The Effect of Human Resource Management Practices on MNC Subsidiary Performance in Russia
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Effect
of
Human
Resource
Management Practices
Subsidiary
on
Performance in
MNC Russia Carl F. Fey*
STOCKHOLM SCHOOL OF ECONOMICS, STOCKHOLM SCHOOL OF ECONOMICS IN SAINT PETERSBURG
Ingmar Bj6rkman** CENTER INSEAD EURO-ASIA OFECONOMICS, SCHOOL SWEDISH
This study investigates the relationship between human resource management (HRM) and the performance of 101 foreign-owned subsidiaries in Russia. The study's results provide support for the assertion that investments in HRM practices can substantially assist a firm in improving performance. t is now commonly accepted that employees constitute an importantsource of competitive advantage for firms (Barney, 1991; Pfeffer,1994). As a result, it is important for a firm to adopt human resource management(HRM)practices that make the best use of its employees. The above realization has led to increased interest in the impact of HRM on organizational performance,and a numberof studies have found a positive relationshipbe-
Further, different HRMpractices for managerial and non-managerial employees are found to be significantly related to firm performance. Only limited support, however, is obtained for the hypothesized relationship between efforts at aligning HRM practices with firm strategy and subsidiary performance. tween so called "high performancework practices" (Huselid, 1995) and different measures of company performance.Furthermore, some empirical evidence supports the hypothesis that firms that align their HRM practices with their business strategy will achieve superior outcomes (for recent reviews, see Becker and Gerhart, 1996; Beckerand Huselid, 1998). The implications of these findings for multinational corporations, however, re-
*CarlF. Fey is an assistant professor at Stockholm School of Economics and also helping to develop Stockholm School of Economics in Saint Petersburg. **Ingmar Bjbrkman is a professor of international management at the Swedish School of Economics in Helsinki, Finland and affiliated with the INSEADEuro-AsiaCentre. The authors would like to thank the Institute of InternationalBusiness at Stockholm School of Economics, the Swedish CentralBank, the Prince Bertil Foundation, and the Finnish Academy for financial support for this project and Antonina Pavlovskaya,MarinaLibo, and Natalya Libo for research assistance. BUSINESSSTUDIES,32, 1 (FIRSTQUARTER2001): 59-75 JOURNALOF INTERNATIONAL
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EFFECT OFHRM ONPERFORMANCE main to be investigated. Most studies of the relationship between HRM and organizational performance have been conducted on the domestic operations of US firms, with a smaller number of studies carried out in Europe (e.g., Guest and Hoque, 1994) and Asia (Ngo et al., 1998). Scholars of international business have so far focused on the extent to which HRM practices within multinational corporations are globally standardized and/or locally adapted (Rosenzweig and Nohria
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