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The article aims to answer two questions: how does the country of origin effect influence the transfer of HRM practices to the foreign subsidiaries of a multinational corporation, and how does the country of management effect interacts with the previous effect during the transfer process? The authors examine the research of the country of origin perspective and provide various quotations and findings from researches that apply to the paper’s aim. One of the key variables in the transfer of practices is the institutional distance, the difference in the country’s institutional profile between the country of origin and the country of operation. The national culture of the host country is also believed to be one of the influences on HRM transfer. Moreover, the literature examined by the authors provides another factor of influence, i.e. the macro-power relations between countries that cause the so-called “dominance effect.”
The authors use two theoretical frameworks to explain actors’ interests and how these interests can influence the transfer of HRM strategies in multinational corporations (MNC). The micropolitical perspective is used by the actors to defend or progress their interests. For example, when a demand that actors find unreasonable is expressed to them, they can refer to the parent country’s institutional arrangements. The social capital possessed by actors also influences the transfer of HRM practices. The shared common language between the subsidiary and the MNC headquarters allows the subsidiary to receive information and obtain insights from other organizations. Thus, state the authors, country of management effects can counteract country of origin effects. However, not much research has been done to examine the relations between these two effects.
The focus of the Paper
As there is not enough research about the correlation of the effects, the authors aim to investigate the issue exploring how the country of origin effects change the transfer of HRM from host to subsidiary countries. The authors note that the initial purpose of the paper is to investigate how these effects interact and affect the transfer of HRM practices. The authors use a multiple case study method to collect data for a five-year period. The data gathered by the authors is qualitative as it was provided from the interviews conducted with various employees and managers.
The participants of the interviews were from different levels and obtained different positions in the case study companies. The transferred strategies that the authors examined were linked to four Taiwanese MNC and their subsidiaries in the UK. As the subsidiary companies had stated, they had problems with adopting the practices that the parent country transferred to them. Moreover, Taiwanese companies seemed to have no real plan of international HRM strategies that could be provided to the subsidiaries. The subsidiary enterprises in the UK relied on the parent MNC in many aspects; the corporate HR strategy was also dominant. However, the MNC allowed the branches decide on recruiting and selections techniques.
The use of case studies is justified by the authors as a method that helps seek for similar patterns in the cases to come to particular theoretical generalizations. The authors focused on the issues using in-depth interviews in two languages, Chinese and English. The interviews consisted of questions about the employee’s background and the company’s transfer of HRM practices from the host MNC. The participants were also asked to share their opinion on what could affect the transfer and what challenges were faced or noticed by them. Thus, this approach allowed the authors evaluate the first-hand information and receive data about the challenges that the employees could encounter during the transfer of the HRM strategies.
Recommendations and Implications
The authors identified three patterns:
- Parent HRM practices were dominant and diffused in the subsidiary companies.
- Parent HRM practices faced resistance, and the MNC had to provide hybrid HRM practices.
- Corporate HR evaluated the country of origin effect and discussed the transfer with subsidiaries.
The authors conclude that it is impossible to explain the HRM strategies’ transfer through institutional and cultural approach because many other aspects and factors influence them as well. The findings have several implications: they provide an empirical understanding of both effects and their connection to each other; it is not advisable to believe that only these two effects can be used when approaching the issue; diachronic view allows a better understanding of the transfer process; the study provides empirical data about the transfer of HRM strategies, and how one effect complements the other during this transfer; at last, longitudinal study stresses the processual nature of the HRM strategies’ transfers and provides understanding of different factors that have an impact on them.
The authors also address the practitioners and point out that the question whether the HRM strategies need to be transferred to subsidiaries or the company should adapt to local HRM practices remains open. Nevertheless, it is challenging to achieve consistency when transferring HRM practices from a host corporation to foreign subsidiaries, the authors argue, because it is only possible when the communication between the headquarters and branch offices is clear and trustful. Therefore, the corporate HR will need to engage in communication with subsidiaries more actively to explain the necessity of certain strategies. It also seems reasonable to point out that some of the companies that were demanded to use the parent MNC’s strategies perceived it as a formal adoption but did not implement the strategies or applied them at a low level.
Utility and Drawbacks
I believe that the practical usefulness of this research is evident as it allows the readers to understand that the previous approaches to the issue were partly inadequate. Comprehension of the effects’ impact on transfer of the strategies is needed because the evaluation of the problems connected to foreign strategies becomes easier through it. Moreover, the research has also proven that the transfer of HRM strategies can (and sometimes needs to) be seen as controversial because not all strategies can be suitable for foreign subsidiaries of the MNC.
The drawbacks of this study include incomplete recommendations to the practitioners as this question remained open. Thus, it is still not clear whether the transfer of HRM strategies helps manage foreign branch offices or not. It is possible to assume that the findings are only applicable to the Taiwanese-UK companies and are inapplicable to any others. It is necessary to research the issue with the involvement of other companies from other countries. For example, it seems reasonable to compare the approaches of Chinese-German or American-Bangladesh companies to understand what HRM strategies are transferred in these multinational corporations, and what patterns are prominent.