Abstract
We investigate the adoption of operational management “best practices” in multinational corporation (MNC) subsidiary plants in the Western Balkans. Building on the Practice-Based View (PBV), we suggest that subsidiary plants are more likely to operate according to widely recognized best practices, if these practices are already common in the MNC home country. We also examine the degree to which the MNC can facilitate best practices in their plants by allocating organizational and human resources. We test our hypotheses using survey data from subsidiary managers and secondary company data ( n = 129), supplemented with manager interviews ( n = 14), collected from European, U.S., and Asian MNCs with subsidiary plants in Bosnia and Herzegovina, Croatia, Serbia, and North Macedonia. Results indicate that the subsidiary plants adopt practices that are common in the MNC home country. They do so to a greater extent when the MNC commits organizational resources to the plants, such as codified written procedures and trainings. Contrary to our expectations, there is no benefit to allocating human resources, such as expatriates and business travelers. We provide insights into the transfer and implementation of best practices in the Western Balkan context, enhance our understanding of the PBV by presenting a specific application of this theoretical perspective, and provide practically relevant results for managers and policymakers.
Highlights
The term “best practice” has been used as a catchall phrase for any management activity that is widely regarded as exemplary and world-class—a practice that is seen to be beneficial across contexts and organizations, such as lean manufacturing techniques in production
Our study indicates that, when it comes to operational management practices—i.e., a broad set of best practices—multinational cor poration (MNC) subsidiaries in the Western Balkans are likely to utilize practices similar to those that are dominant in the MNC home-country environment
Since Western Balkan countries are known for their diversity of foreign direct in vestment (FDI) sources and country bilateral relations, we suggest that scholars should explore how factors like cultural or geographic distance to the MNC HQ as well as strength of bilateral relations with other countries may play a role in the transfer of practices
Summary
The term “best practice” has been used as a catchall phrase for any management activity that is widely regarded as exemplary and world-class—a practice that is seen to be beneficial across contexts and organizations, such as lean manufacturing techniques in production. We focus on the implementation of best practices in manufacturing plants as introduced in the seminal research stream by Bloom and colleagues (e.g., Bloom et al, 2019; Bloom and Van Reenen, 2007) Their concept of best practices represents a broad set of activities across various organizational functions, such as using modern operation technologies, setting clear targets, providing clear incentives to personnel, and monitoring performance effectively and systematically (Bloom and Van Reenen, 2007). Large-scale studies across countries show that the extent to which plants adopt such practices is associated with better plant performance and productivity (Bloom et al, 2019; Bloom and Van Reenen, 2007)
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