JOURNAL OF WORLD BUSINESS 49(4) · OCTOBER 2014, pp. 549-559.
South Korean MNEs’ International HRM Approach: Hybridization of
Global Standards and Local Practices
Chul Chunga1*, Paul Sparrowb2, Ödül Bozkurtc3
a
Henley Business School, University of Reading, Whiteknights, Reading, UK RG6 6UD
b
c
Lancaster University Management School, Lancaster, UK LA1 4YX
Department of Business and Management, University of Sussex, Falmer,
Brighton, UK BN1 9QF
1
Assistant Professor; Email: c.chung@henley.ac.uk; Phone: +44 (0)1183 787751, Fax: +44
(0)1183 784029
2
Professor; Email: p.sparrow@lancaster.ac.uk; Phone: +44 (0)1524 510911
3
Senior Lecturer; Email: o.bozkurt@sussex.ac.uk; Phone: +44 (0)7748 297948
*
Corresponding Author
ABSTRACT
This paper analyses the international Human Resource Management (HRM)
approaches of Korean Multinational Enterprises (MNEs). Through a study of nine
major Korean MNEs' approaches to subsidiary-HRM, it is argued that the firms
pursue hybridization through a blending of localization and global standardization
across detailed elements in five broad HRM practice areas. Local discretion is
allowed if not counter to global HRM system requirements and “global best
practices” used as the template for global standardization of selected HRM
elements. This strategic orientation appears to be part of a deliberate response to
the “liabilities of origin” born by firms from non-dominant economies.
Key words: international human resource management, Korean multinational
enterprises (MNEs), hybridization, liability of origin
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Introduction
Over the last two decades, the issue of the global standardization versus
localization of subsidiary-HRM practices has been a central debate in the
literature on human resource management (HRM) of multinational enterprises
(MNEs) (Festing, Knappert, Dowling & Engle, 2012; Pudelko & Harzing, 2007).
Extant research on the issue has mainly focused on MNEs based in developed
economies such as the U.S., European countries, and Japan (Thite, Wilkinson, &
Shah, 2012). Recently, there has been a growing interest in various aspects of the
activities of a “second wave” of MNEs from emerging economies (Bonaglia,
Goldstein & Mathews, 2007) such as,Brazil, China, India, Mexico and Russia as
they grow in number and size. As attention shifts to emerging markets, there are
important research questions that should be investigated, particularly in MNEs
from newly industrialized economies (e.g., South Korea, Singapore, and Taiwan).
Although the size of newly industrialized economies is smaller than that of major
emerging economies, foreign direct investment (FDI) from newly industrialized
economies is still growing, and unlike MNEs from emerging markets, there are a
significant number of MNEs from among these that occupy leading positions in
their global markets (UNCTAD, 2006; Filatotchev, Strange, Piesse, & Lien, 2007).
This study explores South Korean MNEs’ approach to subsidiary-HRM
practices. Research on Korean MNEs could have implications to wider groups of
MNEs. Firstly, Korean MNEs compete successfully in global markets against
MNEs from developed economies and they are widely considered to be exemplars
of successful MNEs from newly industrialized economies (UNCTAD, 2006).
Some Korean MNEs are large, with a wide geographical reach in multiple
subsidiary locations around the world and in leading positions in their respective
sectors. In other words, these MNEs resemble and therefore are directly
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comparable with their counterparts based in developed economies in terms of size,
global presence, and position in the global market. Secondly, at the same time, as
their home country lacks a dominant status in the world economy, they might
experience a “liability of origin,” which refers to the distinctive challenges or
disadvantages stemming from their national origins (Bartlett & Ghoshal, 2000;
Glover & Wilkinson, 2007; Chang, Mellahi, & Wilkinson, 2009; Ramachandran
& Pant, 2010; Chung, Bozkurt, & Sparrow, 2012). Hence understanding the
current state of their international HRM reveals insights, not just for subsequent
cohorts of MNEs from newly industrialized economies and emerging markets, but
also for the general domain of contemporary MNEs in general. We argue it is
particularly important to see whether South Korean MNEs adopt a distinctive
approach to subsidiary-HRM practices, which may call into question the current
dominant assumptions about HRM strategy and practice in MNEs, as these
assumptions are predominantly informed by what is known about MNEs based in
developed countries. An understanding of how South Korean MNEs approach
their global people management is critical to debates on the possible emergence of
an “Asia Pacific model of HRM” (Dowling & Donnelly, 2013, p. 172).
We present the findings of a study that examines parent companies’
approach to subsidiary-HRM practices of nine Korean MNEs, all of which enjoy
internationally competitive positions in their respective sectors. The major part of
study is based on thirty interviews with HR executives and senior managers from
the corporate headquarters directly responsible for the development and
implementation of the IHRM strategy in the firms. As one part of the interview
process, we used a structured-interview instrument designed to examine the
different orientations towards global standardization and localization at the
detailed element level within each of five HRM practice areas across the nine
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MNEs (job and grade, recruitment and selection, training and development,
performance management, compensation and benefits). In total we gathered data
on each of forty-seven elements about which decisions needed to be made with
regard to global standardization or localization: nine for job and grade system, six
for recruitment and selection, six for learning and development, sixteen for
performance management, and ten for compensation and benefits. In our
findings, we show that the IHRM approaches of the Korean MNEs are best
captured by a distinctive approach of hybridization across these elements of
individual HRM practices, rather than more wholesale orientations of “global
standardization” or “localization”.
The remainder of the paper is structured as follows. First, we present the
currently dominant understanding and assumptions in research on the IHRM
strategy of MNEs. After a discussion of our research methodology and an
introduction of the case organisations, the empirical findings are presented. We
then offer an interpretation of the findings with reference to existing theoretical
assumptions, and conclude with a discussion of the contribution of the study and
its limitations, as well as suggestions for future research.
International HRM strategy in the Literature: Dominant Assumptions and
New Challenges
One of the key issues in the practice of IHRM is the need to manage the dual
pressures of global integration and local responsiveness (Brewster, Sparrow &
Harris, 2005). Research on the issue has examined the degree of global
integration or local responsiveness in IHRM (see for example Evans, Pucik &
Barsoux, 2002; Rosenzweig, 2006; Björkman & Lervik, 2007; Farndale &
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Paauwe, 2007; Farndale, Brewster & Poutsma, 2008; Brewster, Wood & Brookes,
2008; Chung et al., 2012). It has also begun to distinguish the use of particular
mechanisms in IHRM integration (Smale, Björkman & Sumelius, 2013). Much
empirical study in the area is underpinned by the integrative IHRM model of
Taylor, Beechler and Napier (1996), which argues that an integrated approach
regarding IHRM strategy and practices has to distinguish the corporate-wide level
from that of affiliates, and also from the employee-group level. Given that our
main interest is in company-wide IHRM strategies, we also work with this
definition of IHRM strategy, even while we recognize there may be more than
three abstract orientations or routes to globalization of HRM. Accordingly, we
define IHRM strategy as the general approach or orientation taken by an MNE “in
the design of its overall IHRM system, particularly the HRM systems to be used
in its overseas affiliates” (Taylor et al., 1996, p. 966).
