Abstract
Based upon the sample of 419 MNCs’ subsidiaries in Korea, we examined the country of origin effect in the choice of MNCs’ HRM strategy: transplantation, localization, and mixed. A multinominal logit regression analysis showed that there is an important country of origin effect in the choice between a localization strategy and a mixed strategy. North American MNCS tended to implement mixed strategy, while Japanese MNCs tended to adopt localization strategy. European MNCs were in the middle. The estimated log odds of choosing a localization strategy over a mixed strategy by Japanese subsidiaries were 1.79 times higher than European subsidiaries and 2.85 times higher than N. American subsidiaries; those by European subsidiaries were 1.59 times higher than N. American subsidiaries. However, the country of origin was not significantly related to the choice between a transplantation strategy and other strategies. We also examined two alternative factors influencing the HRM strategy of foreign subsidiaries: investment strategy and entry strategy. The implications of this and directions for future research are discussed.
Highlights
With rapid globalization, international human resource management (IHRM) has become an increasingly important research field
This paper focuses on the HQ strategies of multinational companies (MNCs), controlling for socio-political factors by analyzing the human resource management (HRM) strategies of MNCs in Korea
We examine the country of origin effect through the HRM strategies the MNCs adopt to manage their foreign establishments
Summary
International human resource management (IHRM) has become an increasingly important research field. During the 1990s, cross-border mergers and acquisitions became very active worldwide and the FDI by multinational companies (MNCs) tripled reaching U.S.$ 4,759 billion (UN 2000). It has become an important and difficult task for MNCs to manage their foreign subsidiaries while considering global efficiency and local context at the same time. The MNCs’ behavior can be influenced both by socio-political situations (or external factors) and by the headquarter strategies and policies of the home country (or internal factors). This paper focuses on the HQ strategies of MNCs, controlling for socio-political factors by analyzing the human resource management (HRM) strategies of MNCs in Korea
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