Examine Why Multinational Corporations Seek to Transfer Their Home-Country Human Resource Management Policies to Their Overseas Subsidiaries. Use Examples to Explain the Difficulties That Firms Might Encounter in the Transfer Process.

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The HRM policy of a firm is looked as a most important strength which needs to be taken care of all the time to have a competitive advantage within the industry they operating in. Multinational corporations (MNCs) seek to transfer their home-country human resource management (HRM) practices to their overseas subsidiary as to them it is just another approach towards globalisation. It can be an element of success for MNCs if they manage to transfer these HRM practices across their subsidiaries in an effective manner. An effective transition of these policies depends on the organisational, cultural, social and relational factors (Bartlett & Ghoshal 1998; Evans, Pucik & Barsoux 2002; Poedenphant 2002). The transition of these policies is a very complex procedure which depends on the requirement of the transfer between 2 different countries. The transition of these HRM policies across the national boundaries depends on the firm’s competitive position in the global economy.

There are various reasons why a MNC seek to transfer their domestic HRM policies across their subsidaires. The most debatable reason for such transfer can be global competition pressure. Transferring policies and practices across their subsidiaries is looked as an incentive on the basis of competitive advantage (A Review of Theories on Transnational Transfer of HR Practice within Multinationals, Tianyuan Yu, in May 2009). According to Kostova T. (1999) in order to achieve synergy and effectiveness, MNCs often go for transnational transfers of their HR policies and practices that replicate their business proficiency and core competencies, which can be classified as another approach of achieving competitive advantage. A transnational transfer of the HRM policies is considered one of the top sources of competitive advantage as they originate from the national organizational system of a MNC. According to Hall and Soskice (2001), a socio-economic system to a country is responsible of a...
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