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Global HRM

Notes firm with a long-term reliance on Belgian expatriates. The Belgian firm had limited control
over the Chinese employees in the joint venture and was constrained by its partner’s
expectations and differing goals.
2. The US telecommunications firm Motorola established a wholly owned operation in
Tianjin, China, in 1992. Changing conditions in China meant that Motorola could effectively
build a ‘transplant factory’: importing production equipment, organisational processes
and practices from either the parent or other subsidiaries in its global network. This
enabled Motorola to integrate the Chinese operations into the broader corporate network,
and to localise management. These have been supported by HR initiatives such as a
special management training programme (CAMP – China Accelerated Management
Programme). English language training and transfer of Chinese employees into US
operations. Motorola has been able to transfer its processes and systems, such as Six Sigma
quality control, bringing its technology, knowledge and work practices, supported by HR
activities, into the new facilities in China relatively quickly.
Ownership and control are factors that need to be taken into consideration while MNCs opts for
the standardisation of work practices. The autonomy to implement processes and procedures is
naturally higher in wholly owned subsidiaries. Complementarities between International JV
partners and the degree of interdependence between the International JV and multinational are
important influences on effective JV operation and transfer of work practices. The importance of
a strategic objective for the International JV in determining work practices in China has been
studied. Those firms pursuing a strategic position in China were more likely to seek to diffuse
task related work practices compared with those who were more short-term. The task-related
influence in an International JV plays important role in directly shaping HRM practices.
The management contract involves the heavy use of expatriate staff. External recruitment for the
majority of management staff requires the contract filling. The purpose is to buy management
expertise that expatriates bring to the situation. There is a large component of training of HCNs
involved. Management may not have the same degree of discretionary power that full ownership
brings.

Example: The US hotel chain Holiday Inn had a 10-year contract with a Tibetan hotel.
The expatriate managers were precluded from giving incentives to or disciplining its staff. This
created some difficulties when hotel employees took their breaks at the same time – which
happened to be when guests arrived expecting lunch. Management contracts are used extensively
in the hotel industry.
Franchising refers to the methods of practicing and using another person’s business philosophy.
The franchiser grants the independent operator the right to distribute its products, techniques,
and trademarks for a percentage of gross monthly sales and a royalty fee. Various tangibles and
intangibles such as national or international advertising, training, and other support services
are commonly made available by the franchiser. Agreements typically last from five to thirty
years, with premature cancellations or terminations of most contracts bearing serious
consequences for franchisees.

9.1.3 Firm Size, Maturity and International Experience

Key factors influencing international operations are the size and maturity of the multinational.
Motorola’s experience in China reflects its large size and the fact that it had a wealth of
international experience upon which Motorola management could draw when considering
entering a transitional economy such as China.

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