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Expatriates and the institutionalisation of HRM practices

Thomas Steger
Faculty of Law, Economics and Social Sciences, University of Erfurt, Erfurt, Germany

Expatriates and HRM practices 7

Received June 2009 Revised September 2009 Accepted November 2009

Rainhart Lang
Chemnitz University of Technology, Chemnitz, Germany, and

Friederike Groeger
Diaverum GmbH, Munich, Germany
Abstract
Purpose The purpose of this paper is to provide an in-depth description of the process of institutionalisation and development of human resource management (HRM) practices in subsidiaries of German multinational companies in Russia. Design/methodology/approach The study is based on nine case studies of Russian subsidiaries including 26 interviews (13 German expatriates and 13 local employees), participative observations and document analyses. The data analysis follows a qualitative methodology. Findings The study provides four patterns of institutionalisation processes of HRM practices. They stress the importance of personal, institutional and contextual factors for the institutionalisation of HRM practices. Moreover, the key role of expatriates with their specic value orientations and behaviour in this process is highlighted. Research limitations/implications One suggestion for further research would be to replicate the study quantitatively (in order to get more cases) as well as qualitatively (to get broader inter-cultural data). Furthermore, it would be valuable to take a more long-term focus to examine the described institutionalisation paths in the long run. Practical implications The paper highlights the importance of personal characteristics of expatriates that are often underestimated in companies selection procedures. Moreover, the connection between the parent companys strategy and the pattern of institutionalisation of HRM practices should make the company management reect upon the preferred pattern before taking the basic decisions. Taking into account the strong economic relationship between Russia and Germany and the expected further development of joint activities, the paper provides also important insights for the use of German expatriates in Russia. Originality/value This paper improves our comprehension of the complex process of implementation and institutionalisation of HRM practices abroad. Moreover, it contributes to the HRM literature as it employs the concept of transnational spaces as an alternative and additional approach to explain this process. The resulting patterns may not be restricted to the Russian case only but should be adaptable to other emerging countries as well. Keywords Human resource management, Russia, Multinational companies, Managers, Qualitative research Paper type Research paper
Baltic Journal of Management Vol. 6 No. 1, 2011 pp. 7-24 q Emerald Group Publishing Limited 1746-5265 DOI 10.1108/17465261111100923

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Introduction The literature on international human resource management (HRM) usually considers expatriate managers as key actors to transfer and establish HRM practices, norms and standards in foreign subsidiaries. This also includes the implementation of respective structures to coordinate and control the subsidiaries in line with the HRM strategy of the parent company. However, due to a strong focus on transfer and adoption of proved practices, the theoretical concepts and empirical studies have partly underestimated that the expatriates with their values and interests become much more vital in contextual settings where imported management instruments and practices often have a completely different meaning and impact beyond original expectations. This also holds true for HRM practices (Minbaeva et al., 2003; Myloni et al., 2007; Peterson, 2003; Ferner et al., 2005; Delmestri and Walgenbach, 2009), although some tendencies of convergence of HRM practices in Central and East European (CEE) countries towards general European trends can be identied (Brewster et al., 2000, 2004; Larsen and Mayrhofer, 2006). The special conditions of CEE capitalism (Bluhm, 2007) as well as the political, economic, social or cultural context for the activities of foreign subsidiaries in Eastern Europe and Russia (Bakacsi et al., 2002; Domsch and Lidokhover, 2007) have also led to a special contextual situation for the transfer of management concepts and HRM practices (Holtbrugge, 1996; May et al., 2005; Meardi et al., 2009), for managerial and organisational learning (Engelhard and Nagele, 2003), for employment relations (Muller-Camen et al., 2001) or for the activities of expatriates in cooperation with country managers (Groeger, 2006). Moreover, the development of HRM practices in subsidiaries of multinational companies (MNC), joint ventures or rms with other forms of foreign participation seems to have a strong impact on the further process of institutionalisation of HRM practices in transforming countries of CEE (Cyr and Schneider, 1996; Edwards and Lee, 1999; Warhurst, 2000). This becomes particularly visible if the foreign assignment is strategic and supported by expatriate managers. The main contributions on HRM practices in Russian subsidiaries of MNC have focused on the description of the state of the art and their contingencies, while ignoring more or less the process of transfer, modication and emergence of practices within the special contextual setting. Moreover, the inuence of expatriate managers, their personal values, intentions, and activities seem to be underestimated in the process of forming and changing HRM practices. Drawing on these decits, we aim to provide an in-depth description of the process of institutionalisation and development of HRM practices in subsidiaries of German MNC in Russia. We perceive them as processes of emergence and institutionalisation in transnational spaces, whereby expatriate managers with their values, interests, qualications and career ambitions play a decisive role. In the rst section, we critically review the existing literature on HRM practices in Russia, particularly in foreign subsidiaries, and derive some key decits in this respect. Then, we design the theoretical basis of our analysis mainly drawing on ideas developed by New Institutionalism and European Institutionalism. On the basis of nine in-depth case studies of Russian subsidiaries of German companies, we develop four distinctive patterns of institutionalisation of HRM practices in this context. Russian subsidiaries of German multinationals have been chosen since they stand for an important part of East-West co-operation of the two biggest economies not only around the Baltic Sea, but also in Europe. In contrast to their importance,

