Institutional theory and MNC subsidiary HRM practices: evidence from a three-country study
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Institutional theory and MNC subsidiary HRM practices: evidence from a three-country study Ingmar Bjo¨rkman1,2, Carl F Fey3,4 and Hyeon Jeong Park5 1
Department of Management and Organisation, Swedish School of Economics, Helsinki, Finland; 2 INSEAD Euro-Asia and Comparative Research Centre, Fontainebleau, Texas, USA; 3Stockholm School of Economics, Stockholm, Sweden; 4 Stockholm School of Economics, St Petersburg, Russia; 5Department of Managerial Sciences, J. Mack Robinson College of Business, Georgia State University, Atlanta, GA, USA Correspondence: ¨ rkman, Department of Ingmar Bjo Management and Organisation, Swedish School of Economics (Hanken), Post Box 479, 00101 Helsinki, Finland. Tel: þ 358 9 9 431 33273; Fax: þ 358 9 9 431 33275; E-mail: [email protected]
Received: 8 July 2003 Revised: 3 January 2006 Accepted: 31 August 2006 Online publication date: 5 April 2007
Abstract This study sets out to explore human resource management (HRM) practices in multinational corporation (MNC) subsidiaries within an institutional theory framework. Based on a sample of 158 subsidiaries of MNCs operating in the United States, Russia and Finland, the paper examines factors hypothesised to influence the HRM practices adapted in US, Japanese and European MNC subsidiaries located in Russia, Finland and the US. The results indicate significant differences in HRM practices used across host countries. Both the status of the subsidiary human resource department and the degree to which the subsidiary was involved in knowledge transfer with other parts of the MNC had a significant impact on the selection of HRM practices. Journal of International Business Studies (2007) 38, 430–446. doi:10.1057/palgrave.jibs.8400267 Keywords: human resource management; multinational corporations; institutional theory
Introduction With the continued globalisation of large corporations, and an increased awareness of the importance of employees for company competitiveness, the question of how to manage people in foreign affiliates has become increasingly important. For a number of years, scholars have argued that human resource management (HRM) practices aimed at the acquisition, development and motivation of firm employees help produce human assets that are valuable, rare, non-substitutable, and difficult to imitate, hence providing a source of competitive advantage (Barney, 1991; Becker and Huselid, 1998). A range of empirical studies carried out in different countries have shown a positive relationship between the extensive use of ‘high-performance’ HRM practices and organisational performance outcomes such as financial performance or market value (e.g., Huselid, 1995; Delaney and Huselid, 1996; Koch and McGrath, 1996; Huselid et al., 1997; Bae and Lawler, 2000; Fey ¨ rkman, 2001; Buck et al., 2003). Given the theoretical and Bjo arguments and the empirical evidence of a positive relationship between high-performance HRM practices and firm performa
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