Human resource capabilities in uncertain environments

Abstract

Increasingly, multinational companies (MNCs) are entering less explored markets with highly uncertain environments. In such an environment, MNCs must develop new solutions to tackle unpredictable changes. While there are some studies focusing on firm strategies in turbulent environments, there is a scant understanding of how the human resource strategies of MNCs should change in precarious environments. Thus, built upon the dynamic capability perspective, we focus on the human resource capabilities that MNCs develop in an uncertain emerging economy. In this research, we carried out a multiple case study and interviewed six MNCs’ subsidiaries operating in the Islamic Republic of Iran. Our findings demonstrate that in an uncertain environment, human resource managers should be able to develop flexible cost management, adapt compensation packages, employ frequent and transparent communication, ensure retention of their top-quality managers, develop long-term oriented team-based and quick decision-making, and have the autonomy from MNC headquarters to enact these initiatives.