studies on subsidiaries of German multinationals are still rare. We end up by summarising and critically discussing our main ndings. Literature review Since the early 1990s, HRM practices in Russian companies have been subject to a number of empirical studies, targeting the situation in state-owned enterprises and joint ventures and, later on, new private rms. Since our focus lies on subsidiaries of MNC, we concentrate hereafter on contributions that deal with the transfer and institutionalisation of HRM practices in these kinds of rms in Russia. With respect to the effects of Western HRM concepts, Welsh et al. (1993) analysed how bonuses, directive leadership instructions and team meetings for continuous improvement inuence the performance of Russian factory workers. Their results show that instruments like team meetings, popular in the West, did not substantially impact on motivation and performance while directive leadership seems to be more inuential. Since the experiment has been carried out in two Russian enterprises without Western ownership, no stable context of Western inuence can be expected. This in turn must be gge (1996), who analysed the conicts within the stated for the case presented by Holtbru corporate cultures of German-Russian joint ventures. As a result, the personality of German managers and their early assumptions about values and norms of Russian employees seem to inuence further developments, including culturally based differences in time perceptions and forms of conict resolution between expatriate managers and local employees. Between 1995 and 1999, Michailova (1998, 2000, 2002) conducted several in-depth case studies in Russian rms with Western participation. Focusing on reasons for organisational inertia and barriers for change and transformation of management practices, she pointed to decits in the communication between partners based on divergent values, attitudes and behaviours. Camiah and Hollinshead (2003) followed this path, dealing with the same problems of effective co-operation between new Russian managers and Western expatriate managers. The authors put more emphasis on the adaptation of Western managers to their working environment in Russia in order to identify factors prejudicial for effective teamwork. Moreover, they point to the necessity of a modication of proved Western management concepts before using them in Russia. Moreover, Fey et al. (2004) found that the transfer of concepts that were well controllable by headquarters, e.g. compensation, results in a greater degree of adaptation and similarities across countries, while training or internal communication skills seem to differ. Smale and Suutari (2007) point to the inuence of the relational context, formed by factors like trust or power dependence, the social-institutional context and the absorptive capacity of a rm on the knowledge transfer through expatriates. Underlining the relative autonomy of the expatriates, the authors identify factors of stickiness impeding knowledge transfers in the eld of HRM. Summing up, the above-mentioned studies have not only referred to cultural differences in values and mentalities between Western (foreign) and Russian managers but also to economic, political, ideological, religious and social systems in which they grew up as important for the processes of change and adaptation of HRM in Russia (Michailova, 2000). Since the cultural differences often are enormous, the working capacity of the managers has been absorbed to a greater extent by solving the respective problems (Suutari, 1998). The cultural differences and the special environmental

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conditions for HRM activities in Russian rms (Domsch and Lidokhover, 2007) seem to limit the effects of transferred HRM practices. Moreover, Russian and foreign managers found themselves in a radically new economic and political situation in which cultural assumptions from West and East need to be continuously adapted and renegotiated (Camiah and Hollinshead, 2003), which leads to the underlining of cooperation and communication as a key for changes. Nevertheless, the above-mentioned studies have a number of shortcomings. First, their focus often lies on selected HRM practices as recruitment, empowerment, teamwork, or leadership behaviour. If a broader number of practices are addressed, e.g. in the studies of Fey et al. (2004) or Shekshnia (1998), the existing practices were only described, contrasting the situation in the West and/or giving advice for improvements of HRM in line with Western standards. Second, the studies hardly focused on the modes of transfer, implementation or institutionalisation of the new practices. Only in the case of Michailova (1998) a long-term process-like perspective is applied. Since Engelhard and Nagele (2003) have focused on learning processes, a process perspective can be assumed, however, the authors are more concerned with deciencies in management skills and learning barriers. This holds true also for the study by Smale and Suutari (2007). Third, the focus of explanation mostly lies on national cultural differences, values or attitudes of managers and employees, with some reference to the legacy of the old Soviet system and the respective HRM practices (Welsh et al., 1993; Fey et al., 2004). If the power relation between the partners is addressed, it is often considered one-sided or static, except for some contributions by Michailova. All in all, there is a lack of alternative theoretical reasoning. Fourth, while contextual factors are partly included, most studies have missed to address the special character of countries still in transition. They are merely treated in a static way, and their background was considered a limitation from outside to the introduction of modern HR management practices (Domsch and Lidokhover, 2007). Fifth, there is a dominance of studies focusing on the activities of Anglo-American and partly Scandinavian rms. Meanwhile, the situation of German subsidiaries seems to be under-researched, taking into account the overall economic importance of the cooperation between Germany and Russia. Theoretical background Looking at existing theoretical concepts and empirical results of the process of institutionalisation and implementation of HRM practices in subsidiaries of multinational rms, a number of explanatory factors have to be taken into account. In order to address the above-mentioned shortcomings, we take, in contrast to other studies, a process perspective. We distinctively focus on the whole range of HRM practices: from recruitment, development and remuneration to teamwork, leadership and outplacement, and the respective instruments. By this, we aim to tackle shortcoming one mentioned above. Moreover, we concentrate on concepts that allow to include the inuences of existing and changing power relations as well as of cultural aspects and, thus, enabling to contextualise the process of institutionalisation, beyond a simple contingency perspective or classic country comparisons. Figure 1 shows the process of transfer and institutionalisation of new HRM practices as inuenced by the process and especially the modes of transfer, the various forms

