Transfer of Human Resource Practices from German Multinational Enterprises to Asian Subsidiaries

Article excerpt

ABSTRACT

There are three Human Resource Management related issues that have attracted considerable interest in the international management literature. These three research issues deal with 1) human resource practice transfers, with 2) relational context affecting implementation and internalisation, and with 3) roles of key staff that influence European human resource practices across Southeast Asian countries. These issues were addressed in a study when human resource (HR) directors and line managers were interviewed in German companies with subsidiaries in Singapore, Thailand and Indonesia. The study findings indicate firstly, that German MNEs because of underlying value differences, tend to transfer policies and leave the translation into practices to the local Asia Pacific HR director, whereas the subsidiaries have contrasting expectations. Secondly, the findings confirm the importance of the relational context and trust between headquarters (HQ) and subsidiaries. Finally, the study evidence demonstrated HQ and subsidiary managers have different perspectives, and this observation highlights how cultural attributions affect organisational practice. The implications are that various approaches to the control of HR policies exist and the MNEs are encouraged to carefully analyse the relational context and subsidiary expectations when planning their international HR transfer strategy.

INTRODUCTION

The first issue to be addressed is that of the transfer of human resource practices from headquarters to subsidiaries and from subsidiaries to parent companies. Although there is agreement that the transfer of knowledge internationally is a key requirement for successful multinational enterprises (MNEs) (Bartlett & Ghoshal 2000, Evans, Pucik & Barsoux 2002, Poedenphant 2002, Mariappanadar 2005), differences of opinion occur about factors that influence the adaptation of Human Resource (HR) policies and practices from MNEs to subsidiaries. A second discussion point within this literature is what relational context needs to exist between Headquarters (HQ) and their subsidiaries (Kostova & Roth 2002), and a third issue focuses on the roles of relevant staff in the transfer process (Taylor, Beechler & Napier 1996). The contention in this paper is that these issues have not been adequately researched in European firms, especially, German firms and their Asian subsidiaries.

In terms of the first research issue namely, the transfer of human resource practices, Kostova and Roth (2002) formulate hypotheses about factors that influence international transfer of organisational practices. This work serves as a guideline to conceptualise the transfer of HR policies and practices in this study. The need or desire to transfer policies and practices to implement global HR systems often arises from relatively basic needs, such as wanting quick access to global headcount or payroll volume (Roberts 2000). This is in contrast to the more strategic and theoretical notion that international human resource strategy (IHRM) is an integral part of business strategy (Hamel & Prahalad 1994, Bartlett & Ghoshal 2000, Rugman & Hodgetts 2000, Evans, Pucik & Barsoux 2002, Nankervis, Compton & Baird 2002, Takeuchi 2005).

The second research issue is in terms of context implementation. Specically, is the debate about relational context. A number of researchers argue that the approach to internationalisation is more often than not to expand, and, therefore, impose the existing home country system or process internationally, without getting involvement of the people from the subsidiary. Thus, the tendency to consider values, norms and customs of one's own country to be superior to those of other countries is often referred to as an ethnocentric or exportive approach (Taylor, et al. 1996, Clark, Grant & Heijltjes 2000, Roberts 2000). Because the home country or HQ approach may be neither accepted nor appropriate, the practice at the operational level in subsidiaries often establishes itself as a sub standard solution. …