Three key assumptions have been dominant in research on orientations to
IHRM strategy. First, the degree of standardization (versus localization) of
subsidiary-HRM practices has been considered as a key dimension underlying
different orientations in IHRM strategy (Brewster et al., 2008; Pudelko &
Harzing, 2007; Dickmann & Müller-Camen, 2006). Taylor et al. (1996) identified
three generic IHRM orientations at the corporate-level of MNEs: exportive,
whereby corporate HR actors attempt to transfer parent company’s HRM system
to subsidiaries; adaptive, whereby they attempt to adapt subsidiary HRM system
as much as possible to the local context; and integrative, in which “the best”
approaches are sought from parent and subsidiary practices. In most empirical
IHRM research, the degrees of standardization as an integration mechanism has
been examined by assessing the similarity between parent and subsidiary firm
practices (e.g. Brewster et al. 2008; Rosenzweig, 2006; Björkman, 2006).
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Second, previous studies have typically examined the degree of
standardization either at the overall practice level (e.g. performance management,
recruitment and selection, compensation etc.) or the level of entire HRM
functions, through the use of measures that aggregate ratings on the degrees of
standardization for individual HRM practices (Björkman, 2006). For example, a
pioneering study on HRM practices of MNEs by Rosenzweig and Nohria (1994)
examined whether subsidiary-HRM practices were similar to parent’s or local
practices in each of six HRM practice areas such as employee benefits, annual
time off, variable compensation for managers, and so forth. Research has
increasingly looked at the implementation of particular HRM practices, for
example talent management (Hartman, Feisel & Schober, 2010) or global
performance management (Festing, Knappert, Dowling & Engle, 2012) in
different subsidiary locations. Importantly, while standardization may be
implemented across a specific element of an individual HRM practice, the
approach towards another element of the same practice at the same time may be
defined by localization (Brewster et al., 2005). For example, an MNE in the
energy sector mapped a set of generic HR processes by breaking these down into
detailed elements and revamping the country role around each process to establish
a new HR system architecture. Decisions were made as to whether to allow local
aberrations from the globally designed process on a detailed element-by-element
basis in each HRM practice (Sparrow, Brewster & Harris, 2004).
The third dominant assumption is that in attempts to standardize HRM
processes, parent-company practices are the major reference, in line with the
aforementioned orientations of IHRM strategy (see e.g., Bartlett & Ghoshal, 1989;
Rosenzweig, 2006; Björkman, 2006). This is evident in the widespread tendency
to treat similarity of practices between parent company and subsidiaries as a key
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indicator of global integration of HRM within IHRM research (Rosenzweig &
Nohria, 1994; Hannon, Huang & Jaw, 1995; Kim & Gray, 2005; Rosenzweig,
2006). The use of parent practices as the major reference of standardization
reflects MNEs' taken-for-granted views on effective HRM practices, the
embeddedness of their practices in their home countries (e.g. Björkman, 2006) or
their “administrative heritage” (Taylor et al., 1996; Bartlett & Ghoshal, 1989).
However, the dominant assumptions above have been challenged by more
recent scholarship, which depicts a more complex picture in IHRM. Regarding
the first and second assumptions, several recent studies show that the constitution
of IHRM strategy and practices could be far more nuanced and complex than the
rather simplistic framework that the degree of standardization versus localization
suggests. For example, work by Edwards and colleagues highlights that a number
of complex patterns of transfer, negotiation, and combination of practices exist in
the process of globalizing HRM (Edwards & Rees, 2007; Edwards & Tempel,
2010; Edwards, 2011; Edwards, Jalette & Tregaskis, 2012). In a detailed case
study of Japanese multinational retail firms, both in their home country and in
their subsidiaries in China, Gamble (2010) finds that the construction of
subsidiary-HRM practices in MNEs is too complex a phenomenon to be explained
by the traditional standardization vs localization continuum. In order to capture
the complexity of IHRM, Gamble proposes the concept of “hybridization”, which
involves complex patterns of creating new management practices through
simultaneous processes of highly selective adoption, transfer, and local adaptation.
Other research by Sparrow and colleagues on HR globalization within western
MNEs makes a distinction between standardization and optimization to capture
the more nuanced and detailed approach MNEs adopt in their IHRM strategy
(Sparrow et al., 2004; Brewster et al., 2005). Standardization occurs when HRM
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processes designed at headquarters are applied to country operations either
formally or tacitly based on the expectation of performance benefits, as seen by
corporate headquarters (Martin & Beaumont, 2001). Optimization involves the
discipline of adjusting a process based on multiple viewpoints so as to obtain a
particular goal by setting or optimizing a specified set of parameters without
violating some core constraints. Case studies examining the globalization of HR
functions at the element level in western MNEs reinforce this emerging view
through the investigation of areas such as international recruitment (Sparrow,
2007), the evolution of international mobility functions (Sparrow, 2012) and the
development of global talent-management processes (Garavan, 2012; Sparrow,
Farndale & Scullion, 2013).
Regarding the third assumption, questions have also been raised about the
most appropriate locus of reference for potential standardization. Pudelko and
Harzing (2007) note that practices from outside the organization, such as “global
best practices” that do not necessarily originate from the parent company may be
utilized as a reference for standardization. In this paper we argue that IHRM
research needs to adopt a broader frame of reference when considering the origin
of practices for standardization. This broadening also demands far more
sophisticated methodologies than have typically been used in related research.
The dominant assumptions in the extant research on IHRM strategy become
problematic in the distinctive context of the emerging MNEs, such as South
Korean MNEs. These firms might not be driven by the same assumptions about
the globalization of their HRM. MNEs from developed countries often claim
legitimacy in the transfer of parent-company practices to subsidiaries, presenting
them as “advanced practices” and a source of competitiveness, corroborated by
the global status of the home country. MNEs from home countries that lack such
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claims to legitimacy might not attempt the same approach to globalization of their
practices. First, they may be more sensitive to diverse institutional pressures and
reluctant to transfer home country practices to subsidiaries because of such
perceived shortcomings (Chang et al., 2009; Smith & Meiksins 1995; Bartlett &
Ghoshal, 2000). Second, the practices that exist in the parent company or home
country might not be mature because of limited heritage and experience in
conducting global business (Ramachandran & Pant, 2010; Cuervo-Cazurra &
Genc, 2008; Luo & Tung, 2007; Dunning, Kim, & Park, 2008). South Korean
MNEs, and by extension MNEs from other newly industrialized economies, may
challenge some dominant assumptions within current IHRM debates.
