Transferring HR practices within multinational corporations

There is extensive evidence that planned transfers of management practices by the headquarters of multinational corporations (MNCs) to foreign subsidiaries are not always successful. In this article, we outline a model of factors influencing the transfer of HR practices to MNC units abroad. The article has two main contributions. First, we develop a more holistic understanding of the outcome of HR practice transfer as encompassing three dimensions: implementation, internalisation and integration. Second, we expand current explanations of transfers of practices to foreign units. We argue that transfer of HR practices is a social process where the governance mechanisms used by the MNC, characteristics of the subsidiary HR systems, the social relationship between the subsidiary and MNC headquarters, and the transfer approach taken by headquarters management will influence the outcome of the process.     

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.     

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’.     

Foreign subsidiary perspectives on the mechanisms of global HRM integration

Often in connection with the integration‐responsiveness dilemma, research on HRM in multinational corporations (MNCs) speaks more to explaining the appearance of HRM practices in foreign subsidiaries than to the mechanisms through which such practices are globally integrated. Accordingly, and adopting a subsidiary perspective, the present study has two main aims. The first is to identify the key mechanisms of global HRM integration, how they are used and by whom, and the second is to investigate the factors that explain their usage. The study uses qualitative data from 40 personal interviews conducted with general managers and the most senior HR personnel across 20 Finnish‐owned subsidiaries in China. Based on the contingency view of organisations, explanations for mechanism usage are attributed to certain internal characteristics of the subsidiaries and to the Chinese institutional environment.     

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.     

Hybridization: striking a balance between adoption and adaptation of human resource management practices in French multinational corporations and their Tunisian subsidiaries

International management research has tended to approach the transfer of human resource management (HRM) practices by examining the one-way transfer from parent companies to their subsidiaries, their adaptation to the subsidiaries’ local context and, more recently, the reverse transfer of HRM practices from subsidiaries to their headquarters. This article aims to analyse the transfer of HRM practices from headquarters to their foreign subsidiaries through the process of hybridization. Although numerous studies focus on the transfer of HRM practices between economically developed countries or from these countries to transitional economies, few have considered French multinational corporations (MNCs) operating in ex-colonized countries. This paper addresses the ways in which the HRM hybridization process is implemented in two French subsidiaries operating in Tunisia. It focuses on the dual perspectives of managerial staff at headquarters and subsidiaries as well as shop floor employees in the subsidiaries. A range of HRM practices (recruitment and selection, compensation, performance appraisal and career management) is analysed from their transfer to their reinterpretation. The results show the importance of the concept of hybridization on HRM practice transfer through a multi-level analysis of the strategies used by various stakeholders during the hybridization process. The paper also provides useful insights into the factors of hybridization that may foster or inhibit the transfer and adoption of HRM practices by foreign subsidiaries. These include the relational context, the type of practices transferred, the interests of different professional categories and their social interactions. Based on these factors, several hybridizations are identified. The study points out the specificity of the Tunisian context and shows that institutional factors have less influence on the transfer of HRM practices in ex-colonized countries than cultural factors that have a transversal influence on different HRM practices. Key cultural factors constraining the transfer include emotional relationships and interpersonal trust. Moreover, the international transfer of HRM practices from MNCs to ex-colonized transitional countries requires taking into account the post-colonialism and fascination effects.     

HR's strategic role within MNCs: helping build social capital in Latin America

In this article, we adopt a holistic perspective in considering the impact of the country's environment as well as the multinational corporations (MNCs) strategy on human resource (HR) practices. More importantly, we argue that within MNCs human resource management (HRM) is playing a central role in the process of balancing local and global forces. HR can be critical in helping MNCs' deal with local differences while also helping the company implement practices that are critical for its global strategy. Specifically, we argue that HR plays a key role in developing social capital, which may provide the necessary ‘substitutes’ for formal control that would otherwise be neglected. Our contribution lies primarily in outlining how this new role of creating human capital confers on HR the task of filtering mission-critical practices through a ‘localization mesh’ that ensures success. In addition, given the importance of social capital as an informal mechanism that allows MNCs to coordinate and integrate activities, we suggest ways in which an MNC can build social capital within the context of the Latin American pan-regional cultural values.     

The effects of labour costs and workplace constraints on foreign direct investment among highly industrialized countries

Drawing on economic propositions underlying theories of foreign direct investment and organizational propositions underlying international human resource management strategic decision making, the theoretical model developed herein integrates two distinct but interrelated strategic HRM assessments. In deciding where to invest, multinational companies (MNCs) assess both (1) the net comparative labour cost advantages associated with alternative host-country IR systems and (2) the comparative flexibility afforded them by alternative IR systems to either transfer or create preferred HRM strategies abroad. The results of the present study indicate that, on average, MNCs from the major investor countries of the world give substantial weight to differences in national IR systems in deciding how much to invest across alternative high-skill, highwage countries. In particular, the evidence indicates that MNCs have invested more in countries with higher skills, lower compensation costs and lesser government and collective bargaining constraints on MNCs' flexibility to set the terms and conditions of employment or otherwise deploy preferred HRM practices abroad.     

