Creating social capital in MNCs: the international human resource management challenge

Social capital has assumed a critical role in the successful implementation of global strategy for multinational companies (MNCs). The article focuses on the ways in which the international human resource management (IHRM) system and those responsible for it influence the creation and utilisation of social capital in MNCs. It examines the challenges posed to IHRM by the wide diversity of definitions and manifestations of social capital found in the multiple cultural contexts of the global business environment and provides a framework on how to approach the cultural influences on the definitions and behavioural expressions of social capital. It also critically assesses the recommendations that have been made regarding developing social capital in MNCs, the competencies most critical to the ability to develop social capital in multiple cultural settings, and provides a set of recommendations for future research in this area.     

Intellectual Capital–Enhancing HR,Absorptive Capacity,and Innovation

This study investigates the role of intellectual capital (i.e., human, social, and organization capital)–enhancing human resource (HR) practices in the development of a firm's absorptive capacity, as well as the mediating role of absorptive capacity in its relationship to the firm's innovation performance. Results show that while human capital–enhancing HR (acquisition and developmental HR) is positively related to absorptive capacity, social capital–enhancing HR affects absorptive capacity through egalitarian HR practices. Organization capital–enhancing HR practices contribute to absorptive capacity through effective information systems. Finally, our findings confirm that the various intellectual capital–enhancing HR practices affect innovation performance through their impact on the firm's absorptive capacity. © 2016 Wiley Periodicals, Inc.     

Multinational corporation management strategies and international human resources practices: bringing IHRM to the bottom line

This paper examined the relationship between multinational corporations' global management strategies and the resulting international human resource practices. Four global strategies, which vary in their extent of global integration and local responsiveness, were examined (ethnocentric, regiocentric, polycentric and geocentric). Data from international human resource professionals in forty-six companies generally supported the hypothesis that HR practices (recruitment, selection, socialization) varied by global strategy. In particular, strategies varied especially between the ethnocentric and geocentric companies. These strategies were further found to be related to a composite Multinational Corporation Success Index of economic variables (return on capital, sales growth, return on equity, profit margin). Companies which had ethnocentric strategies were found to be less successful than companies operating under any of the other three strategies. Findings suggested that local responsiveness should be incorporated into the global strategy of multinational companies. Recommendations for international human resource practices based on these results have been given.     

Global talent management and inpatriate social capital building: a status inconsistency perspective

Distinct to expatriate managers at the subsidiary-level, inpatriate managers' influence at the headquarter (HQ)-level is controlled by the extent to which an inpatriate manager is able to ‘win’ status from HQ personnel. The primary goal of the paper is to conceptualize how organizational support, in the form of global talent management (GTM) practices, can alleviate inpatriates' difficulties in building social capital at HQ. Building social capital at HQ is vital for inpatriates to attain status in order to build the inter-unit social capital that enables them to pursue their boundary-spanning role across HQs and subsidiaries. Status inconsistency theory is put forward to recognize the personal, professional and structural incongruence of events and activities at HQ carried out with respect to inpatriates. We argue that inpatriate managers become empowered at HQ only when social capital is accumulated whereby social capital is driven by an acknowledgment of inpatriates as a legitimate staffing option. The relationship between GTM practices and social capital building needs to be managed properly by inpatriates themselves as well as by the organization. A future research agenda helping to build social capital of inpatriates through GTM infrastructure is discussed and propositions are offered throughout.     

Examining the link between skill shortages,training composition and productivity levels in the construction industry: evidence from Northern Ireland1

One of the key questions in international research addresses the tensions arising from international co-ordination and local adaptation of multinational companies' (MNCs) policies and practices. The German business system encourages MNCs to have a long-term, high-investment orientation, to practise intensive management-labour cooperation and to pursue developmental human resource management (HRM). This study analyses six major German MNCs operating in both Britain and Spain and outlines their reasons for the international co-ordination of HRM. It addresses the issue of central control versus local adaptation by looking at the transfer of German HR policies and practices. The cases show that the MNCs were able to preserve substantial ‘German-ness’ abroad. However, the results of the transfer of German HRM were not always positive due to a variety of endogenous and exogenous causes. Barriers to transfer from institutionally strong to weak environments are discussed and possible internal HR approaches are suggested to counterbalance the national business system effect. Their success will depend on head office-foreign affiliate relations shaped by factors such as cross-border communication, trust and power distribution.     