This paper addresses the following central research questions:
RQ1: What is the overall orientation in Korean MNEs’ approaches to subsidiaryHRM practices in terms of global standardization and localization?
RQ2: At which level do Korean firms intend to standardize subsidiary-HRM
practices?
RQ3: What is the origin of practices for standardization in Korean MNEs’
approaches to subsidiary-HRM practices?
Methodology
A multiple-case study method was adopted in this study as appropriate for the
investigation of the similarities among Korean MNEs in their corporate IHRM
strategies. Nine major MNEs were included in this comparison. The case
companies were selected based on (1) accessibility, (2) public awareness of their
“Global HR” activities and (3) representativeness in their sectors in terms of firm
size. Though one cannot generalize the findings in this study based on the small
number of cases to the larger population of Korean MNEs, the nine firms captured
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a considerable range of sectors, including automobiles, electronics, steel,
industrial wire and cable, infrastructure building, IT services, cosmetics, and
confectionary. Crucially for the study at hand, all nine firms included in the study
had very concrete, focused, and active globalization strategies, which included
HR functions. The proportion of revenues generated overseas spanned a range
from the mid-teen percent to over eighty percent. Total sales likewise spread
across a wide range (See Table 1.). This, of course, suggests that variables such as
the percentage of revenues generated from overseas or total sales might moderate
the overall results we report. As companies’ efforts for globalizing HRM were
mainly focused on white-collar employees, our research only includes their
approaches to subsidiary-HRM practices for this segment of employees.
(Insert Table 1. about here)
To gain a basic understanding of each company, a range of documents was
collected and reviewed, including annual reports and company profile documents.
Primary data for analysis were collected through thirty interviews with thirty-one
key informants. In each company interviews were arranged through an initial key
contact, a HR manager in a corporate HR team. Each interview was conducted on
a one-to-one basis except one interview that was carried out with two interviewees.
Twenty-nine interviewees (between two to five interviewees for each of nine
companies) were HR executives and HR senior managers at the corporate
headquarters of the nine MNEs. They were key informants who were directly
responsible for the development and implementation of IHRM strategy, including
activities associated with globalizing HRM at the firm level. The purpose of using
multiple interviewees was to capture a holistic picture of the company’s approach
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to subsidiary HRM practices, as a single interviewee may have been unable to
answer all of the questions given the wide range of information sought at the
organizational level. Thus interviews in a given case company were largely
complementary to each other. When there were multiple responses to a question
from different interviewees in a company, we checked on consistency and found
those responses tended to be highly congruent with each other and the congruent
responses were adopted in the data analysis. Non-congruent responses are noted
as competing explanations or caveats to our findings. Given the focus of
questioning was on each company’s approach and its policy-design intent, this
was to be expected. Additionally, to gather information regarding general trends
in global HR activities in South Korea, two interviews were conducted with
directors of the Seoul offices of two international HR consultancies, which had
been and were, at the time of research, involved in multiple Global HR projects
with a large number of Korean MNEs. Interviews were carried out at the
interviewees’ workplaces and each interview lasted from one to one and a half
hours. All interviews were tape-recorded and transcribed.
Interviews carried out for the study were of two types. Where the focus was
on the investigation of emergent phenomena, interviews were semi-structured.
Where the focus was on the collection of detailed data so as to allow for the
analysis of element-level practices across the nine MNEs in the study, a more
structured approach was adopted. In practice, this meant that interviews with
informants about the overall corporate IHRM strategy and the activities associated
with globalizing HRM, as well as the justifications offered for the pursuit of these
particular directions in IHRM strategy, were semi-structured. Interviews with the
structured-interview instrument that solicited data for the analysis of an individual
firm’s orientations at the element level of IHRM practices, categorized as globally
12
standardized (following globally common standards), localized (allowing
subsidiary discretion to respond to local needs), or modified (allowing local
modifications on the global standards), were structured. Methodologically, our
two-pronged approach was best suited to pursue further the suggestions in
previous literature that globalization can happen at the detailed element level in
HRM practices (Rosenzweig, 2006), remedying the tendency in much of the
extant literature only to investigate this at the broad practice level.
The semi-structured interview topics included descriptions of IHRM
strategy, specific IHRM initiatives and the reasons for the pursuit of given IHRM
strategies. Every interviewee in the nine firms was asked about these general
strategic themes. The structured-interview instrument solicited data about five
broad HRM practice areas that have widely been identified as core areas of
practice in previous research (Huselid, 1995; Youndt et al. 1996): job and grades,
recruitment and selection, learning & development, performance management,
compensation and benefits. It entailed data at the detailed element level of
practices within each of these practice areas. For example, the general HRM area
of performance management was expanded to comprise sixteen elements, such as
performance evaluation factors; performance measurement items; weighting of
evaluation factors; performance-rating scale and so on (see, Table 2). The list of
forty-seven elements representing generic design elements of the five HRM
practice areas were identified in an earlier study (Chung et al., 2012) with two
Korean MNEs (AutoCo and ElecCo2) which also participated in this study. Both
companies already had a series of elements of HRM practices in their global
HRM guidelines. Common elements were identified by comparison between the
two companies and a generalizable element list was developed. The respondents
could answer the instrument without difficulties and the list of elements in the
13
instrument covered their HRM practices comprehensively. Such detailed data
collection at the level of elements was essential given our stated purposes, as it
made it possible to refrain from a priori assumptions about the existence of a
universal and homogenous orientation in the strategies across different HRM
practice areas. It also enabled a systematic comparison across the firms.
For the structured-interview part, one interviewee for each company was
identified by key contacts as the most appropriate informant who had been
involved in the development of corporate guidelines for subsidiary-HRM
practices. This individual was first asked to respond to the structured-interview
instrument as well as the semi-structured interview questions. Most interviewees
could respond to the instrument without difficulty, offering explanations of why
their companies adopted the particular approaches to subsidiary HRM. In two
companies (AutoCo; ElecCo2), two interviewees were separately involved in
responding to the instrument, as one could not answer questions in all the
categories in the instrument due to the respondent’s scope of job responsibilities.
The results of initial responses to the instrument by one or two interviewees were
then reviewed by another respondent. In most cases they were confirmed without
disagreement, but in a few cases the initial responses were amended in the
following interviews as it became apparent that there had been misunderstandings
of categories in the instrument by the former interviewees.