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.     

Foreign firms in China: modelling HRM in a toy manufacturing corporation

This article reports the study of a large, wholly foreign‐owned toy factory in China. It explores whether foreign direct investment (FDI) manufacturing firms in China inevitably operate in a Taylorist fashion, in contrast to the much praised HR model of blue chip multinational corporations (MNCs) in the country, or whether there is a ‘third way’ in which good HR practices may be adopted on the ground. The article concludes that a more nuanced approach is needed in our study of FDI companies in order to gain a fuller understanding of the institutional and cultural factors at play and of the consequent diversity in the HR and employment practices of FDI firms, instead of being trapped in a simplistic and polarising typological framework of analysis. This study is necessary in light of the growing diversity in the patterns of FDI companies operating in China in terms of their ownership structure, product market, management style and HR strategy, both for managers and for workers.     

The phenomenon of young talent management in Russia—A context‐embedded analysis

This article describes the particularities of young talent management (TM) in Russia and explains them through a context‐specific analysis. It adopts a multilevel perspective that acknowledges the relevance of context at three levels: the macro environment, the organizational, and the individual. Data were gathered through 46 interviews with HR managers and young talents from six Russian companies and six Russian subsidiaries of foreign multinational companies (MNCs) active in a variety of industries. Following the contextualization approach, this study offers important insights into the interplay between macro, organizational, and individual factors as well as their isolated or interrelated effects on TM. While multilevel contextualization provides the rationale behind certain TM practices and the particular focus on young talents in Russia, it also explains why Russian companies are inspired by global best TM practices. Thus, contextualization allows for explaining the coexistence of a specific environment and nonspecific (global best) TM practices. Important particularities are revealed also when compared to the results of TM studies in other emerging countries. The article contributes not only to the TM discussion, but also to the wider field of international human resource management and the international management literature regarding contextualization.     

Human resource management in Asian subsidiaries: comparison of French and Japanese MNCs

European and Japanese multinational corporations (MNCs) have expanded their activities in Asia, usually through massive mobilization of various human resources from head offices, whether expatriated or on short-term assignments, and a reliance on diverse categories of local employees. Because expatriation is costly, difficult and often limited in its results, MNCs have developed localization strategies for management positions to support their regional development. This contribution addresses such a scenario by comparing Japanese and French MNCs in eight Asian countries, based on 53 interviews across subsidiaries of 17 MNCs. We find that Japanese MNCs have not localized management positions as much as French MNCs, but they have grown more willing to do so. To compensate for the lack of local capabilities without sending more expatriates, both French and Japanese MNCs frequently send experts on short-term assignments. Finally, though human resource practices vary widely across countries, even for a given MNC, some harmonizing principles have been introduced to regional HRM strategies recently.     

Broad‐based incentive plans,HR practices and company performance

The purpose of this paper is to further develop our knowledge of the complementarities between broad‐based incentives and human resource (HR) management practices, and their combined impact on company performance. We focus on three HR practices that are expected, separately and in combination, to enhance the effectiveness of broad‐based plans: information sharing, upward communication, and training in team skills. Using a sample of 305 Canadian firms, we find that companies with broad‐based incentive plans have lower levels of upward communication and higher levels of information sharing compared with companies that do not offer incentives to the majority of their workforce. Further, we find that companies with broad‐based incentive plans are more productive compared with companies with no such plans, and the presence of supporting HR practices increases their productivity advantage even further. In particular, upward communication combined with broad‐based incentives has a strong positive relationship with productivity.     

The effect of corporate-level organizational factors on the transfer of human resource management practices: European and US MNCs and their Greek subsidiaries

One of the central questions in the literature on MNCs is the extent to which their subsidiaries act and behave as local firms (local isomorphism) versus the extent to which their practices resemble those of the parent company or some other global standard (internal consistency). Drawing on the resource-based view and resource-dependency theory, this paper aims to provide an insight into the interplay of several corporate-level organizational factors that affect the transfer of HRM practices across borders. Data collected from 80 European and US multinationals with subsidiaries in Greece are used to test specific hypotheses. Our results indicate that the level of importance attached to HRM by the MNC's top management and international experience have the highest explanatory power for the transfer of HRM practices, while international competitive strategy, informal control and the presence of expatriates also have a marginally significant influence.     

