European MNCs Research Articles

Employee retention and company performance results: the mediating role of HRM outcomes in foreign subsidiaries of Central European MNCs

Employee retention and company performance results: the mediating role of HRM outcomes in foreign subsidiaries of Central European MNCs

MNCs’ Intermediate Units and Their Choice of Control Mechanisms

This paper analyzes how MNCs’ intermediate units—those that exercise authority over other subsidiaries—apply specific control mechanisms: centralization, formalization, outcome control, and socialization. We combine agency and network theory to explain how intermediate units’ dual agency role—as both principal and agent— and their network embeddedness form the choice of control mechanisms. More specifically, we propose hypotheses on how the intermediate units’ internal and external relationships determine their choice of control mechanism. We study this issue in the context of Spanish intermediate units —owned by European MNCs— that exercise authority over subsidiaries in Latin America.

CSR Strategies in Greater China: Global, East Asian, American, European Style?

Abstract The concept of Corporate Social Responsibility emerged in the United States and spread to Europe and Asia while being adapted to national/local characteristics. Since borders between markets and societies are blurring and globalization is promoting MNCs which find themselves acting in hybrid societies, international institutions put efforts into the development and moral acceptance of global CSR standards. The scientific interest in CSR focused on the conflicts between company returns and benefits for society. The resulting concepts of performance-oriented, awareness-oriented and welfare-oriented CSR should facilitate the evaluation of CSR strategies implemented by MNCs. In research on the cultural dimensions of economies, it might be possible to allocate geographically the three concepts. Regarding the newly emerging Chinese MNCs, the paper aims to shed light on which concept they follow. On the one hand, CSR concepts of American and/or European MNCs that are present in China might serve as a role model; on the other hand, by learning from Taiwanese/ Hong Kong MNCs, a “greater China CSR approach” might emerge. Empirical studies and own field research suggest that compared to American and European companies, CSR is less deeply rooted in Chinese companies. Furthermore, significant differences between Mainland China, Hong Kong and Taiwanese companies indicate that a Greater Chinese CSR approach does not yet exist. Therefore, it cannot be assumed that American and European CSR concepts will experience a Chinese influence in the near future.

Multinational firms and political actors: the issue of corruption and transparency

Globalisation and increasing availability of information frequently face multinational firms with the serious issue of transparent business activities and avoidance of corrupt behaviour. The question addressed is how MNCs handle these issues. Based on business network theory, the article presents an analytical view on business and political actors’ relationship, with emphasis on transparent and corrupt behaviours. The analytical view holds the relationship elements of knowledge and legitimate/illegitimate commitment and this is illustrated with cases showing two European MNCs and their behaviours in foreign markets. By adding elements from behavioural theory, the study contributes new knowledge on: a) analytical tools for studying both transparent and corruptive behaviour; b) embeddedness of transparency and corrupt behaviour in a network of business and political relationships; c) the impact of the transparent and corrupt behaviour of the firms both locally and in foreign countries.

Factors affecting the change of top executive nationality in MNCs’ foreign affiliates in Japan

Using archival data published in 2003 and 2007, we investigated factors that influence the change of nationality of the most senior executives in foreign affiliates of MNCs operating in Japan. Our results show that as the length of operation in Japan increased, the likelihood of a non-Japanese top executive in the affiliate being replaced by a Japanese one, was higher than that of a Japanese top executive being replaced by a non-Japanese one. We also found that when an affiliate had a Japanese top executive at time one, it was more likely that a non-Japanese executive replaced the Japanese one if the affiliate's foreign ownership ratio increased at time two. In addition, there were notable differences between affiliates of Asian, North American and European MNCs in top executive staffing patterns of Japanese affiliates. Implications from this study and future research directions are discussed herein.

Addressing the lack of empirical data on global performance management: developing a research strategy and assessing initial empirical evidence – a research note

This work aspires to improve the methodological way of empirical data collection and to provide data to validate Global Performance Management (GPM) research frameworks. Despite the existing various conceptual and theoretical frameworks for GPM, the empirical evidence is still in its infancy. We draw detailed implications for the empirical research on GPM based on the challenges already outlined in cross-national and cross-cultural research methodology. Our research in progress focuses at deepening our knowledge for investigating GPM using the interplay between frameworks and secondary data from case studies on GPM systems in European MNCs.

The effects of ‘language standardization’ on the acceptance and use of e-HRM systems in foreign subsidiaries

Electronic human resource management (e-HRM) systems are argued to be transforming the role of HR by facilitating the transfer of transaction processing responsibilities to employees, managers and other third parties. In multinational corporations, e-HRM systems must achieve this whilst accommodating regulatory and cultural differences, one of which being language. In light of scant empirical research on the role of language in the information technology and international HRM literature, this study investigates the effects of language standardization on the acceptance and use of e-HRM systems in foreign subsidiaries. The findings are based on 18 in-depth interviews with subsidiary HR managers from two European MNCs.

