DETERMINANTS OF STANDARDIZATION AND LOCALIZATION OF HUMAN RESOURCE MANAGEMENT (HRM) PRACTICES IN MULTINATIONAL COMPANIES’ SUBSIDIARIES: A REVIEW AND IMPLICATIONS

Abstract

Standardization and localization are two debatable concepts in human resource management of Multinational Companies (MNCs) subsidiaries. Standardization involves conducting subsidiaries HRM practices in similar ways as conducted at headquarters of Multinational Companies while localization is adaptation of subsidiaries HRM practices to ways used by local firms in the host countries of subsidiaries. The objective of this paper was to explore determinants associated with standardization and localization of HRM practices in Multinational Companies’ subsidiaries. Method used was a review of literature retrieved from Google, Google Scholar and Jstor as electronic data bases. Interpretation of findings from the literature showed that there were various determinants associated with standardization and localization of HRM practices in Multinational Companies’ subsidiaries and mostly included: cultural and institutional factors, country-of-origin dominance and HRM approaches adopted by Multinational Companies for overseas subsidiaries. It was concluded that the national contexts of the parent and host countries as reflected in the individual determinants had a huge role to play in standardization and localization of HRM practices such as staffing, training and development, compensation, communication, job design, promotion, recognition, job security, industrial relations, and performance management among MNCs’ subsidiaries. The paper also provided implications to international human resource management practitioners. KEY WORDS: HRM practices, Localization, Standardization, Subsidiaries