Multinationals, the internationalisation process and human resource management strategy : a case study of UK subsidiaries of Chinese MNCs

• Main Author: Zhang, Miao
• Published: Kingston University 2001
• Subjects: 658; Business and management studies
• Online Access: http://ethos.bl.uk/OrderDetails.do?uin=uk.bl.ethos.247797

The thesis addresses human resource management (HRM) strategic choice in multinational corporations (MNCs). The literature in this area is dominated by studies that are concerned with the strategy in which the practices of the "country of origin" of an MNC are adopted by their overseas subsidiaries. This "ethnocentric strategy", is mostly adopted by MNCs from countries that have a comparative competitive advantage in the world economy. The primary aim of this thesis is to investigate an opposite strategy, "localisation strategy", in which the practices of the host country are adopted by overseas subsidiaries of an MNC. The concept of localisation here is not only compliance to local constraints or utilisation of local competitive advantages but more also an approach to absorb advanced management practices from the local environment. The term "absorption localisation" is used to describe this new form. This strategy is most likely to be adopted by MNCs from the countries that are new entrants to international markets as a way to speed up their internationalization process. Theoretically, the HRM strategy adopted by subsidiaries is shaped by a MNCs overall business strategy, which reflects its position in national business systems and cultural and institutional differences from a host country. Structural contingency and managerial competency mediate the strategic choice. Structural factors facilitate certain kinds of strategic choice, but do not determine it, and leave scope for managerial competency to influence the nature of strategic choice and the extent to which the strategy is implemented. Empirically, the research involves the analyses of HRM practices in six Chinese MNCs operating in the UK to explore the nature and process of the strategic choice in these organisations. Drawing on the six case studies, it was found that "absorption localisation" has been adopted by the majority of these companies. This strategy is shaped by the demands of these MNCs internationalisation process and reflects the transformation of Chinese national business systems. It was also found that the extent and process of the strategic implementation are constrained by the characteristics of the national business system, some elements and manners of the national business systems can be observed in the HRM practices of these companies. Meanwhile, structural factors and managerial characteristics facilitate strategic choice and implementation. These findings imply, more generally, that HRM in MNCs is moving towards globalisation or convergence. However, the fact that there is diversity in the extent of localisation and clear evidence of the influence of the country of origin remains, suggests there may be limits to the convergence process.