 National Culture: Russia (vs Germany) Transformational settings: Institutions at the macro level Organizational contingencies: Size, branch etc.

(3) Contextual factors:

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(5) Process of Institutionalisation of HRM practices (4) Modes of transfer of HRM practices
Coercive Mimetic Professional Adaptation Modification Decoupling Faade building Learning Recombination Recreation Emergence etc.

Imitative order Recombinant order Corporate battlefield etc. and Russian German Mixed/Self-standing

(6) Patterns of HRM practices and established order

(1) German parent company

Strategy Power

Values Country experiences Career ambitions Relations to subordinates Reputationin parent company

(2) Expatriates

Figure 1. The process of transfer and institutionalisation of HRM practices

and processes of institutionalisation within the CEE subsidiary, and the established system or order. Moreover, the process itself is inuenced by contextual factors (e.g. national culture), organisational factors (e.g. orientation, power and strategy of the parent company), and personal and social factors established around the expatriates, their power position and sources, values, career ambitions and relations to their subordinates. We numbered the different boxes according to the following description in the text and highlighted the main focus of our empirical analysis, i.e. the process from transfer to established order: (1) The concepts of transfer and establishment of HRM practices in subsidiaries of foreign companies are usually based on the assumption of an asymmetric division of power with parent companies having a strong position to transfer their practices to the subsidiaries (Gooderham and Nordhaug, 2006; Paik and Sohn, 2004, Ferner et al., 2005). With reference to principal-agent-theory, it is argued to be a necessary and useful strategy for subsidiary control (Yu et al., 2006). (2) Those theoretical positions, however, obviously fail to explain the differences in HRM practices between parent companies and subsidiaries in different settings (Ferner et al., 2005; Farndale et al., 2008), as they systematically underestimate the active role of expatriates and other relevant actors, their interests, values, career ambitions as well as the expatriates country experiences and their position within the subsidiary (Peterson, 2003; Minbaeva et al., 2003; Myloni et al., 2007). Moreover, it should be asked about the reputation of the expatriate in the parent company. Parts (1) and (2) of the concept clearly relate to shortcoming three.

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(3) The context of transformation countries in CEE must be considered leading to an enormous increase of complexity for expatriate management. The special conditions of CEE capitalism (Bluhm, 2007) as well as the political, economic and social context create what Kostova (1999) calls institutional distance between parent (Germany) and subsidiary (Russia) countries, which inuences the transferability of practices. In addition, the distribution of power between the different actors is inuenced by the national culture as well as by the corporate cultures of the parent company and of the subsidiary as contextual settings. Regarding CEE countries, a low expectation of participative behaviour (cf. GLOBE results for those countries, e.g. Bakacsi et al., 2002 as well as ndings from other research, e.g. Michailova, 2002) involves a high degree of authority and inuence attributed to CEOs and to foreign managers. So, an increased inuence of the personal interests, experiences and relationships of those actors on the local situation as well as on the ongoing processes of transfer and institutionalisation of HRM practices can be stated. The position of expatriates and the strategic interest of parent companies also depend on contingency factors such as subsidiary size or branch. This part of the concept particularly addresses shortcoming four. (4) Looking at the process of transfer, new institutionalism suggests coercive and mimetic processes and professionalisation as important modes for the spreading out and the establishment of management practices (DiMaggio and Powell, 1983). Scott (1987, 1995) pointed to additional mechanisms of structural adaptation to environmental expectations such as imprinting of structures or bypassing. Instead of a transfer and implementation of practices enforced by a parent company, the practices are transported by values and norms of inuential actors, e.g. expatriate managers. (5) A process of institutionalisation of practices takes place when the newly established rules and practices become accepted, adopted and used by other local actors and, at the same time, are recognised as generally accepted practice for subsidiaries by the parent company. In addition, the institutionalism approach argues that organisations and parts of organisations have the potential for decoupling and building facades of legitimacy (Meyer and Rowan, 1977). In this respect, the institutionalist approach has proved to be helpful to understand the transfer and diffusion of management practices and the related processes (Ferner et al., 2005; Tempel et al., 2005; Tempel and Walgenbach, 2007; Delmestri and Walgenbach, 2009), particularly in the context of CEE countries (Lang and Steger, 2002). However, if a decisive role of active actors like expatriates or inuential local management is assumed, the above concepts seem to be too narrow, and lack necessary explanations for different patterns of HRM practices emerging in the same contextual setting and the same parent companies. Consequently, a need for some broader explanatory approaches has been stated (Clark and Geppert, 2002; Muller-Camen et al., 2001; Tempel et al., 2005). Based on earlier ideas about different types of organisational reactions such as resistance against institutional forces (Oliver, 1991), the concept of transnational social space (Morgan, 2001) seems to be an appropriate approach to our topic. It assumes a higher degree of freedom for local and foreign actors involved in the process of establishing new HRM practices. The processes of transfer, adaptation, modication, re-interpretation, re-combination, re-creation, or even emergence of HRM practices are therefore

