Internationalization and HRM strategies across subsidiaries in multinational corporations from emerging economies—A conceptual framework

Abstract

The rapid rise of multinational Corporations (MNCs) from emerging economies has led to greater interest and urgency in developing a better understanding of the deployment and diffusion of managerial strategies from their perspective and without assuming the prevailing Western ethnocentric orthodoxy. This paper develops a conceptual framework of global HR strategies and practices in MNCs from emerging economies across their subsidiaries in both developed and developing markets. Using data from a pilot study of an Indian MNC, it provides insights and guidance into the motives, strategic opportunities and constraints in cross-national transfer of HR policies and practices in a multi-polar world.

Introduction

“In the coming decades, China and India will disrupt workforces, industries, companies, and markets in ways that we can barely begin to imagine.” (Engardio, 2008, p. 23)

Research on MNCs has tended to be focused on those from developed countries establishing subsidiaries either in other developed economies (e.g. U.S. to the UK) or into developing economies (e.g. the USA into Latin America). U.S. firms invested in Europe from before 1939 but the major push came after World War Two (Ferner et al., 2004). Japanese MNCs began to locate in advanced economies, particularly in the 1980s. While, there has been a rich stream of MNC research in this area, there has been relatively less research on newer industrialized (e.g. Taiwan, India and South Korea) to the more industrialized economies (Glover & Wilkinson, 2007, p. 1438). This is a new era which is often referred to as a ‘new geography of investments’ (UNCTAD, 2004). While most MNCs come from the world's top five economies, a growing number are from developing and newer industrialized economies. UNCTAD (2006) categorizes developing economies into two groups—South Korea, Taiwan and Singapore who are newer industrialized and have an established track record as outward investors and those such as India and China that are rapidly developing.

In this paper, we widen the horizon of International HRM to include HRM strategies and practices from emerging economies. The purpose of the paper is to explore how HRM strategy of the MNCs in emerging economies is formed and how it operates in practice. First, we outline the issues relating to emerging MNCs. Second, we develop a conceptual framework of global HR strategies and practices in MNCS from emerging economies. This provides managerial insights and guidance into the motives, strategic opportunities and constraints in cross-national transfer of HR policies and practices. It uses the data from the pilot study of an Indian multinational company to test the conceptual framework and propositions. The paper concludes with a discussion of how our findings relate to existing research and identify directions for future research.

This paper helps to identify and analyze ‘the travel of ideas’ (Delbridge, 1998, Garrahan and Stewart, 1992) between the East and West, in terms of the motive and opportunity behind cross-national transfer of HR policies and practices. Such an understanding of corporate management thinking and practice in Asian MNCs helps practitioners understand their own strengths and weaknesses in the new scheme of things and assists them in strategizing accordingly as to how best to influence the top management layers and players. This would in turn assist them to facilitate a smooth ‘travel’ of policies and practices across subsidiaries (Ferner, 2009).