Uncovering competitive and institutional drivers of HRM practices in multinational corporations
Elaine Farndale & Jaap Paauwe Tilburg University, The Netherlands
Submitted to: Human Resource Management Journal, Special Edition on International HRM
This paper is not yet finalised and, for this reason, the authors request that it is not quoted without permission. However, the authors warmly invite requests to do so or discussion about any issue in connection with this paper.
Dr Elaine Farndale & Professor Jaap Paauwe Department of Human Resource Studies Tilburg University PO Box 90153 5000 LE Tilburg The Netherlands Tel.: +31 (0)13 466 2827 / 2371 Fax: +31 (0)13 466 3002 Email: email@example.com, firstname.lastname@example.org 1
Uncovering competitive and institutional drivers of HRM practices in multinational corporations ABSTRACT
Current international human resource management (IHRM) literature focusing on multinational corporations (MNCs) presents evidence of both similarities and differences in the HRM practices adopted in different global locations. However, the drivers behind this duality require more detailed investigation. This paper focuses on exploring why MNCs position themselves within global markets as they do, exploring how extant theory can help explain the drivers behind both global and national HRM practices. Based on a worldwide sample of in-depth interview-based case studies of well-known MNCs, we explore the ways in which different firms react to both institutional and competitive pressures in selecting their approach to HRM. The findings uncover a differentiation between external global competitive isomorphic pressures, external national institutional isomorphic pressures, and internal processes of strategic choice and competitive differentiation. It is suggested that MNCs face all three drivers of HRM simultaneously, leading to different patterns of practice adoption, adaptation and innovation.
HRM practices; multinational companies; isomorphism; differentiation.
Uncovering competitive and institutional drivers of HRM practices in multinational corporations INTRODUCTION
Interest in the value of human resource management (HRM) practices in terms of contribution to firm performance continues to be high as the HRM field seeks legitimacy in both academic and practitioner fields. Despite groundbreaking work by authors such as Huselid (1995) and Pfeffer (1995), there are as yet no definitive solutions offered as to what universal HRM ‘best’ practices consistently deliver high firm performance (Paauwe & Boselie, 2005; Purcell, 1999). In the area of employee relations, this has evolved into a debate on the convergence or divergence in practices due to increasing globalisation (Geppert, et al., 2002; Paauwe, 2004). Equally, in the broader field of HRM such discussions are also underway (Brewster, 1999). When considering international organisations, this brings to the fore the distinction between universalistic ‘best’ practice versus best fit (contingency) approaches to HRM (Delery & Doty, 1996).
Multinational corporations (MNCs) are at the heart of these debates, as they operate at both the global and national level, are one of the main driving forces (next to information and communication technology - ICT) behind globalisation, and are confronted with a variety of HRM practices in their countries of operation. At the same time, MNCs benchmark themselves against each other to improve both efficiency and effectiveness. Benchmarking might result in a certain amount of reproduction of HRM universalistic practices through competitive isomorphism (DiMaggio & Powell, 1983), but at the same time these practices can show variations in approach, content and implementation resulting in competitive differentiation. Reflecting deeper on these observations, we can distinguish both universal
rationales for the adoption of HRM practices and more context-dependent or best fit...
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