inuenced by actors intentions and personal interests. In sum, parts (4) and (5) of the concept distinctively tackle shortcoming two. (6) On this background, Clark (2005) developed a frame in which structural asymmetry between East and West and the respective orientations lead to optional patterns within the process of cooperation. The Western orientation to local management can be characterised as varying between an exploitative-ethnocentric and an exploratory-polycentric approach or strategy. By these terms, the concept relates to Perlmutters (1969) ideal types ethnocentrism/exploitation and polycentrism/collaboration as well as to some prominent considerations in the literature on organisational learning (e.g. explorative vs exploitative learning March, 1991). While the exploitative-polycentric orientation is based on ethnocentric values, such as superiority of their own ideas and preferences, the exploratory or collaborative orientation is culturally sensitive, acknowledging the values, expertise and experiences of the local staff. It can be assumed that the latter approach supports a wider process of exchange and negotiation within the transnational space, and nally gives room for the evolution, and emergence of new practices. Accordingly, the orientations of local managers in CEE countries to foreign collaborators may vary between active acceptance of new Western knowledge, concepts, and practices, passive acceptance, passive non-conformity, or active opposition. The possible eight combinations emanating from this can be described as process patterns or as results of the introduction process of new HRM practices. Clark (2005) describes recombinative transnational order (i.e. combination of exploratory polycentrism with active acceptance), imitative transnational order (i.e. combination of exploitative ethnocentrism and active acceptance), and corporate battleeld (i.e. combination of exploitative-ethnocentrism and active opposition) as most common patterns. Although this concept has been developed for joint ventures or transnational institutions (Djelic and Quack, 2008), with more powerful local management or partners, an application to parent subsidiary relations seems to be appropriate, even if the institutional or cultural distance between the countries is high, as in our case. Methods In order to explore the process of institutionalisation of HRM practices in Russian subsidiaries of German MNC and, thus, to particularly tackle shortcoming ve, this study is based on the analysis of nine case studies. With the help of interviews with different actors, participative observations as well as the analysis of company documents we focused on aspects such as the characteristics of the expatriates, the situation of the subsidiary, the strategy and behaviour of the parent company regarding the subsidiary and the expatriates, the characteristics and amount of knowledge transfers between parent company and subsidiary, and the characteristics of the HRM practices of the subsidiary. The nine case studies comprised one representing ofce, four smaller subsidiaries (15-50 employees) and four larger subsidiaries (60-250 employees). Eight of them were located in the Moscow region, one in Voronezh. Between May and July 2004 one co-author took a total of 26 interviews 13 expatriates and 13 local employees. All expatriates had either a position on the rst level (CEO) or on the second hierarchical level (head of department or deputy CEO) with exclusively commercial background. HR managers were not included since, where available, those were all local managers.

