Influences on Human Resource Management Practices in Multinational Corporations
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Abstract. A study of human resource management practices in 249 U.S. affi'liatesof foreign-based multinational corporations (MNCs) shows that in general affi'liate HRM practices closely follow local practices, with differences among specific practices. The degree of similarity to local practices is significantly influenced by the method of founding, dependence on local inputs, the presence of expatriates, and the extent of communication with the parent. In addition, sharp differences are revealed among affiliates of Canadian, Japanese and European MNCs, suggesting strong country effects. Together, these findings support the view of MNCs as composed of differentiated practices, which in turn are shaped by forces for local isomorphism and for internal consistency. One of the central questions in the literatureon MNCs is the extent to which their various foreign affiliates (or subsidiaries) act and behave as local firms versus the extent to which their practices resemble those of the parent corporation or some other global standard. In a seminal paper on this topic, Perlmutter [1969] described three types of MNCs: ethnocentric, polycentric and global. According to this typology, the management practices in foreign affiliates of MNCs could resemble those of the MNC's home country (ethnocentric), could conform to local practices of the affiliate's host country (polycentric), or could adhere to a worldwide standard (global).
*PhilipM. Rosenzweig is AssistantProfessorat the HarvardBusiness School. His researchinterestscenteron the managementof multinational firmsandhave recently focused on foreign-basedfirms operatingin the United States. Publishedarticles have appearedin ManagementScience, CaliforniaManagementReview,Academy of ManagementReview,and EuropeanManagementJournal. **Nitin Nohria is Associate Professor at the HarvardBusiness School. He has extensively studied the managementof MNCs and has publishedarticles on the subject in StrategicManagementReviewand Sloan ManagementReview.He has coauthoredtwo books:Beyondthe Hype:Rediscoveringthe Essenceof Management andNetworksand Organization,bothpublishedby HarvardBusiness School Press. Supportfor this researchwas generouslyprovidedby the Division of Research,HarvardBusiness School. The authorsextend theirthanksto Mike Stevenson,Philip Hamiltonand Steve Andrewsfor theircontributionsto this study. Received:July 1992; Revised:July & November1993; Accepted:November1993.
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JOURNAL OF INTERNATIONALBUSINESS STUDIES, SECOND QUARTER 1994
Perlmutter's typology described the management practices of the MNC in terms of an overall orientation. More recently, some scholars have argued that viewing multinationals in terms of an overall orientation obscures the internal differentiation of management practices within an MNC [Hedlund 1986; Bartlett and Ghoshal 1989; Ghoshal and Nohria 1989]. Instead, they argue, an MNC is
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