Social capital and human resource management in international joint ventures in Vietnam: a perspective from a transitional economy

This study highlights the importance of social capital in international joint ventures (IJVs), and examines human resource practices as a factor shaping such social capital. Comprehensive measures of social capital are developed and tested, which extend prior work on ‘bonding’ and ‘bridging’ social capital. We also link social capital with its anticipated antecedents and consequences. The study's findings are based on data collected from 164 IJVs located in Vietnam. IJV performance was predicted by training and by the level of trust and cooperation between foreign and local personnel. Training (including acquisition of management skills, technology, and cross-cultural understanding) also was predictive of the measures of social capital. A key practical implication arising from this study is that the return on investment from training of joint venture personnel can stem not only from the transfer of technical and management skills needed for developing competitive advantage, but also from the positive impact on social capital, which further contributes to venture success. The establishment of written objectives and plans for the venture, as well as the IJV's level of control regarding its own HR functions also was found to be related to some components of social capital. The findings of this study reinforce the call to build on the contributions of local personnel in joint ventures, and in Vietnam in particular.     

Strategic human resource management,human capital and competitive advantage: is the field going in circles?

The resource‐based view (RBV) of the firm has been consistently used as a backdrop in strategic human resource management (SHRM) research and has the potential to bridge the ‘micro–macro’ divide. The tension between the SHRM and the strategic human capital literature, however, signifies that RBV has not reached its potential. In this paper, we begin with a brief review of the conceptual logic linking human resource management (HRM) practices and firm outcomes that aim at highlighting the different treatment of RBV in the SHRM and strategic human capital literatures. We then propose a conceptual model that suggests that HRM practices are not simple levers that enable firms to create sustainable competitive advantage, as most of the strategic human capital research postulates. On the contrary, we argue that HRM practices can contribute to a firm's sustainable competitive advantage not only by enhancing employees' ability, and offering motivation and opportunities, but also by shaping supply‐side and demand‐side mobility constraints.     

Uncovering competitive and institutional drivers of HRM practices in multinational corporations

Current international human resource management (IHRM) literature focusing on multinational corporations (MNCs) presents evidence of both similarities and differences in the HR practices adopted in different global locations. However, the drivers behind this duality require more detailed investigation. This article focuses on exploring why MNCs position themselves within global markets as they do, exploring how extant theory can help explain the drivers behind both global and national HR practices. Based on a worldwide sample of in‐depth interview‐based case studies of well‐known MNCs, we explore the ways in which different firms react to both institutional and competitive pressures in selecting their approach to HRM. The findings uncover a differentiation between external global competitive isomorphic pressures, external national institutional isomorphic pressures, and internal processes of strategic choice and competitive differentiation. It is suggested that MNCs face all three drivers of HRM simultaneously, leading to different patterns of practice adoption, adaptation and innovation.     

Human Capital Factors Affecting Human Resource (HR) Managers' Commitment to HR and the Mediating Role of Perceived Organizational Value on HR

Human resource (HR) managers’ commitment to their occupation (HR) leads to the proper delivery and implementation of HR practices and, therefore, is deemed as a critical factor for the success of HR practices. Based on sociocognitive, human capital, and signaling theories, this study examines: (a) HR managers’ own and their chief HR officer's (CHRO) HR‐specific human capital as antecedents of their commitment to HR, and (b) the mediating mechanism through which the CHRO’s HR‐specific human capital positively influences HR managers’ commitment to HR. Based on 146 HR managers from 146 organizations in South Korea, the findings of the current study suggest that HR managers with higher levels of HR‐specific human capital and those working with CHROs with higher levels of HR‐specific human capital tend to have higher levels of commitment to HR. In addition, CHROs with higher levels of HR‐specific human capital positively influence HR managers’ commitment to HR by signaling to them that HR and its function are valued and cared about by their organizations. Theoretical and practical implications of this study are discussed along with study limitations and further research directions. © 2015 Wiley Periodicals, Inc.     