The data analysis followed four steps. The first step coded the structuredinterview data for each company regarding parent companies’ guidelines for
subsidiary-HRM practices. As the data collection described earlier was highly
structured, it could be coded in a straightforward manner. The results are shown
in Table 2. In the second step, the semi-structured interview data for each
interviewee were coded for accounts regarding: (1) the parent company’s
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approach to subsidiary-HRM practices, and (2) the rationale or reason for
adopting the approach. Pre-defined coding categories were used for IHRM
strategy and influencing factors on this strategy. Each selected interview account
in each category was then coded using labels that summarized key notions in the
interview account. The codes were then classified into higher-level codes through
inductive reasoning. These codes were provisional and subject to re-coding if
signaled by the subsequent company-level analysis. The third step focused on
analyzing the coded individual data at the company level. After aggregating the
results of coding the semi-structured interview data at company level, each initial
higher-level code was re-examined across interviewees for each company and
refined to reflect common views across interviewees. When necessary, more
abstract constructs were identified and coded. After refining provisional codes, the
coded results of the semi-structured interview data were reviewed alongside those
of the structured-interview data. Key features of the parent company’s approaches
to subsidiary-HRM practices and the rationales behind these approaches were
identified for each company, based on the understanding that had been gained
through the coding process. In the fourth step, the common or distinctive patterns
in company-level approaches to subsidiary-HRM practices and the rationales of
these approaches were examined across companies. The key findings in relation to
the research questions were drawn from this comparative analysis.
Given that our focus is to examine parent companies’ approaches to
subsidiary-HRM practices, the reports from interviewees in headquarters need to
be verified through examining whether such approaches are actually recognised
and implemented in each subsidiary. We tied reports from headquarters regarding
subsidiary HRM practices to the actual practices implemented in the six
subsidiaries of one MNE to demonstrate the validity of our findings.
15
It would be beyond the scope of a single qualitative study to investigate all
subsidiaries of the nine companies. However, we conducted supplemental
research with six subsidiaries of an MNE to examine the fit with the reports from
headquarters-level interviews. This company was selected because it showed most
of the common patterns identified as important across the nine firms in the parent
companies’ approach to subsidiary-HRM practices and we could control and
match the functions served by its subsidiaries. Among the six subsidiaries, three
subsidiaries are located in India and the other three are located in the U.S, again
enabling multiple site comparisons within a single country. The three subsidiaries
in each host country include a sales office, a manufacturing plant, and a research
and development center. The level of economic development of a host country
and the function of a subsidiary were identified in the initial study at the corporate
level as important factors that could lead to different patterns in the
implementation of parent firms’ policies regarding subsidiary HRM. Thirty-six
interviews were conducted across the six subsidiaries. To capture the state of
implementation of subsidiary-HRM practices, five to seven interviewees in a
subsidiary, including local HR managers, an HR expatriate, the head of the
subsidiary and two to three line managers, were included in the study. Interviews
were conducted on a one-to-one basis. In each subsidiary, the local HR manager
and an HR expatriate were asked to provide information regarding the
implementation of headquarters’ guidelines on subsidiary-HRM practices. A
structured-interview template similar to the one used for the headquarters-level
study was used at the interviews. The subsequent interviews were conducted with
line managers and the head of subsidiary to verify the information received from
the local HR manager and the HR expatriate. When there is a divergence of views
between the local HR manager and the HR expatriate, the interview data from line
16
managers and the head of subsidiary was considered to ascertain the current state
of implementation in a particular area of HRM practices.
Findings
In every firm we found evidence of a hybridization approach, which involves
careful choices of specific elements of HRM practices for global standardization,
modification of global standards, or localization, in parent firms’ approach to
subsidiary-HRM practices. The analysis of orientations across the 47 elements of
the five HRM practices reveals that evidence is lacking for universal, wholesale,
and homogeneous strategies that can be coherently summarized as global
standardization or localization. Rather, in each participant firm, we observe that
viable options are sought and selected from among the three orientations - global
standardization, modification of standards, and pure localization - for each
element of HRM practices. We now elaborate on this main claim.
The emerging “global HR” in Korean MNEs: views from the institutional context
Changes in HRM practices in South Korea that occurred after the 1997 Asian
financial crisis have been well reported in the literature. These were broadly
related to the implementation of new concepts and practices, such as performanceoriented HRM systems, within the Korean business context (see, e.g., Bae &
Rowley, 2003; 2001). Our interview data confirm that the most significant HR
issues as seen by key actors in Korean MNEs are the challenges posed by the
perceived need for the globalization of the HR function. Interviewees consistently
argued that there was a clear and widespread trend among Korean MNEs for
attempts at the globalization of HRM at the firm level.
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According to our interview data, large Korean MNEs such as ElecCo1,
ElecCo2, and AutoCo, which were established and developed their businesses in
global markets earlier than most other Korean firms, initiated projects for
globalizing their HR function from the mid-2000s onwards. Subsequently, other
Korean MNEs from a range of industries joined the stream of globalizing efforts.
According to one key informant at the subsidiary of a major American HR
consultancy firm, which was a HR-consulting service provider to numerous
Korean MNEs, “Global HR” has been established as a common and critical issue
for MNEs from the Korean institutional context:
“Within [the last] 5-6 years… the term, “Global HR” has been used
widely in Korean business society. Before then, a main focus of
Korean companies’ headquarters had been on expatriation.... As the
internationalization of businesses by Korean companies has rapidly
progressed, core functions such as marketing, R&D, and
manufacturing went outside Korea. Some Korean companies even
acquired foreign MNEs, which means a large number of employees
are now non-Koreans. Korean MNEs began to think of how the major
practices of HRM such as the grade system, performance management,
reward, and recruitment should be designed and managed in a global
context” (Director, major HR consultancy)
This view was supported in all of the nine case companies. Previously, the
management of subsidiary HR functions had been largely delegated to subsidiary
HR managers, mostly hired in each host country. Corporate HR staff had not been
overly concerned with the operation of HRM in individual subsidiaries. However,
the rapid growth of business in foreign markets produced significant pressure for
18
the corporate HR staff to initiate globalizing efforts across their organizations,
linking the corporate HR function and foreign subsidiaries.
A hybridization approach at the level of element of practices
A range of activities may be labeled as “Global HR”, but our interviewees mainly
defined it as those common activities associated with the development of global
HRM guidelines, designed to guide and regulate HRM practices in subsidiaries or,
in some cases, across an entire MNE, including the parent company.
