Chapter

Five

Transfer of HRM across Boundaries

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 Learning Outcomes
In this lecture, we will:
• Explain why firms might want to transfer HRM practice
throughout the organization.
• Identify the key factors that account for the level and types of
HRM practices transferred.
• Describe the effect of the local cultural, institutional and
subsidiary context on the transfer of HRM practices.
• Discuss the probable causes of the various patterns of
diffusion of HRM practices throughout MNEs.

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 Why Firms Transfer Practices
• Market motives
– Sharing best practices
– Enhance the organization’s relative competitive position
• Cultural motives
• Political motives
– Gain legitimacy
– Individuals advancing their status.

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 Degree of Transfer of Practices
• Subsidiary method of founding
• Local dependence
• Presence of expatriates
• Amount of communication with the parent company.

4
 Factors Influencing Transfer of HR
Practices
• Country of origin
• Dominance effects
• Strategic human resource management orientation
• Host country effects
• Type of practice transferred.

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Standardization vs Localization

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 Country of Origin
• Location of assets
• Home country nationals in dominant senior management
positions
• Expatriates
• Effects diminish as firms internationalize.

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 Dominance Effects
• Social dominance
• Hierarchy of practices based on group’s status
• Countries with higher economic development are more likely
to be emanated
• Tend to result in standardization of HRM practices.

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 Strategic IHRM Orientations
• Adaptive
– Consistent with a multinational strategy
• Exportive
– Consistent with a global strategy
• Integrative
– Consistent with a transnational strategy.

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 Host Country Effects
• Both type and level of practices are influenced by institutional
and cultural factors in the local context
– Employment law
– Labor market institutions
– Host country norms for ‘good’ management
• This can effect:
– Types of practices transferred
– Local affiliate response to transfer.

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Local Affiliate Response to Transfer

• Depends on a range of institutional factors:

– Regulatory
– Cognitive
– Normative
• The process can be political
• It is also dependent of the relationship of employees
from the headquarter and employees at the subsidiaries.

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 Factors Influencing Diffusion
• Nationality of the parent firm
– Consistent with country of origin and dominance
effect
• Configuration of the MNE
• Organizational conduits
• Relative influence of each of the national operations

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 Configuration of the MNE
• Organizational structure
• Similarities among subsidiaries
• Degree of integration
• How the firm has grown
• More similar organizational units are to each other the more
scope there is to share practices

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