Human resource management is quickly becoming a contentious issue for multinational corporations irrespective of their home country. Talent and competition now know no boundaries. Companies that once dominated particular regions or demographic territories must now compete on both a global and local level. This presents an interesting dynamic as it relates to HRM practices. Larger corporation must now compete on such a granular level, creating complexities within the overall HR function itself. Countries now have different rules of law, customs, societal norms, and regulations. What may be acceptable in the United States may very well be unacceptable in China or Germany. Therefore, multinational corporations must be especially carefully when attempting to utilize HRM practices at a local level. This is particularly true for subsidiaries that often have specialized market knowledge that the parent company may not have. Bjorkman and Lervik mention in their opening remarks that HRM transfers are often unsuccessful. In fact, Bjorkman and Lervik state that the reasons for such failures can be distilled into implementation, internalization and the over integration of HRM practices. Much of the literature regarding this issue confirms Bjorkman and Lervik's assessment of the overall transfer of HRM practices.
To begin, HRM practices are transferred to expand "Best Practices" throughout the firm. It is viewed, that spreading these practices will enable the firm to better compete on both a global and local level for talent. It is this consistency that is believed to help establish a strong corporate culture, will eliminating any deviations from the desired HRM outcome. The problem, as outlined by Bjorkman and Lervik is that overall implementation does deviate substantially with respect to each subsidiary. In fact, two identical subsidiaries could have completely different result, due almost entirely to how they implement the corporate HRM system. This is often due to the fact that subsidiary strategies are often different. The range of MNC subsidiary strategies are described in Perlmutter's (1969) and Bartlett and Ghoshal's (1989) well-known classifications. These classifications are outlined below
ethnocentric, global strategy: control is centralized and subsidiaries resemble the parent company
polycentric, multi-domestic strategy: control is decentralized and subsidiaries conform to local practices
geocentric (or regiocentric as added by Perlmutter & Heenan, 1974), transnational strategy
These subsidiaries often adhere to regional standards as part of the overall organizational network. As a result, the overall implementation of HRM practices may vary depending on if the firm is ethnocentric, polycentric or geocentric. Furthermore, based on this classification, subsidiaries can have differing roles such as the local adaptation of products with their respective jurisdictions. For example, a subsidiary of General Motors may have a provision to provide a specialized expertise for the company, or they can have a worldwide mandate to provide a particular product or service (Dicken, 2003). As a result the overall HRM strategy of multinational corporations can vary based on the extent to which firms want or need to adapt practices to local conditions. It is this standardization that is often highly coveted by multinational organizations (Almond, Edwards, & Clark, 2003). However, standardization is not without is negative attributes. For instance, standardization can lead to conflict between a company's practices and prevailing conditions of the local markets in which the subsidiary operations. This often includes national cultural phenomena, institutions and business systems.
Another challenge to the effective transfer of HRM practices is culture (Bird & Beechler, 1995; Ferner, 1997). This culture includes both the individual corporation and the society in which the corporation operates. Culture, although intangible, has a very profound impact in how HRM practices are actually implemented throughout a global corporation. What may work in one region of the world may have the completely opposite effect in another region of the world. This can almost be exclusively attributed to culture. For example, United States corporations are often centralized, more formal and place and emphasis on avoiding union recognition. In contrast, Japanese MNCs have strong but informal centralized co-ownership with a network of Japanese expatriate managers. They are collectivistic by nature and often emphasize the group as oppose to the individual. The United States often applauds the individual who stands out among his or her peers. As a result of this stark contrast are cultures, HRM practices will be implemented differently. This core values are often strongly embedded with their respective regions. American's have a core value of individuality and pursuit of one's own happiness. If an organization attempts to impede on this core value a clash arises that may adversely...
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