With regard to research questions 1 and 2, our objective is to show how the
adoption of an HR strategy that is selectively adaptive to pressures of global
standardization and localization at the level of element of HRM practices affords
both a more nuanced and context-dependent approach to the globalization of HR
activities. We found that case companies regulated their subsidiary-HRM
practices carefully, deciding which elements of the HRM practices needed to be
globally standardized (following globally common standards), localized (allowing
subsidiary discretion to respond to local needs), or modified (allowing local
modifications on the global standards). The choices made for each element of
practice reflected a nuanced understanding of where local discretion was possible
without impacting the high-level global requirements of the HR system as a whole.
It is difficult to assess a broad HRM topical area as globally standardized or
localized without carefully examining at the level of its individual elements, and
even harder to describe the overall IHRM strategy. The literature traditionally
defines this IHRM strategy using the traditional dichotomy of global
standardization vs. localization as the general orientation in the overall system
design. However, the notion of “hybridization” describes an IHRM strategy based
on combining different orientations together. Some elements of a practice are
19
standardized, while others are allowed to be modified based on the global
standards, and yet other elements are allowed to be localized. The corporate HR
staff of the firm try to select a viable option from the three alternatives for each
element of the HRM practice (e.g., the performance evaluation factor,
performance measurement item, weighting of evaluation factors, performance
rating scale etc.) in order to achieve a set of objectives (e.g., the globally common
logics of actions, such as maintaining performance-oriented management style,
facilitating global staffing etc.) within the potential constraints (e.g., the accepted
legal and cultural context of host countries).
The pattern of the IHRM strategies in all nine case companies could be
described as such a hybridization approach. However, the actual outcome of such
endeavours was different according to the particular context of each company (see,
Table 2). The hybridization approach at the element level refers to the intended
approach, not the realized one. As reported elsewhere (e.g. Chung et al., 2012;
Gamble, 2010, 2003; Kostova & Roth, 2002), there are potential gaps between the
corporate headquarters’ intentions and actual implementation in subsidiaries.
(Insert Table 2 about here)
The analysis across the nine firms shows that all can be classified as being
oriented toward a hybridization approach at the element level as described above.
Although variations in the particular blend of hybridization exist across the MNEs
in their overall approach, there is not one case that could be classified as being
geared predominantly toward either global standardization or localization. Even in
the electronics and automotive sectors, which have been recognized as examples
of globally integrated industries (Porter 1986), the Korean MNEs intended to
standardize only a highly selective range of elements within their HRM practices.
20
Most interviewees were reluctant to describe their IHRM strategy as being
based on a global-local dichotomy, as shown by a corporate HR manager:
“Actually, we began to approach the issue of global HRM with the
concept of standardization, but, after giving careful consideration to it,
we finally concluded that it might be unrealistic to stick to a standard
model which is developed by the center due to the complexity in each
subsidiary situation. We thought that how to deploy and make it work
in each subsidiary is a real issue. So, we took the view of local
optimization, utilizing [external global] best practices as just one
source of reference.” (Corporate HR manager, SteelCo)
As illustrated above, Korean MNEs standardize their HRM activities
selectively, based on a finer level of practices. This tendency was explained by a
senior manager involved in the development and implementation of global HRM
guidelines in his company as follows:
“We developed something called a ‘global HR standard’ and deployed
it to all subsidiaries. Initially, we intended to define core areas for
global standardization on an entire practice-by-practice basis, such as
global grade system, job classification system, performance
management and so on. For example, regarding the grade, we wanted
to say, this is our mandatory standard system that every subsidiary
should follow. However, after a pilot test with several subsidiaries, we
found that the approach was unrealistic and a more sensible approach
would be needed to accommodate diverse local needs as well as to
maintain key element as globally common. Thus, we break down
major HRM tasks into more detailed elements and decided which one
21
should be a key area for global standardization.” (Corporate HR
senior manager, AutoCo)
With regard to the research question 3, a distinctive aspect in the IHRM
strategy of Korean MNEs is the strong willingness to adopt what they believe are
“global best practices” or “global standards” as a source of standardization. Seven
out of nine case organizations used benchmarking with leading U.S. MNEs, and
eight of the MNEs hired U.S.-based global consultancies to support their
globalizing efforts. HRM practices used by US-based MNEs have been widely
introduced to Korean companies since the Asian financial crisis in 1997.
Information was gathered through benchmarking and work with consultancies.
However, the scope and depth of the implementation of these practices differed
among Korean MNEs. The majority reported that their parent companies could
not fully implement espoused “ideal” practices for a number of reasons, such as
internal constraints in their home countries based on resistance from labour unions
and the continued influence of traditional practices. Home practices represented a
mix of traditional seniority-based and a newly introduced performance-based
system. When they developed global HRM guidelines for subsidiaries, they were
not willing to consider their parent companies’ current practices as the major
reference, but rather adopted “global best practice” as a basis of standardization:
“The HRM practices of the Korean headquarters may be effective in
Korea, but, could they be the same in other countries? We don’t think
so. Why? Because it [the context] is very different. Then what would
be an alternative? Maybe something like ‘global best practices’ could
be considered as a tool or source if they are more applicable
universally, even though it might not be really the best one.”
(Corporate HR executive, ElecCo2)
22
Although our study of nine MNEs potentially limits the ability to generalize
our findings, we identified an indication of the potential impact of the sector on
the IHRM approaches of the companies. Companies 1,2,3 from automotive and
electronics, considered as examples of globally integrated industries by Porter
(1986), expressed an intention to standardize more elements of HRM practices
than the other companies, as shown in Table 2. Whilst those three companies
tried to standardize 40-55 percent of elements of HRM practices, the other five
companies (4, 5, 6, 7, 8) targeted only 9-17 percent, and one company (9)
intended to standardize 30 percent of the elements. It remains unclear whether the
differences are the result of an industry effect or an international strategy effect, as
all three firms in the globally integrated industries seem to be oriented towards a
global strategy, while the other firms are oriented towards a multi-domestic one.
We conducted a follow-up study to partially assess how the parent
companies’ approaches to subsidiary-HRM practices, as reported in the corporateheadquarters level study, are actually recognized and implemented at the
subsidiary level. Table 3 shows the recognition and implementation of the
corporate guidelines on HRM practices by six subsidiaries of MNE 1.
(Insert Table 3 about here)
First, corporate guidelines regarding subsidiary-HRM practices set a ‘Global
HRM Standard’. These guidelines lay out the desired features of HRM practices
that subsidiaries are expected to adopt and which elements of HRM practices are
required to be globally common. All HR managers in the six subsidiaries have
some knowledge of their corporate-headquarters approaches to subsidiary-HRM
23
practices, and from such knowledge determine which elements can either be
modified from the global standard or are left to the full discretion of subsidiaries.