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Eight expatriates had grown up in West Germany, ve in East Germany (the former GDR). With only one exception, all expatriates were male. The interviews followed the concept of a problem-focused interview that enables both to concentrate on certain problem aspects and to allow respondents to give their personal narrations (Groeger, 2006). The interviews with the expatriates were taken in German and lasted between 90 and 180 minutes, while the interviews with the Russian local employees were taken in English or German and lasted between 30 and 90 minutes. Since the co-author was familiar with the Russian language, she was able to give additional information or to ask additional questions in Russian. Table I summarises the main characteristics of the case studies. Company visits were feasible in all cases. In some companies, the co-author was even allowed to have some additional conversations, which were completed by March 2005. Moreover, in the Voronezh subsidiary she could make some participative observations (e.g. to accompany a candidate interview and to follow the employees daily work). The document analysis included some rm advertising material, internet presentations, internal notices, internal presentations and organisational diagrams. The knowledge of the Russian language and culture proved to be rather helpful in this context, particularly facilitating an open communication with the interviewees and several observations in the subsidiaries. All interviews have been fully transcribed. The analysis of the data followed a four-step procedure: rst, the interviews were coded according to the categories developed in our conceptual model (cf. Figure 1 and the respective discussion) and some additional topics particularly mentioned by the interviewees (e.g. expatriates reputation in the parent company). This means, we investigated each interview for any indices that describe how those categories are worked out in the respective case. Second, each case study was described and condensed separately. For this purpose, the information collected in Step 1 was ordered along the nine case studies. Moreover, some additional data, e.g. notes taken from the participant observation or the document analysis, was added. By this, we continuously improved the distinctiveness of each cases own story. Third, the nine case studies were crosschecked to identify some similarities and differences between them. This resulted, fourthly, in four patterns of institutionalisation processes of HRM practices to be described in the following section. Findings Pattern 1 our man in Moscow! An expatriate with strong references to and long-standing experiences in Russia stands in the core of this rst pattern. Often he has been socialised in the former GDR. His career
Medium-sized Small Represent. company company ofce A B C D E F G H R 6 3 1/2 250 3 6 1 20 1 1 2 1 2 1 1 1 1 1 1 1/2 1 2 2 1 2 1 250 80 60 30 50 17 20 0 2 1 2 1 1 1 2 2 1/2 23 2

Company Number of expatriates at the time of the case study Number of expatriates interviewed Hierarchical level of the expatriates interviewed Number of local employees Number of local employees interviewed

Table I. Characteristics of the case studies

ambitions are relatively low since he has already reached the hierarchical top level and intends to remain in Russia in the long run. It is not surprising that he is well integrated in the subsidiary and his employees consider him as one of us (cf. box 2 in Figure 1). There is obviously no need for facade building on the side of the local staff towards the expatriate. Against the background of a young and relatively small company the climate is rather informal and familiar, which can be considered well adapted to the local employees cultural expectations (3):
At least once per week we also sit together with all employees [. . .] usually on Friday at 2:30 p.m., silence, before they leave, half an hour. Then, I say what I was not happy about, I say where I perceive the problems to be; I say what we have renounced. Well, we are quite close together because we are still quite familiar with each other (Expatriate/Company H).

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The parent companys orientation can be considered explorative: although there is a distinctive interest in the Russian market, its leadership style is quite loose and laissez faire. Transfers do not really play an important role. The parent company rather concentrates on immaterial aspects and smoothly tries to convince the subsidiary management to adapt (1). The expatriate has a considerably strong reputation in the parent company he is the one who stands for the Russian business and its success. So, the expatriate does not need to build up any facades towards the parent company. He rather acts as a translator who is entitled to explain the parents executives how Russia functions:
[. . .] because there is nobody else who could report about Russia. He ,the expatriate. was indeed the only one. Then they open up their ears, [. . .] when he is talking about his experiences in Russia (Exp 2/R).

Consequently, the HRM practices of pattern 1 are considerably Russian, i.e. there is rather continuity of traditional practices than institutionalisation of new ones (6). This situation, nevertheless, is even perceived appropriate by the parent company. So, the established order may be perceived rather stable and traditional since no distinctive attempts can be identied to fundamentally change the current, inherited practices. The success of this kind of HRM is usually rather good as it ts with the local staffs cultural values and expectations. However, it also involves the risk of a too easy way of life and, therefore, limited success of the company. Along with the suffering of the overall performance, the reputation of the locally adapted management practices tends to erode which may ultimately lead to a radical change of the parent companys policy about Russia. Pattern 2 our masters voice! The characteristics of the expatriate of pattern 2 are rather opposite to the previous one: his reference to Russia is low and his experiences in the country are limited. He perceives Russia rst of all as a kind of stepping stone for his career. Consequently, he is loosely integrated in the subsidiary. The local employees consider him predominantly a delegate of the parent company and eventually an expert with important know-how (cf. box 2 in Figure 1). Given the fact that the subsidiary is still in an early phase of its life cycle (3), his expertise is highly acknowledged. The parent companys high interest in the Russian market and exploitative orientation (1) lead, on the one hand, to a rather strict leadership style and, on the other hand, to a broad variety of supporting transfers (e.g. intensive training of salespersons).

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Sometimes those transfers are accompanied by a high number of short-term expatriates who are entitled to establish the different functions of the (new) company with high velocity (e.g. case D). The implementation and institutionalisation of those new practices is promoted by imposition, incentives, and persuasiveness (4):
The rst thing you have to communicate to the people, you must give them a vision what they are working for. You take them by the hand, y with them to any place and you show them what they are working for [. . .] Particularly during the starting phase we got them all (Exp/D).

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The employees reaction is somewhat ambiguous: on the one hand, they gratefully acknowledge the diverse incentives and partially adapt their behaviour accordingly. On the other hand, we can identify a certain trend to build up some facades towards the expatriate and his expectations (5):
I started to work with this German company and from the rst day on I was taught order and behaviour. I am fully satised with that. I do not feel bothered by anything (Local employee 1/E).

