreign subsidiaries of multinational corporations. Grounded in a literature review of the reasons for employing either parent country nationals or host country nationals in top management positions in foreign subsidiaries, a number of factors influencing the choice between these alternatives are identified. Using a combination of an archival and mail survey research method, the influence of each of these factors is empirically tested with a sample of nearly 3000 observations. © 2001 John Wiley & Sons, Inc.     

Evaluating international managers' performance: parent company standards as control mechanism

The study argues that performance appraisal systems are a way to control international managers' behaviour and international operations in general. It examined the influence of three types of antecedents on the use of par-ent company standards as evaluation criteria, i.e. the power of international managers, international managers' commitment to the parent company and the company culture. The study used a sample of 162 internationals from four Belgian and one British parent company. The results indicated that international managers in high power positions were evaluated according to parent company standards. These managers were completing their foreign assignment in South America and Asia (uncertainty absorption), they had managerial jobs (centrality) and each was only one of a few other international managers in the host company (substitutabil-ity). Contrary to expectations,. they also showed a high degree of intercul-tural interaction.     

Building from below: subsidiary management moderation of employment practices in MNCs in China

The international human resource management literature has a long tradition of examining the impact of institutional differences on the employment practices adopted by multinational corporations (MNCs). The question of how actors make sense of institutional differences, however, has received less research attention. This study examines the enactment of employment practices as institutional differences are translated, contextualized and deployed by managers at subsidiaries of MNCs. Based on intensive case studies at two Japanese–Chinese joint-venture manufacturing plants, the study first shows that distinctive employment practices were adopted to manage the boundaries between employee groups. These distinctions are then explained by the institutional difference between the home country (Japan) and the host country (China) as well as the way that institutional differences were represented by the managers in the process of designing, developing and executing employment practices. The study therefore argues that country differences are not only assumed spaces, but are also a reservoir of management resources that are moderated, in the case of employment practices, by actors’ strategic choices and political actions before they are enacted in the subsidiary.     

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.     

An innovative global management staffing system: A competency‐based perspective

Significant demands are imposed on corporate management of multinational corporations (MNCs) to develop a strategic orientation of their global human resource management systems (SGHRM). This strategic orientation, which should balance the need for both global stability and local flexibility, necessitates a more pronounced multicultural management membership. The competency‐ based SGHRM system proposed in this paper combines an innovative global management staffing practice of inpatriating foreign managers with the extant practice of expatriating domestic managers. The competency‐based criteria are used to identify global manager candidate pools capable of executing an integrated global management system © 2000 John Wiley & Sons, Inc.     

Overcoming liabilities of origin: Human resource management localization of Chinese multinational corporations in developed markets

Despite the rapid growth of Chinese outward foreign direct investment in developed markets, many Chinese multinational corporations (MNCs) suffer from liabilities of origin (LOR)—capability‐ and legitimacy‐based disadvantages associated with the country of origin. This study identifies localization as a strategic mechanism through which Chinese MNCs overcome their LOR. With a specific focus on human resource management (HRM), we examine how factors associated with firms' perceived LOR, including springboard intent, local competition, and host country regulatory pressures, affect Chinese MNCs' adoption of local HRM practices in developed markets. We differentiate HRM practices that managers intend to adopt from those that are actually implemented and explore how state ownership affects the intention–implementation gap. Based on a sample of Chinese MNCs in the United States, we find that springboard intent, local competition, and host country regulatory pressures are positively associated with intended, but not implemented, HRM localization. Further examination demonstrates that springboard intent and local competition have significant effects on implemented HRM localization among private businesses but not in state‐owned enterprises (SOEs). The managerial constraints and resource endowment of Chinese SOEs may hinder their overseas subsidiaries from implementing local HRM practices to address LOR.     

Strategic Global Human Resource Management: The Role of Inpatriate Managers

The need for highly qualified multicultural managers will increase as more organizations globalize their operations. These global managers may be perceived as organizational resources and, therefore, a resource-based view of human resource management is utilized. At the same time, relational view of human capital provides insight into the value of managers who have unique local market knowledge (i.e., social knowledge). By integrating the two aspects of the resource-based view, one can develop a dynamic capabilities approach to staffing global assignments. Within this integrative theoretical perspective, inpatriate managers (i.e., host or third country managers who are transferred into the home country organization on a semi-permanent to permanent basis) can be explored as a potential pool of uniquely qualified global managers to be utilized in global organizations. It is envisioned that through this unique building of managerial talents, organizations can develop/maintain a distinct competitive advantage in the markets they enter. This article explores inpatriation as an innovative means to develop managers as strategic resources to be used in formulating and implementing a global strategic plan.     

