Cross-National Transfer of Employment Practices in Multinationals

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cross-national transfer of employment practices in multinationals

This paper argues for the systematic incorporation of power and interests into analysis of the cross-border transfer of practices within multinational companies (MNCs). Using a broadly Lukesian perspective on power it is argued that the transfer of practices involves different kinds of power capabilities through which MNC actors influence their institutional environment both at the ‘macro-level’ of host institutions and the ‘micro-level’ of the MNC itself. The incorporation of an explicit account of the way power interacts with institutions at different levels, it is suggested, underpins a more convincing account of transfer than is provided by the dominant neoinstitutionalist perspective in international business, and leads to a heuristic model capable of generating proposed patterns of transfer outcomes that may be tested empirically in future research.

multinationals; comparative & cross-cultural HRM; conflict; international HRM; strategic and international management; organisational theory. Introduction

Much has been written about the cross-national transfer of management practices in multinational companies (MNCs). A recent conceptual development is the ‘neoinstitutionalist’ contribution of Kostova and colleagues (Kostova, 1999; Kostova and Roth, 2002; Kostova et al., 2008). In the international business literature, this approach shows signs of establishing a new intellectual hegemony.1 Given this salience, critical engagement is essential. The neoinstitutionalist approach to practice transfer in MNCs has provided fundamental insights. It argues that MNCs – or to be more precise, their subsidiaries – operate under conditions of ‘institutional duality’, facing both the institutional terrain of the international firm itself and that of the host environment in which they operate. These institutional spheres exert rival isomorphic pressures which come to the fore when practices are transferred from the parent to host operations. Drawing on Scott’s (2008) institutional pillars, Kostova uses the ‘country institutional profile’ tool to characterize parent- and host-country institutions. This provides the basis for assessing ‘institutional distance’ (ID), the divergence in institutional arrangements between the parent country and host. In general, the greater the ID, the more problematic is transfer; and the harder is the ‘internalization’ of transferred practices, that is, their full assimilation to host employees’ cognitive mindsets and normative frameworks (Kostova, 1999). However, neoinstitutionalist positions on transfer in MNCs suffer from a neglect of ‘old institutionalist’ questions about power, coalitions, interests and competing value systems (e.g. Stinchcombe, 1997), despite increasing attention to such questions in broader neoinstitutionalist theory (e.g. Oliver, 1991; Greenwood and Hinings, 1996; Lawrence, 2008; Lounsbury, 2003; Tempel and Walgenbach, 2007). The key concepts of ‘institutional duality’ and ‘institutional distance’ overlook the ability of actors in MNCs to shape institutions to their needs and thus influence the transfer process. There is little sense of what is ‘at stake’ for actors in the confrontation of cognitive, normative and regulative frameworks that arise when practices are transferred. This paper discusses how the analysis of power can be incorporated into an understanding of cross-institutional practice transfer. It builds on recent work concerning MNCs as political actors (e.g. Bélanger and Edwards, 2006; Dörrenbächer and Gammelgaard, 2011; Dörrenbächer and Geppert, 2011; Edwards and Bélanger, 2009; Ferner and Edwards, 1995; Ferner and Tempel, 2006; Levy, 2008; Levy and Egan, 2003). It argues that power and interests of actors shape transfer through processes that draw on institutional resources both at the ‘macro’ level of the host business system and the ‘micro’ level of the MNC. These...
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