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Internationalisation & HRM Practices of Emerging Economies’ Multinational Corporations Across Subsidiaries

Theory into practice: final report

Project Report 2013 30 Pages

Business economics - Business Management, Corporate Governance

Excerpt

Table of Contents

Chapter-1: Aims & Objectives .
1.1. Background to the Ptoject
1.2. Motivation for Tackling Project
1.3. Aims & Objectives
1.4. Method of Analysis
1.5. Summary

Chapter-2: Literature Review
2.1. Effect of Country’s Origin on Strategy
2.2. Conceptual Framework
2.3. Influencing Factors
2.4. Subsidiaries’ Control in Developed Markets
2.5. Subsidiaries Control in Emerging Markets
2.6. Indian Multinational Corporations (MNCs)
2.7. Summary

Chapter-3: Case Study & Discussion
3.1. Case Study
3.1.1. Company Profile
3.1.2. Organisational Systems & Structure
3.1.3. International Business Strategies
3.1.4. Global Staffing &HR Systems
3.2. Discussion
3.3. Summary

Chapter-4: Conclusion & Recommendations
4.1. Conclusion
4.2. Recommendations

Chapter-5: References

Executive Summary

The current era is very often termed as New Geography of Investments (UNCTAD, 2004). It has also been examined that Developing and Industrialised Economies are listed first in the categories of top five economies from where MNCs come. UNCTAD (2004) has classified developed economies into two two groups: Newer Industrialised (Singapote, Taiwan and South Korea) which are successful in establishing good track record and sometime also known as outward investors and the second group is of Rapidly Developing Economies (China and India). The core objective of this report is to discover how MNCs are forming their HRM strategies within the emerging econimies and how much they are successful in aligning their HRM practices with their main business strategies and also with operational activities. This report will be useful in the identification and the analysis of travel of ideas between MNCs residing in East and West in relation to the their purpose and opportunity in accordance to the Human Resource (HR) practices and policies cross national transfer. The case study on Alpha Services provide some interesting insight about the way in which emerging economies’ MNC strategizing and managing their operations in different regions. It has been understood that Indian MNCs are facing many problems in reorganizing their internationalization strategies. Correspondingly, the company’s corporate coordination and control mechanism are highly influenced by multiple issues that the company is facing as MNC from the emerging economy. The approach of Alpha Services in regard to the adoption of performance indicators from its major US based business solution company and then to make those indicators as an integral part of company’s PMS (Performance Management System is seems to be a clear indication of adaptive approach implication specifically for the purpose of management of its subsidiaries located in developed markets. Similarly, the management of Alpha Services does not reflect ethnocentric or exportive approach in managing its subsidiaries in developing markets. It has been shown the unlike markets of US and UK, the company’s managers remain unfamiliar with the Chinese business & cultural environment and left this responsibility to the local managers (with broad corporate oversight) in supervising the company’s operation in China. In 21st Century (Knowledge Economy) it has been seemed that industries like creative & services are dominating the economic paradigm where the tilting is more intended in the favor of emerging and transition economies, the practices and theories are implacable only to the developed economies’ MNCs which had monopolized industrial economy of 20th century. In short, the economic transition is towards new economic and management paradigms.

Keywords

Multinational Corporations (MNCs), Strategic International Human Resource Management (SIHRM),

Internationalisation, Developed Economies, Emerging Economies, Human Resources Practices & Policies, Ethnocentric Approach and Exportive Approach.

Chapter-1: Aims & Objectives

1.1. Background to the Project

This report is written on the topic “Internalisation & Human Resource Management (HRM) practices of emerging Multinational Corporation across their subsidiaries. The scope of this report is broad as it involves the comparison and contract of HRM practices of both economies’ (emerging and developed) MNCs It has been examined that Multinational Corporations (MNCs) are determined to be more focused more on establishing its subsidiaries either in developed economies (US/UK) or in the developing economies (China/India). It has been observed that before 1939, US firm were investing aggressive in European Countries but the dramatic change in the trend began due to the Wold War- II (Ferner et al., 2004). On the other hand, Japanese MNCs had started to reside in advanced economies during the period of 1980s. So, it has been analysed that many research studies are available on the Developed and Developing economies but very few initiatives are taken on the emerging economies[1] which are prominently known as Industrialised Economies (Glover & Wilkinson, 2007). The current era is very often termed as New Geography of Investments (UNCTAD, 2004). It has also been examined that Developing and Industrialised Economies are listed first in the categories of top five economies from where MNCs come. UNCTAD (2004) has classified developed economies into two two groups: Newer Industrialised (Singapote, Taiwan and South Korea) which are successful in establishing good track record and sometime also known as outward investors and the second group is of Rapidly Developing Economies (China and India). The core objective of this report is to discover how MNCs are forming their HRM strategies within the emerging econimies and how much they are successful in aligning their HRM practices with their main business strategies and also with operational activities.

