Country of Origin Effects on Subsidiaries Management and Human Resources Practices

Looking from the dependency theory’s point of view, the need for control also pushes a MNC to implement their home-based policies. The stronger the need is, the more the necessity of integrating these policies will grow, and hence there is a probability that the HR practice will resemble the home-country practices. The more dependent a subsidiary is to their parent, the more the firm will try

It is critical to organizations because the employees are from different cultural backgrounds. These distinctions have to be considered when making decisions because they have an impact on formal work relationships and performance. This understanding is more paramount to multinational organizations because they have business operations right at the heart of different cultures in the various countries. The success of global firms depends on how well the management handles the cultural differences and uses them to the advantage of the

Managing HR in MNC is different from the way the HR is being managed in the country, According to Morgan (1986) there are three factors that differentiate between IHRM and domestic HR: First, the countries of operations such as the -country where a subsidiary may be located, the host-country where the subsidiaries are located, and other countries. Second, the different types of employee, in international environment the HR management have to deal with the host-country nationals (HCNs), expatriates or home-country nationals (PCNs) and third country nationals (TCNs), for example if L’Oreal hired an Indonesian employee in their Indonesian subsidiary the employee is a HCNs, and when manager from L’Oreal Headquarter in France came to work in Indonesian subsidiary the manager is a PCNs, and if L’Oreal employs manager neither from Indonesia nor France to work in their Indonesian subsidiary the manager is TCNs. Third, is the way HR practices (eg. staffing, compensation, training, and etc) are conducted. Although IHR practices seems to have the same activities as domestic HR, in IHR the manager will be dealing with different environment and diversity of employees from different cultural background. Moreover, as mentioned earlier dissimilarities between domestic and international HR management mostly due to profound differences between host and home countries in term of culture,

In this model, Perlmutter gives 4 modalities on which multinational companies can manage their human resources activities on an international level. Those modalities are: ethnocentrism, polycentrism, geo-centrism, and region-centrism.

"Firms may be able to exploit core competencies in international markets through resource and knowledge sharing between units across country borders" (Hill 384). This sharing generates synergy, which helps the firm produce higher-quality goods or services at lower cost. In addition, working across international markets provides the firm with new learning opportunities. Multinational firms have substantial occasions to learn from the different practices they encounter in separate international markets. Even firms based in developed markets can learn from operations in emerging markets.

There are several streams of the literature that may help readers examine the case. These include the literature on cross-cultural management literature, and organisational structure and control. A brief summary of relevant theoretical frameworks is provided as Appendix 1. Readers may use this to gather a basic understanding of the cultural and control issues that influence the behaviours in the case. While there are many issues that emerge, the most important managerial problems are associated with cultural clash between the key people and with the underlying political and power plays created by the Firm’s structure and control processes.

According to the text, regardless of the speed and depth of globalization large differences in national culture persist and no multinational manager can succeed without a deep understanding of the national culture in which they do business (Cullen & Parboteeah p. 24). The potential for conflict, misunderstanding and miscommunication is enormous because customs,

According to the works of Chaney & Martin (2011) and Harris & Moran (2000), they agree that international management skills are in need for the increasing scope of international trades and investments. A large number of multinational companies have expanded their businesses through both developed and developing countries. Some of the business invest directly and others are partnership arrangements and strategic alliances with domestic operations. Their studies show that independent entrepreneurs and small businesses have started investing and competing in the world marketplace. Thus, to acquire corporations’ objectives, there is exceedingly a necessity for the development of strategic framework for cross-cultural management and communication in the current competitive global market. Chaney & Martin (2011) also noted that, cultural awareness and cultural differences are strongly important to the multinational corporations’ success. A good understanding of the culture where business is implemented can make international managers productive and effective.

The first is the country of origin to transfer its practices to the ‘host country’ activities; that is what often called ‘cross national isomorphism’ (Ferner, 1997). Accordingly, this strategy may entail the installation of dominant systems of training, work organisation and recruitment in ‘host countries’. For example, where the parent company attempt to impose its policies about the training and development of its workforce, training schemes and the need for skilled employees in an MNC are aligned with those of the parent company. Furthermore, it is widely accepted, that in a MNC which adopt and embrace an ethnocentric approach, cultural values and corporation’s strategy of the country of origin are predominant, whereas the company assumes that such an approach would be advantageously for the firm and that their subsidiaries ought to discipline and follow the same patterns (Francesco and Gold 1998). A representative example of such an approach are the Japanese corporations, since studies have shown that they seek to impose their policies and practices in their MNCs and enforce their rules (Kopp, 1994). However, ‘ethnocentricity’ merely underestimates what Ferner (1997) suggests, that the transfer as long as the embodiment of ‘home country‘ practices, such as organisational structures, processes and procedures could be either adopted from the ‘host’ country’s systems and regulations or neglected. The second alternative implies a radically divergent strategy where

As businesses and firms grow in size, they are crossing borders and becoming multi-national companies. When the firms cross borders, several management strategies need to be aligned in accordance with the cross-cultural needs.

Generally, culture can be viewed as the behavioural norms within a group of people sharing common ethnicity, beliefs, education, historical background, location or institutions. It is widely the accepted behaviour in a group and likely the most striking or peculiar form of behaviour noted by a foreign member new in the group. Considering this, multinational corporations (MNC) must be highly sensitive towards cross cultural management in order for them to expand, implement their strategies and achieve their goals in domains outside their home.

• The extent to which HRM policy and practice should vary in different countries. (This is also known as the issue of Convergence and

It is undeniable that competition in the business area is very fierce. People in the business world must find the best way in order to survive. Business, nowadays, expand their business to other countries as globalization on the rise. They need to remain competitive in a global marketplace with well coordinated and tightly controlled worldwide operations. For multinational enterprises (“MNEs”), the corporate culture is one of the core elements bringing success to its businesses. Yet, cross-cultural conflicts also could hinder the MNEs from optimizing its worldwide operations. In this paper, we will discuss how corporate culture influences

Cross-cultural issues also arise at the organizational level; because company’s indifferent countries organize their daily business differently. Some of the most noticeable differences include relative hierarchy of departments. The relative power of the various departments within a corporation is often a function of the country where the corporation has its headquarters. For example, the manufacturing departments of merman-based companies have influence over their marketing and sales counterpart’s hat many Canadian and American manufacturing departments can only dream of. Merman

Management of a country can affect the multinational corporations in many ways. For instance, in a country like Poland, the official language is Polish and all the managerial work is written in Polish. Also, power distance can affect Multinational Corporation because of differences in power distance of different countries like the U.S and Mexico. Power distance reflects the extent to which the less powerful members of institutions and organizations expect and accept that power is distributed unequally. Mexico has a higher power distance than the U.S.