To what extent and in what ways can multinational companies be expected to be a source of diffusion of ?best practice' human resource management techniques? Illustrate your answer with examples from at least two countries

Résumé du document

Globalization of markets and their productions directly benefits multinational companies (MNCs). Firms are increasingly dispersing parts of their production process to various locations around the globe to take advantage of the national differences in the cost and the quality of the production factors. The firms are often able to lower the costs of land, labour, materials and capital. They also have an opportunity to lower transportation costs by moving their production closer to markets. The internationalization of markets has also led to the growth of a number of MNCs to incorporate their operations across countries. The MNC is an efficient way of transferring knowledge and expertise across national borders, because much of the context for implementing employment practices is the same throughout an organization's subsidiaries. Techniques, which have worked successfully in one part of the MNC, are transferred to other subsidiaries of the organization, in order to control and co-ordinate them. This allows the firm to compete with other MNCs. In the field of international human resource management, two issues are important: first of all, to what extent MNCs can be expected to be a source of diffusion of best practices?; and second, in what ways do MNCs diffuse their practices? It must be kept in mind that the influence between MNCs and subsidiaries work in both ways: from headquarters to subsidiaries and from subsidiaries to headquarters. This mutual influence will be analysed in this paper. Plus, the way in which a MNCs policies and culture affects the host country's business environment will be assessed.

Extraits

[...] The fact that UK subsidiaries were chosen rather than subsidiaries in other foreign countries was not a coincidence: the UK was the most internationalised of developed economies; many international corporations had been present in the UK for many years so British had good experience in managing international workforce and were able to perform control and coordination mechanisms appropriate for operating across national borders (Ferner and Varul, 2000). UK was also extremely open to foreign direct investment, and the UK-based companies had been in the forefront of the globalisation of a number of industries. Many Anglo-Saxons practices and models were diffused from the British subsidiaries to their HQ in Germany. However, two important practices concerning the field of human resource management were the HR/IR practices and the work organization. [...]

[...] Cited in Edwards et al (1999). Oliver, Wilkinson, B (1992) Japanization of British Industry' Oxford, Blackwell. Cited in Ferner. Streeck, W., (1996) ‘Lean Production in the German automobile Industry: a test case for convergence theory' In S. Berger and R. Dore National Diversity and Global Capitalism, Ithaca, NY, and London: Cornell University Press. Cited in Ferner and Varul (2000) Streeck, W., (1997) ‘German Capitalism: does it exist? can it survive?' New Political Economy, volume 2 p.237. [...]

[...] (1998) ‘American Investment in British Manufacturing' revised edn. London: Routledge. Cited in Ferner Edwards, T.; Rees, C.; Coller, X. (1999) ‘Structure, Politics and the diffusion of employment practices in multinationals' European Journal of Industrial Relations, volume 5 p Evans, p., (1992) ‘Management development as glue technology' Human Resource Planning, volume 15 p.85. Cited in Ferner and Varul (2000) Eberbwein, W.; Tholen, J. (1993) ‘Euro-Manager or Splendid Isolation? International Management: An Anglo-German Comparison' Berlin/New York: de Gruyter. Cited in Ferner and Varul (2000). [...]

[...] (1997) ‘Country of Origin Effects and HRM in Multinational Companies' Human Resource Management Journal volume 7 p. 19-37. Cited in Edwards et al (1999). Ferner, A.;Quintanilla, J. ;Varul, M., (2001) ‘Country-of-Origin Effects, Host-Country Effects, and the Management of HR in Multinationals: German Companies in Britain and Spain' Journal of World Business, volume 36 p Ferner, A.; Varul, M. (2000) ‘‘Vanguard' subsidiaries and the diffusion of new practices: a case study of German multinationals' British Journal of Industrial Relations, volume 38 p.115. [...]

[...] Evans (1992) studied the management of culture in the international context and he called it the “glue technology”: the Anglo-Saxon concept of corporate culture, with its notion of amenability to conscious control and codification, contrasted with the traditional German model of culture, based on diffuse and implicit values encapsulated in the notion of betriebsgemeinschaft (the ‘works community”). This notion is seen to decrease managerial intervention that pervades work relations between managers and employees (Eberwein and Tholen, 1993). We now turn to the work organization practices. Despite the fact that German companies have good systems of production, some British practices were diffused in this area: the use of the American systems of ‘value chain' management and the use of Japanese techniques of ‘lean production' (e.g. low stocks, team working). [...]