We noted in the last chapter that there has been considerable interest in the global strategies of firms but the current consensus is that firms are not as global or international as is often assumed. It is evident that there is a clear country-of-origin effect. US MNCs, for example, tend to be more centralized and formalized than others in their management of HRM issues, ranging from pay systems through to collective bargaining and union recognition. They tend to innovate more and import leading edge practices from other nation-states. Japanese MNCs on the other hand have been at the forefront of work organization innovations through lean production, but expect their subsidiaries abroad to fit in with this approach and even though standard worldwide policies and formal systems are not as apparent as in US MNCs, there is stronger centralized direction and ethnocentric attitudes. In short, "MNCs, far from being stateless organizations operating independent of national borders in some purified realm of global economic competition, continue to have their assets, sales, workforce ownership and control highly concentrated in the country where their corporate headquarters are located" (Ferner and Quintanilla, 1998:710). In our validation workshops this view was clearly supported by international HR directors:
In reality most multinationals have a culture which may be US-global (e.g. IBM) or Japanese-global (e.g. Panasonic) or European-global (e.g. Shell). So any moves towards centralization or decentralization operates in the context of what these respective national business systems/corporate governance systems need to see. In Japan, for example, they have to trust in your competence before they will decentralize.
(Senior international HR director)
This results in there being tensions between the forces of globalization - which were also held to be self-evident - and the characteristics of MNCs that still bear their "nationality effects." So what exactly is meant by globalization or internationalization in this context? Globalization of industries? Internationalization of the firm? How might these be measured? It is important to understand this because international HR functions only arise in, and need worry about the implications of, more global operations. The more basic the level of internationalization of the markets the firm operates in, the simpler need