The expatriate enjoys a good reputation in the parent company although he does not hold a higher position and although he seems to be exchangeable at any time. He does not need to engage in facade building towards the parent company. The institutionalised HRM practices in the subsidiary are by far copies adopted from the parent company and, therefore, look rather German (6):
We have some relatively loose manners here [. . .] everybody talks to everybody, the country manager does not ignore anybody and the area managers does not either [. . .] We also want to openly perform this, thats just our mentality that we have not to make any differences. Nevertheless, it is clear that I possess a company car and it is clear that I receive a higher salary (Exp/D).

The established order can be perceived imitative transnational, however, if opposition among the local staff occurs a real battleeld may develops (Clark, 2005). The success of this kind of HRM is limited since in spite of the great effort any quick positive results are hardly to be found. The behavioural patterns of the local staff often turn out to be little changeable. Nevertheless, even when the overall company performance remains weak this will not lead to a fundamental change in strategy. It rather gets the parent company to exchange horses, i.e. to send a new expatriate to effectuate a turnover (in a fairly similar way). Pattern 3 managing the crisis with the help of German know-how! With pattern 3 the expatriates reference to Russia is low as well, although he disposes of some experience in the country (cf. box 2 in Figure 1):
I am long enough in the region that I can comprehend the Russian values. But this does not always mean that they are mine (Exp 2/B).

A constitutive aspect of this pattern is that the expatriate enters the subsidiary in a crisis situation (3), holding a distinctive mandate from the parent company. So, his career ambitions are still strongly developed. He is more or less well integrated in the subsidiary, since local staff quickly recognises that their future is fairly dependent on the expatriate and his (future) actions. Similar with pattern 2, the parent companys orientation must be perceived exploitative and it exerts a rather strict leadership style towards the subsidiary,

mainly due to the crisis the company undergoes (1). Transfers from the parent to the Russian subsidiary are strong and diverse (e.g. the introduction of a German styled wage system). On the one hand, the implementation of the transferred ideas and practices is based on imposition (4):
This is not a should-be event and not a would-like event either. It is a must event! (Exp/D).

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On the other hand the local employees, at least for a short period and due to the crisis situation they experienced, also seem to accept the superiority of Western concepts and freely imitate them. This, however, is also paralleled with a clear tendency to build up facades towards the new foreign executive (5). The reputation of the expatriate in the parent company is somewhat conicting since he often is a trouble shooter hired from outside the rm. Moreover, the parents optimism about the Russia project was considerably decreased by the crisis. Nevertheless, there seems to be no need for the expatriate to build up any facades towards the parent company. The implemented HRM practices are clearly oriented towards the German requirements (6). On the side of the expatriate a distinctive black-and-white perspective can be found in this context:
I recognise that for instance my Russian employees do not like talking about problems. It is often the case that you must force them to do so [. . .] But this seems to be a Russian problem [. . .] (Exp 2/B).

As a result of this great dedication, a certain success in the HRM sector can be identied. The established order can (still) be perceived imitative transnational (Clark, 2005). However, success rather seems to be on a short-term level and mainly forced by the situation that is characterised by a deep crisis of the subsidiary and by strong pressures from the parent company. If the subsidiary survives, it is highly questionable whether the (imposed) HRM practices will endure in the long run since they are hardly grounded in the local cultural framework. Pattern 4 you need to compromise! The expatriate of pattern 4 takes a kind of average position as both his references to Russia and his experiences in the country are on a medium level. The same can be said about his career ambitions. His behaviour is often characterised by a tendency to nd a compromise between conicting interests (cf. box 2 in Figure 1). This kind of expatriate is usually quite well integrated in the subsidiary and the local employees appreciate his exibility and his willingness to compromise that often ts well with the local culture (3). So, facade building of the local employees towards the expatriate can hardly be found. The parent companys orientation is a kind of mixture between explorative and exploitative. It prefers to take a rather exible, case-by-case leadership style (1). Even the amount of transfers from the parent company to its Russian subsidiary differs. The implementation of transfers is mainly based on persuasiveness and education (4):
He ,the Russian employee. was close to being dismissed [. . .] I did not dismiss him, I pointed out that we continue to coach him. He has the potential, so we try to uncover this potential (Exp 3/A).

Accordingly, the local employees often freely imitate the new ideas and practices, though they usually try to mix them with to local values and customs (5).

