Page 168 - DMGT548_GLOBAL_HRM

Unit 9: Global HR Issues in the Host Context

A smaller multinational who is a relative newcomer to international business, may not have the Notes
same level of ability or resources and an alternative mode of operation such as a joint venture
would be an attractive proposition.

9.1.4 Subsidiary Mandate

The position of the subsidiary is related to the size and maturity of the multinational. Subsidiaries
roles and positions alter over time and related to subsidiary initiative-taking, power and resource
relationships, host-country environment, and the predisposition of top management and the
active championing of subsidiary managers. This proves that subsidiaries may be both initiators
and producers of critical competencies and capability that contribute to competitive advantage.
Centres of excellence at the subsidiary level can be viewed as an indication of MNCs recognising
the levels of expertise that differs across the organisation and that not all innovation and best
practice originate from headquarters.

Example: General Electric’s establishment of a centre of excellence in Hungary affected
the subsidiary’s mandate, changing it from being a miniature replica of the parent to being
strategically independent or a product specialist.
Staff movements across subsidiary operations are one way to break down these barriers and
produce corporate rather than subsidiary champions who are prepared to disseminate information
about subsidiary initiatives and capabilities and recommend adoption in other parts of the
organisation where appropriate.
Personal relationships are built up by when key staff visits to other units, facilitated information
sharing and the eventual adoption of new products by other subsidiaries. Face-to-face meetings
are important in building trust and exchanges of tacit knowledge. Project teams where members
are drawn from various business and functional units are used.
9.1.5 Global or Local Work Practices and HRM

Forces for standardisation are mainly internal to the multinational driven by the need for
control and to sustain competitive advantage. Host governments may encourage standardisation
through the transfer of foreign work practices, processes and management techniques if such
moves are aligned with political and economic imperatives.
Forces for adaptation come from external constraints that the multinational confronts in its
various markets. People across borders contain elements of both standardisation and adaptation
and multinational transfer of managerial and HR practices both influence and inhibit convergence.
A key factor here is time. Organisations are not static.

Example: In China, early entrants localised their HRM practices, however, during 1990s
there seems to have been a trend towards introducing more Western HRM policies in China.
There are many cases where multinationals have successfully replicated work practices in their
foreign subsidiaries through intensive training programmes designed and implemented by
headquarters. This is particularly true regarding technical training for operating employees in
areas where certain skills and work practices are regards as strategically essential.

Example: Japanese multinationals such as Nissan and Honda have been able to train
substantial numbers of HCNs in their US, UK and European subsidiaries with reasonable success.
The conduct or delivery of training programmes may have been modified to cater for local
differences but the outcome is similar.

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