Technical training in the MNCs in Malaysia: a case study analysis of the petrochemical industry

PurposeThe aim of this paper is to gain insight into some of the types of training and development practices that are carried out in the chemical industry for technical workers. A salient focus of the study is to make a comparative analysis of four MNCs, which were selected based on equity ownership, to ascertain whether T&D practices are similar regardless of equity ownership.Design/methodology/approachSpecifically, four MNCs in the chemical industry were analysed to ascertain the types and intensity of T&D practices in these MNCs in Malaysia. In‐depth interviews were conducted with some of the HR practitioners in each organisation.FindingsRegardless of ownership, T&D practices of technical workers in the chemical industry in Malaysia are rather similar, though it differs in terms of intensity. On the whole, European MNCs place more importance on T&D, but it cannot be concluded that European‐owned MNCs have better T&D practices than Asian‐owned MNCs.Research limitations/implicationsSimilar research could be conducted on a larger sample, incorporating MNCs of different equity ownership to determine how T&D policies of globalised MNCs affect employee performance. Further research could be extended to different regions and sectors.Practical implicationsIt provides an insight of desirable T&D practices that HR practitioners could develop to create competitive advantage through their human resources.Originality/valueIn addition to identifying the relevant T&D practices, commentary is provided of current knowledge in terms of best T&D practices that could be emulated by local organisations as well as other institutions in the Asia Pacific region.

Changes in institutional context and MNC operations in China: Subsidiary HRM practices in 1996 versus 2006

This study investigated the changes taking place in HRM practices found in European-owned units in China between 1996 and 2006 in conjunction with the transformation of the context in which they are operating. Our study presents clear evidence for the convergence of HRM found in local Chinese firms with those of European MNC units in China. The results also point to a convergence within European MNCs since the HRM practices in units located in China have become significantly more similar to those of their parent companies.

How international are executive boards of European MNCs? Nationality diversity in 15 European countries

In this paper, we describe and explain differences in nationality diversity within executive boards of European Multinational Corporations. Both country- as well as company-characteristics are included. The data consist of 2229 individual executives in 363 companies spread over 15 EU countries. It is concluded that in 2005, the executive boards of these companies are only marginally diverse in terms of nationalities. However, differences between European countries are substantial. The analyses show that these differences result from unique differences in governance regimes within the individual countries, and to a lesser extend the result of company characteristics.

The effect of corporate-level organizational factors on the transfer of human resource management practices: European and US MNCs and their Greek subsidiaries

One of the central questions in the literature on MNCs is the extent to which their subsidiaries act and behave as local firms (local isomorphism) versus the extent to which their practices resemble those of the parent company or some other global standard (internal consistency). Drawing on the resource-based view and resource-dependency theory, this paper aims to provide an insight into the interplay of several corporate-level organizational factors that affect the transfer of HRM practices across borders. Data collected from 80 European and US multinationals with subsidiaries in Greece are used to test specific hypotheses. Our results indicate that the level of importance attached to HRM by the MNC's top management and international experience have the highest explanatory power for the transfer of HRM practices, while international competitive strategy, informal control and the presence of expatriates also have a marginally significant influence.

Human capital development policies: enhancing employees' satisfaction

PurposeThe aim of this article is to gain insight into some of the human capital development (HCD) policies that enhance employee satisfaction. A salient focus of the study is to assess whether employees in globalised foreign‐owned MNCs are likely to be more satisfied with the HCD policies than with the practices employed by locally owned MNCs.Design/methodology/approachSpecifically, four MNCs in the chemical industry, which were selected based on equity ownership, were analysed to ascertain whether employees in these MNCs in Malaysia are satisfied with the HCD policies by providing an account of the satisfaction level of the employees with the HCD policies in these four Malaysian MNCs.FindingsA main conclusion from the findings of this research is that respondents in European MNCs are generally more satisfied than respondents in Asian‐owned MNCs with the HCD policies of the company. On the whole, European MNCs place more importance in HCD but it cannot be concluded that foreign‐owned MNCs have better HCD policies and hence higher employee satisfaction with the HCD policies compared with locally owned MNCs.Research limitations/implicationsSimilar research could be conducted on a larger sample, incorporating MNCs of different equity ownership, to determine how HCD policies of globalised MNCs affect employee satisfaction. Further research could be extended to different regions and sectors.Practical implicationsIt provides an insight of desirable HCD practices that human capital practitioners could develop to create competitive advantage through their human capital assets.Originality/valueIn addition to identifying the relevant HCD practices, commentary is provided of current knowledge in terms of best HCD practices that could be emulated by local organisations as well as other institutions in the Asia Pacific region.

MNCs’ HRM Strategy and Country of Origin Effect: Do North American, European and Japanese Firms Really Differ?

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.

Risk management of strategic alliances and acquisitions between western MNCs and companies in central Europe

This article intends to evaluate risks associated with strategic alliances and acquisitions between Western MNCs and central European companies and to suggest appropriate means of control to deal with two different types of risks: relational and performance. While postsocialistic governments in central Europe have increasingly welcomed foreign direct investments, a relatively high degree of uncertainty still exists for companies contemplating entry into this region due to a lack of cultural knowledge and insufficient business experiences. Based on in-depth interviews with U.S. and European MNCs, hypotheses are developed in explaining relationship between risks, control, and trust in forming strategic alliances and exercising acquisitions, along with managerial implications. © 2005 Wiley Periodicals, Inc.