Human resource management and organizational strategies in German- and US-owned companies

The development of the international economy over the past twenty years has bred considerable diversity in the form and substance of employment relations (labour-management relations, human resource management practices) throughout the world. Cases of ‘social partnership’ are today found in the ‘free market’ United States economy; some companies operating in Germany's ‘social’ market economy are rejecting traditional forms of social partnership in the name of more unilateral strategies.

This paper examines (a) the extent to which ‘strategic diversity’ – variation in human resource strategies and policies – is possible within the heavily institutionalized, co-operative and codeterminative German economy, and (b) how managers perceive the effects of different kinds of HR approaches on organizational change and industrial adjustment. It is based on empirical evidence drawn from seven large chemicals companies operating in Germany – three of them US-owned firms and four German-owned.

The main conclusions are that considerable strategic diversity is possible within the German context, and that managers perceive distinct costs and benefits to specific aspects of the typically American ‘unilateral’ style and the more German ‘negotiated’ approach to structuring the relationship with human resources. The paper concludes with a discussion of the implications of these trade-offs for the transferability of HR strategies across international borders, giving special attention to policies to avoid some of these potential costs.     

National Industrialisation Strategies and Their Influence On Patterns of Hr Practices

This article uses a framework developed by Kuruvilla (1995a) that hypothesised a very close link between industrialisation strategies of Southeast Asian nations and industrial relations systems. That framework is used here to argue that the industrialisation strategy adopted by nations also influences the development of firm level IR/HR practices. Using case studies of firms in the ‘import substitution industrialisation’(ISI) and ‘export oriented industrialisation’(EOI) sectors in Malaysia and the Philippines, the author finds that in both countries, the ISI sector is characterised by firm level IR/HR practices that are passive, pluralistic and paternalistic in nature, while the EOI sectors in both economies are characterised by IR/HR practices that can be termed aggressive, flexible, and dynamic in nature. In addition, given that Malaysia and the Philippines are currently at different stages of export oriented industrialisation, the cases demonstrate that workplace practices in the EOI sector in Malaysia are more dynamic and advanced than those of the Philippines. Thus, the article shows that the industrialisation strategies of nations create distinct patterns of industrial relations and human resource practices within the economy, controlling for other factors such as business strategies and the technological processes of firms that also cause such variation in IR/HR patterns.     

Global,national and local practices in multinational corporations: towards a sociopolitical framework

This paper intends to shed some light on strategies and power resources of subsidiary managers and employee representatives involved in ‘charter changes’ and the implementation of ‘best practices’ developed elsewhere. Research shows that local managers face a dilemma in that they need both internal legitimacy (within the MNC itself) and external legitimacy (within the local context). It is argued that the power resources key actors draw on in the (internal) decision-making processes of ‘charter changes’ are intertwined with certain (external) national business system (NBS) characteristics, an aspect often neglected in North American research about MNCs. The authors identify three key influences, which restrain or empower local management and employees in their ability to make strategic choices and gain power within the MNC. They are (1) the overall strategic approach of the multinational group, (2) the strategic position and the economic performance of the subsidiary itself and (3) the degree of institutional embeddedness of the subsidiary in the host country. Comparative mini-case studies are used to illustrate the effect of local management and employee representatives' empowerment on their ability to retain skills and work practices supportive of a diversified quality production process in the face of MNC pressure to adopt global ‘best practices’ based on more standardized production processes.     

A problematic transition to a strategic role: human resource management in industrial enterprises in China

The Chinese government has launched extensive reforms to encourage integration with the global economy. Our research investigates the implications for human resource management practices of the changing business environment in China, ownership of organizations, organizational strategies and strategic integration of the HR function. We conducted two surveys in major Chinese cities in 1994/5 and 2001/2, with managers of state-owned, privately owned, collectively owned and foreign-invested enterprises.

Regression analyses showed that organizational strategy and organizational ownership, in contrast with earlier research, were not found to be strong predictors of HRM practices. The changing business environment in China and participation by the HR function in strategic decision-making were the strongest predictors of HRM practices. Overall, a strategic role for the HR function and implementation of ‘Western’ HRM practices are becoming more prevalent in China, although the legacy of traditional practices endures and new challenges are emerging.     