Institutional distance,host country and international business experience,and the use of parent country nationals

This study examines how the institutional distance between a host country and a home country influences foreign subsidiary staffing, and how overseas business experience moderates the effect of institutional distance. Hypotheses regarding the effect of institutional distance on foreign subsidiary staffing are empirically tested using a sample of 2,980 foreign subsidiaries of Japanese firms. This study shows that although the ratio of parent country nationals to subsidiary employees decreases when firms face greater institutional distance, the absolute number of parent country nationals assigned to the subsidiary increases. This study also shows that firms with more overseas business experience replace host country nationals with parent country nationals when there is greater institutional distance.     

Emerging issues and challenges in global staffing: a North American perspective

Multinational enterprises (MNEs) recognize that human resources play an important role in gaining a competitive advantage in today's highly competitive global business environment. While all aspects of managing human resources are important, staffing, continues to be an essential IHRM activity that helps MNEs in their need for coordination and control across widely dispersed units. As such, researchers and practitioners alike are interested in addressing the key issues and challenges in staffing the several types of employees that comprise the global or multinational workforce. We focus on three issues that have emerged in recent years regarding how MNEs staff their multinational workforce including: 1) managing different types of employee groups; 2) selection and management of employees posted to international assignments; and, 3) receptivity to international careers among early career individuals. We review these and then describe an empirical study conducted on the third issue.     

Chinese multinationals’ approach to international human resource management: a longitudinal study

Abstract

This study explores how emerging market service firms, operating in developed markets, approach human resource management (HRM). Data analyzed in this article were drawn from a longitudinal case study of the Australian subsidiary of a Chinese multinational bank. We find that subsidiary HRM follows host country and global best practices. However, the way that this hybrid HRM system was implemented shows traces of Chinese origin. A key finding from this study is that although our case bank officially adopted a polycentric approach to subsidiary staffing, employing host country nationals, the subsidiary predominantly employed locals with a Chinese ethnic background. We also find the case bank’s strategy in international HRM has evolved from a focus on localization to global standardization. This global standardization, however, is shaped in line with global best practices rather than home country management model. These findings highlight the need for future studies to adopt a more nuanced approach to examining international HRM strategies, especially when analyzing host country effect or localization strategy.     

Staffing venture capital firms' international operations

International staffing is relatively unexplored for service firms as much of the literature focuses on manufacturing firms. We draw on the knowledge-based perspective to analyze three key issues related to venture capital firms' international staffing: composition of the international staffing pool; reasons for the deployment of expatriates; and the process through which staff co-ordinate international decision-making, respectively. These research questions are investigated in an exploratory study combining a survey and qualitative interviews. The results suggest that the recruitment of local executives is significantly more important than the deployment of expatriates, and expatriation is significantly more important for transferring knowledge than for other motives suggested in the literature. In VC firms, investment committees play a key role in international decision-making, which allows them to manage challenges that otherwise would require deployment of expatriates. Implications of these results for future IHRM research and for the management of venture capital firms are discussed.     

The impact of political risk on FDI exit decisions

Do political risks drive exit decisions by multinational companies (MNC)? What mechanisms can protect a multinational subsidiary in a host country that is characterized by weak institutions and high political risks? Using multinational plant-level data for Russia in the period 2000-2016 and applying the Cox proportional hazard model, we find significant effects from elevated host-country political risk when we compare the year of entry to the year of exit. MNCs are particularly sensitive to problems associated with law, order, and social conditions in Russia and the presence of the military in politics in the home country. Institutional similarity does not reduce the hazard of exits, and MNCs from high-risk countries exit less when home-country risk increases. Subsidiaries from countries that have imposed sanctions on Russia are less likely to exit, though sanctions interact with host-country risks, making them more severe. Being large and being part of a greenfield project help subsidiaries to build resistance against host-country political risks. These findings provide empirical evidence that support our conclusions regarding foreign direct investment volatility in countries with high risk.     

Human resource management and early internationalization: is there a leap-frogging in international staffing?

The present study focuses on the international staffing of early internationalizers by linking the Ethnocentric, Polycentric, Regiocentric, and Geocentric (EPRG) concept with the Process Theories of Internationalization. On a dataset of 116 (N) German medium-sized companies, we test whether the determinants which allow firms to internationalize shortly after their inception, namely prior international experience, technological intensity, and networks, influence the firms' international staffing. We further elaborate whether this influence differs between early and late internationalizers. The empirical results show that prior international experience is not associated with the firms' international staffing at all, and thus, does not allow conclusions. Technological intensity increases the probability of the choice of an ethnocentric staffing policy, especially for early internationalizers. In contrast, networks enable firms, especially early internationalizers, to pursue regiocentric or geocentric staffing policies.