The transfer of human resource practices from parent MNC to an overseas subsidiary : the impact of the introduction of regionalisation

Samaratunga, Mahesha (2009) The transfer of human resource practices from parent MNC to an overseas subsidiary : the impact of the introduction of regionalisation. (PhD thesis), Kingston University, .


While the transfer of "best practices" by MNCs is frequently regarded as contributing towards convergence, recent research has noted important changes in these processes, that is the diversity of the HR transfer process. While there is extensive literature on direct HRM transfers (forward diffusion) from a MNC BQ to a subsidiary, there is little on what happens when BRM transfers are mediated by a regional level. MNC regionalisation has been noted in the international business research (e.g. Perlmutter, Bartlett & Ghoshal 1989, Rugman, 2000, 2005, Schuh 2007). Authors have identified that MNCs are regionalising their business rather than operating at a country level or global level (Rugman 2002, Schuh 2007). However, how regionalisation makes impacts on HRM transfer has yet to be explored in IHRM research. Further, there has been a shortage of studies of HRM transfers in developing countries. This thesis seeks to chart some of the diversity in the transfer process. It is based on a study of a Swiss MNC, with a focus on the subsidiary in Sri Lanka and the regional HQ in India. The study outlines the changes in HR transfer that took place following regionalisation in the mid-1990s, specifically the thesis examines the impact of the introduction of a regional level, whereby HRM practice transfers to the overseas subsidiary are mediated by a regional headquarters (HQs). The thesis devised a combined model of direct and mediated HRM transfers, developed from Liu's model (2004). The Research Hypotheses (RHs) in the thesis viere concerned with the elements of cultural and institutional distances between the countries where Swiss Co, SwissCo SL and SAR HQs were located, MNC company level factors (subsidiary's strategic role, MNC structure and organizational culture compatibility), practice level factors (HRM innovation and knowledge characteristics), HRM transfer mechanisms (direct and indirect), employee implementation and internalisation, and reverse transfer. The thesis derived a set of research hypotheses (RHs) from the combination model and examined their support in the SwissCo case study before the MNC introduced regionalisation (direct transfers) and after the process (direct and mediated transfers). The thesis found support for some RHs, partial support for some, mixed support for some and limited support for others. The support found for some of the RHs varied by period. The thesis found strong support for the RHs that cultural distance and incompatible organizational cultures formed significant barriers to HRM transfer. Strong support was also found RH that HRM transfer Is easier where subsidiaries and employees perceived an HRM transfer to be of benefit to them. The thesis makes a contribution to the development of knowledge and theory on HRM transfers, especially for HRM transfer to a subsidiary taking place when a regional layer is present.

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