Performance and reward practices in foreign multinationals in the UK

This article examines variability in pay and performance management systems (PPMS) across foreign multinational companies (MNCs) in the UK, using a representative survey. It examines factors shaping PPMS for two groups, managers and the largest occupational group (LOG). It finds that US MNCs tend to have more PPMS practices in combination than do non‐US firms, but that for individual items nationality has relatively low influence, particularly for LOG. Other key factors in PPMS vary by employee group: for managers, international HR structural mechanisms for networking, organisational learning and the transmission of a global HR philosophy are important. For LOG, collective bargaining coverage is crucial. The article discusses the implications of the findings for ‘contingency’ approaches to HR ‘architecture’.     

The benefits of global teams for international organizations: HR implications

Abstract

In this special issue we aim to advance the theoretical, conceptual and empirical knowledge about the relationship between global teams and human resource management in international organizations. We argue that although the prevalence of global teams in international organizations is rapidly rising, simultaneously affecting the management of firms on global, regional and local levels, the response of firms and scholars alike to such changes has been slower, especially in the area of IHRM. The HR function in organizations could play a vital role in understanding, managing and leveraging the benefits of global teams to ensure that they contribute positively to the performance of firms, organizational units, and people. We demonstrate that there is still a disconnect in this respect and we highlight several areas in which the increasing use of global teams may challenge our conventional understanding of IHRM issues, and at the same time offer solutions for improvement in international organizations. The selected articles in this special issue provide both theoretical and practitioner implications by highlighting the need to explore the relationship between global teams and IHRM more generally and fully, as well as the need for HR practitioners and IHRM scholars to focus more on the ‘human’ and less on the ‘resources’ aspect. We trust that readers of this issue will agree that the articles all offer novel insights into key issues that open new avenues for further research in this nascent yet promising area.     

A mediated model of the effects of human resource management policies and practices on the intention to promote women: An investigation of the theory of planned behaviour

This study investigates the role of supportive human resource management policies and practices in senior HR managers’ intention to promote women to senior management positions. Based on the theory of planned behaviour, we argue a model in which supportive HR policies and practices affect managers’ attitudes towards the promotion of women to senior positions and their perception of organisational norms and control over the decision. We employ partial least squares based structural equation modelling to investigate data from a sample of 183 firms in Bangladesh. Our results support the utility of the theory of planned behaviour in understanding the positive effects of HR practices on the intent of senior managers to promote women. Our findings suggest that the role of HR policies and practices is not only to eliminate opportunity for discrimination but also to encourage the development of deeper attitudinal and normative acceptance of women’s role in senior management.     

An exploration of the HRM values of Chinese managers working in Western multinational enterprises in China: implications for HR practice

This paper qualitatively explores the nature of human resource management (HRM) values of local Chinese managers working in Western-based multinational enterprises in China and also considers how these values are associated with preferences for HR practices. The study involves the use of repertory grid interviews with 36 local Chinese managers. The study shows that interviewees reflected a high level of assimilation and internalization of many Western HRM values. Interviewees also retained many traditional Chinese values, thus highlighting the role of institutional and cultural forces on HRM. However, among these local managers, there was clear decline in some traditional Chinese values, such as ‘harmony’ and ‘virtue’. A further interesting finding was the co-existence of paradoxical values of collectivism and individualism among the managers. Analyses of repertory grid data and interview comments also highlight that preferences for HR practices is associated with these underlying HRM values.     

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.     

Mind the Intended‐Implemented Gap: Understanding Employees’ Perceptions of HRM

This study aims to shed light on the implementation of HR practices as a key piece of the human resource management (HRM)–performance puzzle. Although the literature suggests that discrepancies between the organization's intended and implemented HR practices are essential to understanding employees’ perceptions of and reactions to HRM, little attention has been devoted to this issue. Drawing upon a multiple‐case study of German health and social services organizations, we therefore explore the linkages (and potential gaps) between intended, implemented, and perceived HR practices. Our study provides new insights into the underlying mechanisms of this relationship, highlighting an organization's ability to leverage its resources as playing a crucial moderating role in implementing intended HR practices, while employees’ expectations of HRM moderate the link between implemented and perceived HR practices. We advance a set of propositions that contributes to a more nuanced, multilevel understanding of the complex phenomenon of HRM implementation. © 2014 Wiley Periodicals, Inc.