The Influence of Country-of-Origin on Human Resource Strategy of Multinational Companies in Developing Countries

Abstract

Human resources can be one of the company's sources of competitive advantage if it is managed effectively and efficiently. Taking this into considerations, MNCs are straggling in designing the human resource strategy that helps them to gain competitive advantage in host countries. In a globalized world however, multinational companies (MNCs) are in the complex pressure of finding appropriate balance between global, home country and local practices especially in the area of human resource management due to the fact that cultural contexts differ significantly among nations. According to theories of ethnocentricity, MNCs tend to transplant the dominant business strategic practices of the country of origin into their subsidiaries and apply them wherever they operate. Country-of-origin effect on firm's strategic behavior however, can be mediated by a strong regulatory framework in the host country. On the other side, permissive business environment and policies that characterize developing countries give MNCs a window of opportunity to implement their home country business cultures. However, little is known about the influence of country-of-origin on human resource strategy of MNCs operating in developing countries by considering the permissive business environment and policies that characterize these countries. Thus, this paper provides a conceptual basis for an empirical work in filling out this empirical gap on the influence of country of origin on human resource strategy of MNCs operating in developing countries by taking developing countries context into considerations.