Second, although there are variations across subsidiaries and elements of
HRM practices, all six subsidiaries implemented the corporate guidelines to some
extent. As expected and specified in the global standards, significant parts of the
mandatory standardization elements were adopted by subsidiaries. Those elements
that were subject to rejection or modification by local actors take on especial
importance. For example, in India, there was a major point of difference between
the intentions of the headquarters and the subsidiary practices in the grade system.
The global standards specified a five-level grade system. This could not be
implemented in India, where a highly differentiated hierarchical grade system was
the norm and standard in the local labor market, for both domestic and foreignowned firms. A ten-level grade system was introduced. Local actors had
successfully persuaded corporate-headquarters actors that implementation of their
own local version of the grade system, based on their localization logic, was
preferable. We also found significant variations among the different subsidiaries
located in the same host country. In the U.S. the more mature research and
development function subsidiary showed a low level of acceptance of the
corporate guidelines. By contrast, the U.S. plant, which was a newly established
subsidiary, was perceived as more willing to adopt the corporate guideline.
The potential explanation on the IHRM strategy of the Korean MNEs
Although we cannot generalize from nine cases, we found evidence that explains
why Korean firms pursued the approaches they did, especially the utilization of a
“global best practices” instead of the use of parent practices for global
standardization of subsidiary HRM practices. Two factors stood out: (1) HRM24
related institutional conditions of the home country; and (2) cognitive conditions
of HRM-related actors in the corporate headquarters. Regarding the institutional
conditions, the case companies perceived a lack of mature practices in their home
country due to the rapidly changing institutional environment. Before the financial
crisis, HRM practices in Korea were largely influenced by Japanese HRM
practices (Bae & Rowley, 2003). After the crisis U.S. practices gained legitimacy
as being more advanced and effective, and have been introduced widely in Korea.
However, changes are still in progress, contested between U.S. and Japanese-style
HRM practices (Bae & Rowley, 2003). Newly legitimized practices are still not
fully established by Korean MNEs as the desired forms. There is variability in
implementing these new “ideal” practices, and a lack of strong legacy practices in
parent companies. Our Korean MNEs opted to standardize particular elements of
their HRM practices across subsidiaries, developing and utilizing prototypes
closer to “global best practices” rather than transferring current parent practices.
An HR planning manager involved in global HR projects explained:
“We developed and deployed new global practices which were not
stemming from parent-company practices, but based on benchmarking
studies of well-known global companies. …We don’t think our HR
practices in the headquarters are the ideal ones we want to implement
and changing HR practices in Korea could be quite difficult and need
more time due to potential industrial relation issues. In a sense, we
could feel more comfortable in implementing the new global practices
in foreign subsidiaries first.” (HR planning manager, SteelCo)
Second, with regard to cognitive conditions, the majority of respondents
from the case companies expressed their less-privileged status as an MNE from a
non-dominant economy. They were explicitly concerned that if a label of “Made
25
in Korea” is imprinted in their global HR practices, it will not be received
positively by subsidiary employees. This cognitive orientation might explain why
the Korean MNEs utilized diverse external sources of practices actively and were
highly concerned about the legitimization of their global practices, by relying on
more visible processes of hybridization. A corporate HR manager in a case
company which is a leading MNE in the sector supported this view:
“U.S. companies already have global concepts in their home practices
in that their practices may be adopted by subsidiaries without serious
conflicts as ‘advanced’ ones. They don’t need to develop something
new for globalization. If Korea is (becomes) a dominant country… we
might be able to plant our practices to other countries in the same
way…. But, we don’t have ‘the global consensus’ that the U.S. firms
have. If we try to implement something called Korean practices in our
U.S. subsidiary, they may say we are crazy! We change ours just
because we need to do it.” (corporate HR manager, ElecCo1)
Even a well-known brand company among our case companies described
itself as a company from a non-dominant economy. Regardless of outsiders’
views, they believe that their parent HRM practices would not be welcomed by
employees in subsidiaries if perceived as “Made in Korea”. We found that the less
privileged status of their home country, as perceived by the interviewees, is one of
the factors that may help explain the companies’ approaches to subsidiary-HRM
practices, such as adopting what they believe are “global best practices” or
“global standards”. Arguably, this kind of “liability of origin” might be found
among MNEs from other newly industrialized or emerging economies.
Discussion
26
Our study finds that Korean MNEs take a more nuanced approach in their IHRM
strategy, rather than adopting a position along a global standardization vs.
localization dichotomy. We identify their overall orientation to IHRM strategy as
a hybridization approach, whereby practices adopted at the element level are
drawn from diverse sources, including so-called “global best practices”.
(Insert Table 4 about here)
This finding may challenge the dominant assumptions of the current IHRM
literature that we identified earlier (Table 4). There is a clear contrast between the
widely shared assumptions about the IHRM strategies of MNEs and what we
found in this empirical study. Our understanding of the IHRM strategies of
MNEs demands critical re-examination. Closer studies of MNEs from newly
industrialized economies and emerging markets promise to extend such
understanding by encompassing a wider, heterogeneous group of MNEs.
This orientation was related to the distinctive institutional and cognitive
conditions that characterize their status as MNEs from a newly industrialized
economy. This strategic orientation, rather than being an unintended aggregate
consequence of ad-hoc practical solutions for individual HRM practices, should
be understood as part of a deliberate attempt by Korean MNEs to overcome their
“liability of origin” (Ramachandran & Pant, 2010; Chang et al., 2009; Bartlett &
Ghoshal, 2000). The IHRM strategy is conditioned by (1) the absence of mature
and unique national bundles of HRM practices due to recent and rapid changes in
the home country institutional context and (2) the self-perception of lessprivileged status as firms based in a non-dominant economy. Arguably, such
institutional and cognitive conditions also apply widely to the larger population of
27
MNEs from newly industrialized economies and emerging markets. The study of
Korean MNEs’ IHRM strategies reveals critical features of the new generation of
MNEs based in the less-developed economies. It builds a more nuanced approach
that recognizes the multiple institutional pressures experienced by these firms in
ways that are distinct from their competitors based in developed home countries.
Theoretical implications
A number of theoretical implications arise from our study of Korean MNEs. First,
contrary to previously identified orientations of IHRM strategy, our findings show
that these MNEs pursue more nuanced approaches. We found a hybridization
approach to be the focal strategy for these firms - a combination of
standardization, localization, or modification at the level of element that
comprises broad HR practice areas. Such a nuanced approach has also been
observed in MNEs from developed countries in prior research (e.g., Gamble, 2010;
Sparrow et al., 2004). However, some key features of the context of MNEs from
South Korea, a newly industrialized economy, render such approaches more
explicit. New constructs and/or new typologies to help capture emergent
repertoires of IHRM strategy are needed that go beyond the traditional global
standardization-localization dichotomy and concepts such as hybridization (e.g.,
Gamble, 2010), optimization (e.g., Sparrow et al., 2004), and duality (e.g.,
Brewster et al., 2008; Evans et al., 2002) deserve more sustained empirical
attention. MNEs from newly industrialized economies and emerging markets
constitute particularly pressing and promising cases for empirical and theoretical
enhancement of our current understandings of IHRM strategy.