Determinants of central control and subsidiary autonomy in HRM: the case of foreign‐owned multinational companies in Spain

This article examines the factors affecting HRM subsidiary autonomy within multinational companies (MNCs). Drawing on institutional theory arguments, along with an analysis of the impact of international HRM structures, it attempts to identify the multiplicity of factors influencing subsidiary autonomy with regard to HRM. Using data gathered from a highly representative survey of foreign MNC subsidiaries located in Spain, the results identify a number of factors that hold explanatory power. First, the distance between the home and the host country in terms of variety of capitalism is crucial in explaining variations in subsidiary autonomy. In addition, international HR structures, such as the existence of an international policy‐making body and the use of HR shared service centres or HR data reporting mechanisms, are also important in accounting for the degree of autonomy over HR issues experienced by the MNC subsidiaries in our study.     

HRD in multinationals: the global/local mix

This article is concerned with how MNCs (multinational corporations) differ from indigenous organisations in relation to their human resource development (HRD) practices, and whether this relationship changes across countries. We question whether local isomorphism is apparent in the HRD practices of MNCs, or whether MNCs share more in common with their counterparts in other countries. A series of hypotheses are put forward and tested, using survey data from 424 multinational and 259 indigenous organisations based in the UK and Ireland. The results suggest a hybrid form of localisation, where MNCs adapt their practices to accommodate national differences, but that these adaptations do not reflect convergence to domestic practice. The results also indicate that MNCs are selective in the HRD practices that are adapted. Evidence from this study indicates that country differences in career traditions and labour market skill needs are key drivers in the localisation of associated HRD practice. In contrast, MNCs, irrespective of national context, adopt comparable systematic training frameworks, ie training‐need identification, evaluation and delivery.     

Knowledge-oriented human resource configurations,the new product development learning process,and perceived new product performance

We propose a set of organizational efforts that can help companies accumulate and learn knowledge related to new product development (NPD) activities. We call it the NPD learning process and argue that a set of coherent human resource management (HRM) practices, termed knowledge-oriented human resource (HR) configuration, can facilitate the NPD learning process. Collecting survey data from Taiwan, we find that the knowledge-oriented HR configuration is positively related to the NPD learning process and that the NPD learning process is positively related to managers' perceived new product performance. This study contributes to the literature of strategic HRM and innovation management.     

A comparative study of performance appraisals,incentives and rewards practices in domestic and multinational enterprises in the country of Brunei Darussalam

Very little work in the past has focused on the comparative analysis of human resource management (HRM) practices between domestic and multinational enterprises (MNEs). The majority of the work in this area has instead concentrated on comparing the HRM practices utilised by the subsidiaries of MNEs, and has mostly been conducted in the context of developed countries. In this paper, we examine how the HR practices of appraisals, rewards and incentives are offered, explained and monitored in domestic enterprises (DEs) versus MNEs, and how they are similar or different in nature. This paper is based on primary data collected from a cross-section of firms operating in the country of Brunei Darussalam – a context within which no previous work of this nature has been undertaken. An analysis reveals several interesting results: HR practices are more advanced and better structured in MNEs that conduct performance appraisals (PA) more frequently than DEs, and their feedback system is also rapid; incentives and rewards systems in MNEs follow market ethos and principles; the HR directors and employees of MNEs are more receptive to PA than those in DEs whilst, in contrast to DEs, incentives and rewards systems in MNEs follow market ethos and principles. Furthermore, with regard to size, younger firms are more likely to be following market principles in terms of explaining incentives and rewards systems to their employees, whilst older firms claim that working for them carries social and psychological benefits for employees.     

Organisational learning,knowledge assets and HR practices in professional service firms

This paper identifies the interrelationship between the nature of knowledge assets (inputs), HR practices and types of organisational learning (outputs) in Professional Service Firms (PSFs). First, we draw on a theoretical framework which includes both exploitive and explorative learning and is appreciative of the time-dimensions within which PSFs operate (accelerated-planned). This juxtaposition identifies four learning orientations. Second, we conduct a thematic analysis of multiple case study data to identify the properties of the dominant knowledge assets and the HR practices that underpin each learning orientation. Finally, we highlight the HR approaches to managing the tensions which arise when exploitive and explorative learning are combined.     

HRM as a predictor of innovation

There is growing evidence available to suggest that HR practice is an important predictor of organisational performance. In this article, we argue that HR practices also have the potential to promote organisational innovation. We describe a longitudinal study of 22 UK manufacturing companies and examine the relationship between such practices and product and technological innovation. Results reveal that training, induction, team working, appraisal and exploratory learning focus are all predictors of innovation. Contingent reward, applied in conjunction with an exploratory learning focus, is positively associated with innovation in technical systems. Furthermore, training, appraisal and induction, combined with exploratory learning focus, explain variation between companies in product and technological innovation above and beyond the main effects observed.