Human Resource Management in Multinational Enterprises: Evidence from a Late Industrializing Economy

By McDonnell, Anthony; Lavelle, Jonathan et al. | Management International Review, May 2014 | Go to article overview

Human Resource Management in Multinational Enterprises: Evidence from a Late Industrializing Economy


McDonnell, Anthony, Lavelle, Jonathan, Gunnigle, Patrick, Management International Review


Abstract This paper examines the extent to which human resource management (HRM) practices in multinational enterprises (MNEs) from a small, late developing and highly globalized economy resemble their counterparts from larger, early industrializing countries. The paper draws on data from a large-scale representative survey of 260 MNEs in Ireland. The results demonstrate that there are significant differences between the HRM practices deployed in Irish-owned MNEs and that of their US counterparts but considerable similarity with UK firms. A key conclusion is that arguments in the literature regarding MNEs moving towards the adoption of global best practices, equating to the pursuance of an American model of HRM, were not obvious. The study found considerable variation from 'US practices' amongst indigenous Irish MNEs.

Keywords Best practice * Globalization * Human resource management * Ireland * Late industrializing * Multinational enterprise

1 Introduction

Proponents of globalization suggest that economies are increasingly integrated leading to the emergence of more standardized global management systems and converging HRM practice across countries (Sera 1992; Pudelko and Harzing 2007). Multinational enterprises (MNEs) are arguably the organizational form most likely to ascribe to a standardized management approach because of their susceptibility to globalizing forces (Brewster et al. 2008). While much international management and business scholarship has focused on whether foreign MNEs ascribe to the local norms and traditions, less insight has been provided into HRM practices in domestically-owned MNEs (notable exception being Famdale et al. 2008) and whether these firms seek to implement what may be considered as dominant or what Pudelko and Harzing term "perceived global best practices" (Pudelko and Harzing 2007, p. 536; Smith and Meiksins 1995). Gooderham and Nordhaug (2003) suggest that best practice in this context means the application of practices which are perceived as key contributors to performance. Pudelko and Harzing (2007) are more specific in stating that best practice effectively refers to US management practices, reflecting that country's economic dominance over recent decades and the increased HRM discourse that is now evident in business and which is strongly North American led.

This paper further contributes to the literature on a possible convergence and standardization of HRM practice--particularly those suggesting a US styled, 'best practice' HRM model is increasingly prevalent (Pudelko and Harzing 2007, 2008). We investigate whether the HRM practices in MNEs from a small, late developing but highly globalized economy resemble those of MNEs from larger, early industrializing nations. Research on small and/or late industrialized countries remains minimalist at best with the exception of the growing literature on the larger, developing Asian economies and India (McDonnell et al. 2011). The focus is on the macro level (i.e., HRM practices at an organizational level) which Batt and Banerjee (2012) argue has received comparatively less attention vis-a-vis micro level analysis (i.e., work group or employee level).

We are especially interested in the ideas of globalization, dominance and spillover effects on HRM practice in indigenous or domestic-owned MNEs. At a general level, these effects refer to the influence of large and economically powerful economies on smaller, less powerful countries, often manifested through the dependence of smaller host economies (e.g., Ireland) on foreign direct investment (FDI) from larger, developed economies (e.g., US). MNEs emanating from larger economies may act as conduits for the transfer of their home country management practices to host locations. These may subsequently be taken onboard by domestic companies who have become international organizations and that look to mimic their more established and apparently successful counterparts (Begley et al. …

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