Second, our findings highlight that MNEs from South Korea utilize external
“global best practices” as an alternative to parent-company practices, which have
28
been recognized as a major source of standardization. Indeed, our particular
finding on this area suggests that this emphasis on “universal best practice” may
be more prominent and observable in the IHRM strategies of MNEs from newly
industrialized economies and emerging markets and that they therefore may very
well be more active and critical agents in the diffusion of dominant models and
approaches on a global scale than previously recognized. In turn, we see such socalled “global best practices” to be widely linked to a dominance effect, which
refers to the tendency of following and learning a role model- widely perceived as
best practices- stemming from a country that occupies a dominant position in a
hierarchy of national economies (Smith & Meiksins, 1995). In a study on HRM
practices of MNEs headquartered in the U.S., Germany and Japan, Pudelko and
Harzing (2007) found that their subsidiary-HRM practices can be shaped not only
by local practices or parent practices, but also by “global best practices” coming
from U.S. MNEs. MNEs from newly industrialized economies and emerging
markets, lacking an institutionally and organizationally mature and entrenched set
of alternative HRM practices, and feeling inclined to adopt already legitimized
practices due to their distinctive institutional and cognitive conditions, may indeed
emerge as the frontrunners of the adoption of global best practices, and, arguably,
key actors in the perpetuation and consolidation of dominance effects.
Third, our findings show that the liabilities of origin, particularly the role of
institutional instability and the perceived weak legitimacy of being a nondominant economy, play a significant role in shaping IHRM strategies of
emerging MNEs. This is a distinctive variation of the “country-of-origin” effect
(see, Ferner, 1997). Previous IHRM research has examined the effect of country
of origin by assessing the similarity between subsidiary-HRM practices with
home country practices based on two assumptions: (1) the existence of dominant
29
HRM practices which are strongly embedded in a home country; (2) parent
company’s willingness to transfer those practices to subsidiaries because they are
taken for granted as an appropriate way of managing people or a critical source of
the company’s competitiveness. Our study of Korean MNEs shows it is
problematic to presuppose these conditions in MNEs from newly industrialized
economies and emerging markets. Emerging MNEs lack clearly demarcated and
consolidated dominant practices in their home country due to the contestation
among different institutions in the process of rapid transformation. Even if there
are practices recognized as being effective in the home countries, the perceived
weakness of legitimacy makes expectations of local adoption of these home
country HRM practices precarious. Strategies of practice standardization based on
home country standards are unlikely. When we examine the country-of-origin
effects in the HRM practices of MNEs from newly industrialized economies and
emerging markets, the similarity of practices between home country and
subsidiary practices may be a poor, and even misleading, indicator of the effect.
Managerial relevance
Contrary to the dominant assumption that standardization might occur at the
overall HRM-function level or the HRM-practices level, our study shows that
MNEs attempt to standardize their HRM practices highly selectively at the finer
level within a practice. This further suggests that there is an important managerial
implication for the practice of HRM within MNEs. A corporate headquarters of an
MNE might need to consider carefully the needs of standardization at a very
detailed level, differentiating each element of HR practices, rather than being
constrained by traditional “lumping” typologies that attempt to manage at the
entire HRM-function level or overall practice level. The latter approaches may
30
have serious limitations in being able to adequately consider the complex pattern
of IHRM approaches that will be the most effective within MNEs.
Limitations and future research
We recognize our study is not without limitations. First, as it relies on data mainly
from the headquarters of each MNE, we only examine the headquarters’ view on
the firm's strategic orientation in IHRM. However, a seemingly optimal
alternative could very well be interpreted differently by subsidiary actors and thus
actual implementation at the subsidiary level could diverge considerably from that
intended and envisioned by the headquarters. Several interviewees at subsidiaries
of a MNE mentioned that even though there are mandatory requirements in
subsidiary-HRM practices, which were intended to be followed by all subsidiaries,
variations from the corporate guideline may exist in a particular subsidiary. Future
research is needed to build upon our findings to provide data on the actual
implementation of selected IHRM strategies at the subsidiary level.
Second, in seeking to identify commonalities across Korean MNEs in their
approaches to subsidiary-HRM practices, we recognize that such approaches
could differ depending on the industry and on company characteristics such as
size and degree of internationalization of businesses (Schuler et al, 1993;
Rosenzweig & Nohria, 1994). The nine Korean companies vary in terms of size,
industry and proportion of sales abroad but our study does not allow us to
systematically test the effects of each of these factors on MNE approaches to
subsidiary-HRM practices. Future research with a larger sample would be well
placed to explore the patterns of differences in the international HRM approaches
across companies and effects of various factors on them.
31
Conclusions
Through the case study of nine Korean MNEs, this research makes several
contributions to emerging research on HRM of MNEs from South Korea as well
as the extension of extant research on IHRM strategy. First, it addresses the lack
of empirical research on HRM in the context of MNEs from newly industrialized
economies and emerging markets, which are becoming more prominent in the
world economy. Second, through examining the detailed elements of each HRM
practice, this research identifies the hybridization approach at the element level of
practices as a distinctive IHRM strategy that has hitherto not been highlighted in
the IHRM scholarship. Third, this study addresses the lack of attention to the
liabilities of origin as a key determinant of IHRM approach especially in MNEs
from newly industrialized economies and emerging markets. Fourth, this research
identifies gaps between dominant assumptions and the empirical findings of
emerging MNEs and suggests that studies on MNEs from newly industrialized
economies and emerging markets could contribute to expand extant theories by
challenging their taken-for-granted assumptions.
The findings from the study of Korean MNEs have significant implications
for other MNEs from newly industrialized economies and emerging markets. The
distinctive institutional and cognitive conditions we identified as important in
shaping the IHRM strategies of companies are likely to also be found in MNEs
from other newly industrialized economies and emerging markets. However, such
inference only calls for further empirical investigation on cases of MNEs from
other economies. Examinations of strategic orientations in IHRM of MNEs from
newly industrialized economies and emerging markets, and the role of their
distinctive home-country institutional status and cognitive aspects of key actors in
shaping those orientations, promise to be an important future research task.
32
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Youndt, M., Snell, S., Dean, J., Jr., & Lepak, D. (1996). Human resource
management, manufacturing strategy, and firm performance. Academy of
Management Journal, 39, 836-866.
39
Table 1
Profile of Case Study Companiesa
ID No.