According to UNCTAD (2010), although the Transational Corporations (TNCs) accounts for massive proportion of global Foreing Direct Investment (FDI) but despite of this fact the transition and developing economies have appeared as the dominant outward investors and occupied almost one quarter in Global FDI outflows during the period of 2010 and majority part of FDI were contributed by the Asian companies. In the same way, From the past 15 years,TNCs growth rate from developing countries has exceeded the growth of TNCs from developed countries. And the significant point is that Asia is dominating the list of top 100 TNCs from developing countries. Additionally, it has been seemed that emerging economies are making huge investment in the host countries which incorporates low income and are generating coniderable investment flow (UNCTAD,2007). It has been examined that the balance of power in the new world economu will be shifted to East where China & India have been continuing to grow as more prominent and attrative countries from the perspective of both Outward FDI and Inward FDI destination countriets (UNCTAD, 2007).

1.2. Motivation for Tackling Project

The main motive behind selecting this topic is my eagerness to pursue my career in the MNCs especially in Indian MNCs as I preceived good prospects for myself in this sector. And that is the reason why I’m currently studying in UK’s university as I would enhance the chances for myself to get recruited because Indian MNCs always prefer to hire foreign graduates as they are to some extend aware of western environment and their intention and motivation in relation to work designated to them. So it means personal preference is the main motive behind choosing this topic.

1.3. Aims & Objectives

This report will focus more on the topic of International Human Resource Management (IHRM) which will examine the HRM (Human Resource Management) practices MNCs operating within the emerging economies.

- The core objective of this report is to discover how MNCs are forming their HRM strategies within the emerging econimies and how much they are successful in aligning their HRM practices with their main business strategies and also with operational activities.

- The secondary objective is to identify and analyse the travel of ideas between MNCs residing in East and West in relation to their purpose and opportunity in accordance to the Human Resource (HR) practices and policies cross national transfer.

1.4. Method of Analysis

This report is entirely based on second data so the approach of case study is adopted as the method of research. In the literature review three proposition statements will discussed and the answers of these propositions will be explained in the Discussion & Conclusion section after generating the understanding from the case study of Indian Multinational Company (Alpha Services).

It has been assumed the critical thinking which will be developed as the outcome of this report will be useful in the identification and the analysis of travel of ideas between MNCs residing in East and West in relation to the their purpose and opportunity in accordance to the Human Resource (HR) practices and policies cross national transfer (Garrahan & Stewart, 1992; Delbridge, 1998). It has been believed that the understanding of Asian MNCs corporate management practices and thinking would help the researcher to assess their strongest and weakest aspects in the theme of new things and also will provide assistance strategically in accordance to the extend of influecing top management players and layers. In short, it would facilitate the even travel of policies & practices over subsidiaries (Ferner, 2009).

1.5. Summary

It has also been examined that Developing and Industrialised Economies are listed first in the categories of top five economies from where MNCs come. UNCTAD (2004) has classified developed economies into two two groups: Newer Industrialised (Singapote, Taiwan and South Korea) which are successful in establishing good track record and sometime also known as outward investors and the second group is of Rapidly Developing Economies (China and India). According to UNCTAD (2010), although the Transational Corporations (TNCs) accounts for massive proportion of global Foreing Direct Investment (FDI) but despite of this fact the transition and developing economies have appeared as the dominant outward investors and occupied almost one quarter in Global FDI outflows during the period of 2010 and majority part of FDI were contributed by the Asian companies. Past research srudies on MNCs are seems to identify the dual pressure for the essential need of conforming to parent company’s host country (Pull- Force) and then home to the organisational particularly in relation to the adoption and implmentation HRM practices and strategies. The core objective of this report is to discover how MNCs are forming their HRM strategies within the emerging econimies and how much they are successful in aligning their HRM practices with their main business strategies and also with operational activities. This report will be useful in the identification and the analysis of travel of ideas between MNCs residing in East and West in relation to the their purpose and opportunity in accordance to the Human Resource (HR) practices and policies cross national transfer

