Unit 5 - International HRM and the impacts of multinational corporations (MNCs).

A final key issue in terms of international HRM concerns the activities and impacts of multinational corporations (MNCs).

There are three main theories:

•  MNCs will tend to adopt common practices regardless of the country they are in.
• Organisations will tend to adopt the local practices of the country in which they operate.
• Organisations face conflicting pressures and will exhibit elements of both localisation and globalisation/homogeneity; this is referred to as duality theory.

To test these theories Brewster et al. (2008) analysed the CRANET data from 22 European countries and 12 non-European countries. They found that, in the main, foreign-owned MNCs did behave differently from local firms. Typically, MNCs spent more on training, were more likely to evaluate training needs systematically and to adopt the stance of more sophisticated HR practices. Equally, in the main, MNCs tended not to simply transfer or impose the HR practices of their country of origin. Rather, they tended to vary their practices depending on the relative strengths of home-country versus host-country institutions. In part this was judged to reflect the impact of national regulations. In other words, what international organisations do is an outcome ‘of the relative strengths of competing forces regulating their behaviour – formal laws, informal norms and practices, ownership structures, and relations with stakeholders’ (Brewster et al., 2008, p. 333). 

As Brewster et al. go on to note, ‘supporters of globalisation can gain some support from our findings, but so too can those who argue for the importance of localisation’.

Country specific to multinational organizations managing across geographic boundaries

HR management has to be adapted to the context of each country.