Company
Industry
1
AutoCo
Auto
2
ElecCo1
3
Total sales
(billion USD)
55.1
Proportion
ofsales abroad
(%)
75
Number of
employees / % of
employee abroad
124,000 / 30
Electronics
135.7
83
190,000 / 50
ElecCo2
Electronics
48.2
85
93,000 / 65
4
SteelCo
Steel
53.2
39
27,000 / 37
5
CableCo
Wire and cable
6.8
70
8,050 / 70
6
ConfCo
Confectionery
1.1
52
5,900 / 63
7
EbizCo
Online game
0.6
36
3,300 / 27
8
CosmeCo
Cosmetics
1.8
16
8,600 / 48
9
InfraCo
Heavy equipment
21.6
a
Source: Annual reports (2010), company websites, interview
55
38,000 / 47
40
Table 2
Summary of Global HRM Guidelines of the Case Companies
Component of HRM practices in MNEs 1 to 9
Job & Grade
Job classification: job family
Job classification : job list
Job description: category
Job description: content
Grade: number
Grade: criteria/definition
Grade: title
Promotion: requirement/ criteria
Promotion: process
Recruitment & selection
Recruiting methods
Recruiting message
Selection: criteria
Selection: assessor
Selection: process
Selection: assessment tools
Learning & development
Succession planning: executive pool
Succession planning: high potential talent
Learning program: leader
Learning program: Common competency
Learning program: profession/ job related
Learning delivery/ operation
Performance management
Performance evaluation factor
Performance measurement item
Weighting of evaluation factors
Performance rating scale
Forced distribution
Evaluation cycle/ frequency
Performance management process
Performance evaluation assessor
Performance management form
Linkages to other HR applications
Common competency
Leadership competency
Job skill/ competency
Competency assessment process
Competency assessor
Competency assessment rating scale
Compensation & benefit
Employee pay structure
Employee base pay range
Employee base pay increase
Employee Incentive
Executive pay structure
Executive base pay range
Executive base pay increase
Executive Incentive
Benefit: employee
Benefit: executive
1a
2
3
4
5
6
7
8
9
Gb
G
Lb
L
G
G
G
G
L
G
G
L
L
G
G
L
L
G
G
Mb
M
M
G
M
M
M
M
M
M
M
M
M
M
M
L
G
G
L
M
M
L
L
M
M
M
M
M
L
L
L
L
M
L
L
M
M
M
M
M
M
M
M
M
G
M
G
M
G
G
G
G
M
M
L
G
M
G
G
M
M
M
L
L
M
M
L
L
L
L
L
L
M
M
M
M
M
M
L
M
M
M
M
M
L
L
L
L
L
L
M
M
M
L
L
G
L
L
L
G
L
L
M
M
M
L
L
L
L
L
L
L
M
L
M
M
G
L
G
G
L
M
G
G
G
G
L
L
G
G
G
G
M
M
M
M
G
G
G
G
M
M
M
L
L
M
L
L
L
L
L
G
L
L
M
M
M
M
M
M
G
G
L
G
L
L
G
L
G
G
M
G
G
L
L
L
G
G
L
G
L
G
G
M
G
G
G
G
G
M
G
G
G
G
L
L
L
L
G
M
G
G
G
G
G
M
G
G
G
G
G
G
G
G
L
L
L
L
L
L
L
L
L
L
L
L
L
L
L
L
G
M
M
M
M
M
M
M
M
M
M
M
M
M
M
M
M
M
M
G
M
G
G
G
M
M
M
G
M
M
M
M
M
M
M
M
M
M
M
M
M
M
M
G
M
M
L
L
M
L
L
L
L
L
L
L
G
L
M
L
L
L
L
L
L
L
G
L
L
M
G
G
G
G
L
G
L
L
L
L
L
L
L
L
L
L
M
M
L
L
M
M
L
L
L
G
G
G
G
L
M
G
M
M
M
M
M
M
M
M
M
L
L
L
L
G
M
M
M
G
G
M
M
G
L
G
M
M
M
M
L
L
M
L
L
L
L
L
L
L
L
G
M
G
L
L
M
M
G
L
L
L
L
M
M
M
M
L
L
a
Company ID number
G: Globally common (following globally common standards), M: Modified (allowing local
modifications on the global standards), L: Localized (allowing subsidiary discretion to respond to
local needs)
b
41
L
L
G
M
L
M
M
G
G
L
G
G
G
L
L
Table 3
Implementation of the Corporate Headquarters Guidelines at Subsidiaries: Case of
MNE 1
Category of assessment
US
Sales
US
Plant
US
R&D
India
Sales
India
Plant
India
R&D
1. Recognition of the corporate-headquarters guideline regarding subsidiary-HRM practices
Yes
Yes
Yes
Yes
Yes
Yes
2. Subsidiary’s assessment of the degree of implementing the components of HRM practices which
were defined as ‘globally common’ (following globally common standards) by the corporate
headquarters
Job classification: job family
M
G1
M1
L1
L
M
Job classification : job list
M
G
M
M
M
L
Grade: number
G
G
M
L
L
Grade: criteria/definition
G
G
M
L
L
Grade: title
G
M
L
L
L
Promotion: requirement/ criteria
G
M
M
M
M
Selection: criteria (core elements)*
G
M
L
M
M
Selection: assessor (HR interview)*
G
G
L
G
G
Succession planning: executive pool
M
M
M
M
M
Learning program: leader
M
G
L
G
G
Learning program: Common competency
G
G
M
G
G
Performance evaluation factor
G
G
M
G
G
Weighting of evaluation factors
M
G
M
G
G
Performance rating scale
G
G
M
G
G
Evaluation cycle/ frequency
G
G
M
G
G
Performance management process
G
G
M
G
G
Common competency
G
G
M
G
G
Leadership competency
G
G
M
G
G
Competency assessment process
G
G
M
G
G
Competency assessment rating scale
G
G
M
G
G
(Pay philosophy - pay for performance)*
G
G
G
G
G
1. G: Adopt the global standard guideline; M: Modify the global standard guideline to accommodate local needs;
L: Utilize HRM practices which were developed locally to accommodate local needs; n/a: Not Applicable (not yet
introduced).
( )* . Additional company-specific information which is not included in the Table2.
L
L
L
L
M
G
M
M
G
G
M
G
G
G
n/a
n/a
n/a
n/a
G
42
Table 4
Dominant Assumptions versus Key Findings
Dimension
Dominant assumptions
Key findings
Overall orientation
 Standardization or localization
 Hybridization
Level of
standardization
 Overall HRM function
 HRM practice
 Detailed element within HRM
practice
Major origin of
practices for
standardization
 Parent company practices
 “Global best practice”
43