Chapter-2: Literature Review

2.1. Effect of Country’s Origin on Strategy

The major challenge which the MNCs are facing is regarding their capanility in balancing the need between local adaptation and global integration. MNCs’ national orgini is considered as the significant factor in determining that balance (Ngo et al., 1998). In Contradiction to Ohmae’s (1990) approach on Nationless Corporations and Borderless World, instituional and cultural determinants of countries where MNCs are located are view as a Salient Determinants from the companies’ contexts (Gooderham, et al., 1999; Chang & Taylor, 1999). Ferner (1997) and Gamble (2003) analysed the concerns regarding the MNCs in relation to management of their foreign subsidiaries and came up with the major findings that the major aspect involved in the MNCs approach with respect to the controlling of their subsidiaries located foreign countries was the country of orgin of MNCs (Hu, 1992: Harzinf & Sorge, 2003). Correspondingly, Harzing & Sorge (2003) point out that even though MNCs are tended to be highly internationalised but still for the purpose of explication of their subsidiaries’ organisational control & coordination they are more intended towards MNCs’ country of origin (Harzing & Sorge, 2003). Additionally, there is an empirical evidence which came up with the conclusion that almost all MNCs of the world have some sort of trace of their country of origin among them. Moreover, it could also be determined as subconscious option which have been influenced due to the cultural & institutional feature of MNCs’ country of orgin. It could also be disseminated through the individuals employed by these organisations (Harzing & Sorge, 2003). However, it has been determined that US and Japanese MNCs have complete contradiction especially in relation to their HRM policies and practices style pursued and implementation by them in their subsidiaries (Ferner, 1997). Japanese MNCs have posses strong characteristics of informal centralisation and depend heaily on the establishment of international networks (Bartlett & Ghoshal, 1992). US MNCs appeared to have place standardised world wide systems and the elaborate control systems (Ferner, 1997). It has been seen that the country’s cultural context either low or high is also a key factor for the determination of country of origin especially with respect to its impact of IHRM practices. Hall (1976) had made the distinction between both contexts (High & Low). According to Hall (1976), the situation when the things are appeared to be less obvious then in that situation the context excert more pressure (High Contex). And the the situation where things are more explicit then the context woulfd excert less pressure (Low Context) Hofstede (1984) inclined that generally countries of Western world are classified into low cultural context while on the other side, Eastern countries are made up of high cultural context (Hofstede, 1984). Therefore the compatibility factor between national and organisational culture is a significant feature in International Joint Venture success (Thite, 2004).

As it has been mentioned previously, there is comparatively less research available on the internationalisation of firms of emerging economies located in both (developed and emgerging) markets (Wright, et al., 2005). Correspondinlg the literature of strategy on emerging ecnomies has primarily be based upon following institutional theories (Agency Theory, Transaction Cost Theory and Resource Based View Theory) as conceptual viewpoint (Hoskisson et al., 2000). Emerging economies MNCs access developed countries’ market for the objective of exploring and entering other emerging countries’ markets with the motive of exploiting potential opportunities (Wright, et al., 2005). In past, Japan & Korea were internationalised with the green fild expansion and discovering their subsidiaries with the cultural clash alleviation. China & India are primarily expanded with the purchases made by Western countries (Hofstede, 2007). Furthermore, the intensity of their MNCs internationalisation is far more raid than the Western MNCs and other emerging economies MNCs (Matthews & Zander, 2007). Chinese and Indian MNCs are also intended towards using FDI and exporting as simultaneous and collaborated strategy rather depending soley on the distinctive attributes (Contractor, et al., 2007).

[...]


[1] India, China, Taiwan and South Korea

Details

Pages
30
Year
2013
ISBN (eBook)
9783656591313
ISBN (Book)
9783656591320
File size
812 KB
Language
English
Catalog Number
v267426
Institution / College
University of Bedfordshire
Grade
B
Tags
internationalisation practices emerging economies’ multinational corporations across subsidiaries theory

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Title: Internationalisation & HRM Practices of Emerging Economies’ Multinational Corporations Across Subsidiaries