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The expatriates reputation in the parent company is on a medium level since his openness to compromise is to some extent considered a weakness of leadership. Consequently, the expatriate from time to time needs to engage in facade building towards the parent company. The realised HRM practices must be characterised as rather self-standing, partly even hybrid (6). Not surprisingly, therefore, that the success of the HRM can be fairly diverse: a strong and highly efcient organisational culture as a positive extreme and a situation of insecurity and chaos due to numerous incompatible practices as a negative extreme:
I think this is both giving and receiving. I also learn a lot from her ,a female local manager. and she also needs be mirrored. On the other hand, when I attended a visit of a customer in the Gazprom context, then I learned a lot from her, what I should say in which moment and what I should not indeed mutually stimulating (Exp 3/A). English should become the language. However, we have the problem today, that we still have some people who are speaking German but no English. Very few people only speak Russian and no German and no English or only very badly. [. . .] So, we currently have gibberish, everybody tries to express himself in the language that he speaks best which indeed provides a veritable communication problem (Exp 1/A).

This situation is typical for a recombinative order (Clark, 2005). The implemented HRM usually is rather successful. However, as described in pattern 1, here too, there is a latent danger that the parent company may stop tolerating the self-standing way of the subsidiary at the moment when its balance sheet does not satisfy them anymore. Table II summarises the four patterns and their respective characteristics described above, thus also highlighting the distinctive differences between them. The numbers of the rst columns refer to the respective boxes of factor bundles in Figure 1. The rst line even mentions some typical cases although not each company could be perfectly attributed to one single pattern. Discussion Our paper focused on the process of institutionalisation of HRM practices in Russian subsidiaries of German MNCs. We have merged some different corpuses of knowledge and concepts into a process model that displays the topic in a highly differentiated manner (Figure 1). Furthermore, based on qualitative research in nine small and medium-sized rms we developed four patterns to describe and explain this process. By this, we aimed at contributing to a better comprehension of the complex process of implementation and institutionalisation of HRM practices abroad. We can argue, moreover, that the resulting patterns may not be restricted to the Russian case only but should be adaptable to other emerging countries as well. In particular, a few important ndings should be mentioned here. First, our ndings have stressed the importance of personal, institutional and contextual factors (Figure 1 as well as shortcomings three and four). They must be considered, on the one hand, strongly interrelated with each other. On the other hand, they also considerably inuence the process of implementation of HRM practices at the same time. Together, they seem to form a special pattern (Gestalt), including the parent companys strategy, amount and modes of transfers, experience and ambitions of the expatriates in relation to Russia, and established HRM practices. So, for instance, low experience and interest together with high career ambitions within the company

Pattern 1 F, H, R Explorative Loose High High Low High Low Medium Setting up/growth High Imposition, incentives, education, convincing Adaptation, facade building Imitative/battleeld German High Imposition, free imitation Adaptation, learning, facade building Imitative German Maturity Low to medium Medium All phases Medium Low Low High Medium High Low Medium High Medium High Medium Medium Medium Medium to high Low D, G Exploitative Rather strict B Exploitative Strict A, C Mixed Case by case

Pattern 2

Pattern 3

Pattern 4

Typical cases (1) Parent companys orientation Parent companys leadership style towards the subsidiary (2) Expatriates reference to Russia Expatriates experience with Russia Expatriates career ambitions Expatriates integration in the subsidiary Facade building of local employees towards the expatriate Expatriates reputation in the parent company (3) Phase of the subsidiarys life cycle

Convincing, education, free imitation Modication, recombination, facade building Recombinant Self-standing

Medium to high Setting up/ growth (4) Amount of transfers from parent company Low to subsidiary Mode of transfers from parent company to Convincing subsidiary (5) Mode of institutionalisation of HRM Hardly any practices (6) Established order Traditional/ stable Character of the subsidiarys HRM Russian practices

Expatriates and HRM practices 19

Table II. Four patterns of institutionalisation processes and their main characteristics

BJM 6,1

20

of the expatriate lead to high amounts of transfer of practices towards the subsidiary, lower integration of the expatriate into the subsidiary, and at least on the surface level, some rather Germanic HRM practices (pattern 2). Second, our ndings emphasise that expatriates with their specic value orientations and behaviour play a key role in this process. It therefore approves the ndings of earlier studies (Peterson, 2003; Myloni et al., 2007). We assume that this holds particularly true in the cultural context of Russia with its highly developed power distance. Consequently, the expatriates re-interpretation of existing company rules and his behaviour to modify, adapt or bypass them is of high importance. In the nine cases observed as well as with the four patterns of processes, we found some rather different forms of how to deal with the parent companys directions. Moreover, it became apparent that these different patterns of behaviour are also consequential for the implementation and further development of both management culture and organisational culture in the company. As exemplied in pattern 1, the activities of expatriates with strong references to Russia and long-term country-specic experiences may result in a far-reaching separation of the subsidiary from the parent company as well as in a locally adapted corporate culture of the subsidiary. Those practices gain legitimacy through the t with the expectations of their immediate environment and through the high acceptance the expatriate receives herein. Third, it has become obvious that the power balance between the parent company and the subsidiary must be considered an important mediator in the process of institutionalisation of HR practices (Clark, 2005). The development of new and locally adapted practices will not succeed if, on the one hand, there is too much pressure to unanimously implement the Western practices or, on the other hand, there is too much dependency of the parent company on the local experiences of the expatriate. Both would quickly limit the ground for any experiments and developments of adequate HRM practices. Fourth, with the help of our typology some diverse theoretical concepts suggested in the past could be successfully replicated. The well-known concepts of de-coupling and facade building (Meyer and Rowan, 1977) proved to be well adapted to describe some crucial behavioural pattern in the process of institutionalisation of HRM practices in Russian subsidiaries. Moreover, the ndings also provided some impressive examples of several forms of established systems/orders as proposed by Clark (2005). We namely found some imitative orders (pattern 3), some recombinant orders (pattern 4) and some battleelds (pattern 2). Fifth, our ndings also highlighted some development patterns taking place in the long run: both patterns 1 and 4 showed that expatriates with a medium or high level of references to Russia become more and more dependent on success by time. If they do not succeed, their engagement to go native and to introduce some HRM practices different from the parent company tends to become de-legitimised. This may lead to a shift in direction of pattern 2 (the parent company delegates a new expatriate to improve professionalism of the subsidiary) or pattern 3 (the parent company delegates a new expatriate to resolve the crisis). In the worst case, the parent company even takes the exit option to end the Russian experiment. Another long-term pattern to be found in our ndings is the (re-produced) short-termism of expatriates in pattern 2 (and sometimes in pattern 3). As their references to Russia are fairly limited, the uctuation among them tends to become rather high, particularly if they are not successful. Then, the parent company may exchange one expatriate by another (of similar characteristics). Only seldom, a shift in direction

of pattern 4 occurs, when the expatriate tries to more intensively adapt the HRM practices to local conditions. Moreover, this paper made some clear theoretical implications: rst of all, the need for qualitative process analysis is highlighted, since the institutionalisation of HRM practices in subsidiaries must be perceived not only highly complex but also very dynamic. As was pointed out above, our process model as well as the qualitative analysis approach provide a long-term perspective, merge several important aspects and inuence factors and, thus, contribute to a deeper understanding of the complex phenomenon investigated here. Second, our analysis has clearly approved the adaptability and the high explanatory power of the transnational space concept (Morgan, 2001) and, particularly, of the adaptive model proposed by Clark (2005). By this, we successfully broadened the reservoir of explanations for these complex processes (cf. shortcoming three). Several implications for practice emanate from this paper, especially for the HRM of multinational companies: rst, our ndings have stressed the importance of a long-run perspective of HRM measures, in particular when dealing with transformation countries of Central and Eastern Europe where dynamism is still very high and business relations often still are under (re-)construction. In this context, the responsible management is well advised to ground and support important decisions with the help of scenarios (e.g. about the subsidiarys further development) and other instruments of strategic planning. Second, the modality and pace of transfer and implementation of HRM practices should be well considered. As it has been demonstrated in our case studies, those processes include some distinctive long-run consequences that can hardly be revoked later. Third, our ndings have highlighted the role and impact of expatriates and their characteristics, such as personal values and orientations as well as career ambitions, on the development and success of foreign subsidiaries. Consequently, the selection of an expatriate who will be charged to establish and run a foreign subsidiary must be considered as of strategic importance by the responsible HR management. Fourth, the high relevance of HR development in the subsidiary should not be underestimated since it deals with the question about what kind of personnel the subsidiary will need in the future. Consequently, the HR development concept must be well adapted on the one hand to the overall HRM strategy pointed out above and, on the other hand, to the diverse other HRM activities (e.g. remuneration policy and organizational culture) developed in the subsidiary. Finally, the possible changes of business strategy in the long-run have to be taken into account as well. As already discussed above (cf. point 5), the patterns described are not completely independent from each other. In some circumstances, one pattern may be replaced by another one. This kind of changes, however, needs to be prepared with care since it also includes some severe changes on lower levels, namely regarding HRM practices and the relating values and norms of the organizational culture. Short-sighted measures in this context may endanger the success of the whole project. Notwithstanding the interesting ndings, this study also has some limitations: rst of all, although the patterns presented above may be rather illustrative and convincing they are only based on a relatively small sample of nine case studies. Moreover, the single company cases should not be considered homogeneous (e.g. the 20 expatriates of company D) and fully consistent with one single pattern (e.g. company E). They sometimes even displayed some aspects of different patterns. So, our study does not claim to be strictly representative. To make their ndings more robust, some further test will be necessary. Furthermore, we could only make few considerations about

Expatriates and HRM practices 21

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the institutionalisation paths in the long run. This seems to be a question particularly worth to be subject to further examination. Last but not least, in our analysis several variables were left aside. So, further research may observe how far company size or industry pattern impact on the process of institutionalisation of HRM practices. Another important aspect to be explored are the effects of different combinations of nation cultures (besides of the Russian-German example).
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