The emergence of corporate integrated innovation systems across regions

This paper examines the subnational, regional, aspects of the multinational corporations' (MNCs) increasingly global innovative networks in the chemical and pharmaceutical industry. Using patents granted in the US to the largest industrial firms, attention is restricted to the main European MNCs and their research activities established in German, British and Belgian regions. The position of national groups of firms in a geographical hierarchy has been argued to affect the technological strategy and specialisation of those groups in foreign countries [Res. Policy 28 (1999) 119.]. This paper extends the argument at the regional level, allowing for a hierarchy of regional host centres and investigating where and how MNCs of different nationality organise their networks for innovation in those regions. The main proposal is that the technological specialisation of foreign-owned affiliates in each region will become more closely related to the regional indigenous specialisation pattern the higher the position of their parent firms' country of origin in the national hierarchy is, and the lower the position of the regional host location in the regional hierarchy is. Conversely, when MNCs originating from a lower-order country locate research facilities in a higher-order country and regional centre, their affiliates are expected to show a tendency to replicate their domestic established lines of specialisation. This paper highlights the potential impact of the dynamic interactions between MNCs and their home and host locations on the technological performance of both the firm and its local environment.

Manufacturing Strategies for Southeast Asia after the Crisis: European, US and Japanese Firms

This article describes short‐term reactions to the Asian crisis by European, US and Japanese MNCs and examines their long‐term regional production strategies for Southeast Asia. In the process, it highlights similarities in the firms’ responses but also distinguishes differences in the long‐term regional reorganization of production activities of Western and Japanese firms. The article argues that there is currently a window of opportunity for Western MNCs to expand their Southeast Asian operations. Japanese firms face several obstacles to the implementation of a comprehensive regional production strategy as a result of their highly centralized way of managing international operations and their comparatively early production engagement in Southeast Asia whichequips most US and European MNCs with a latecomer advantage.

The Political Enforcement of Liberalism: Bargaining, Institutions, and Auto Multinationals in Hungary

The demise of communism triggered large flows of foreign direct investment into Eastern Europe. This article examines the impact of recent changes in the international environment—the transformation of world production systems and the rise of neoliberalism—on bargaining between multinational corporations and post-communist governments. It focuses on the Hungarian automobile industry, one of the region's largest recipients of FDI. The Hungarian case illustrates the ability of small, open, and geopolitically weak states to parlay shifts in the global environment into a bargaining asset. The ascent of lean production heightened pressure on auto MNCs to develop local supplier systems capable of fast delivery of components to East European subsidiaries. The pull of backward integration was particularly strong for Japanese producers, whose non-European status enabled Hungarian state authorities to secure commitments to raising domestic content. Transplanting Japanese-style production in Eastern Europe proved less vexing for European MNCs, whose status as EU-based companies freed them of local-content requirements and whose preexisting supplier networks obviated heavy investments in the Hungarian components industry. But while Western auto producers enjoyed highly favorable terms of entry into Eastern Europe, even they could not elude the paradoxical effects of global changes on MNC/host state relations. The very eastward extension of the European Union's nondiscriminatory rules that facilitated EU-based firms' entry into Hungary also permitted host state authorities to parry efforts by MNCs to obtain particularistic concessions after entry. The Hungarian case thus demonstrates that MNC/host state bargaining in the post-Cold War period hinges more on the global positions of multinationals than on the structural vulnerabilities of capital-importing states ( per dependency theory) or the internal capacity of host states ( per statist theories).

Strategy and organisation: Challenges for European MNCs in Asia

European MNCs are more aware than ever of the strategic importance of Asia. While data show that they are grossly underrepresented in the region, many of them started to boost their exposure to Asia considerably in the 1990s. Regional strategies are developed and regional organisations established, not easy tasks in MNCs driven by global strategies and dominated by global business managers. Sharp conceptual thinking is required to justify and support the claim that Asia requires a different approach, and a separate organisational unit called an RHQ.

Diversity issues in South‐East Asia: the case of Thailand

Provides an overview of labour‐market diversity issues in Thailand. Examines factors such as religion, ethnicity and gender in the context of Thailand’s rapidly expanding economy. Concludes that religious and ethnic divisions are not especially pronounced in Thailand. However, with its relatively high female labour force participation and few restrictions on discriminatory behaviour, Thailand’s chief diversity issue concerns the role of women in the labour market. Presents an empirical analysis of data concerning job openings for white‐collar positions. Focuses on the role that multinational corporations, a major force in the Thai economy, play in promoting or inhibiting gender‐based employment discrimination. Suggests that multinationals are indeed very important in this process, with significant differences among the effects exerted by the subsidiaries of US, Japanese and European MNCs in comparison to Thai‐owned firms.

International Human Resource Strategy and Its Determinants: The Case of Subsidiaries in Taiwan

This paper explores how the tension between global integration and local responsiveness affects the dimensions and determinants of international human resource (IHR) strategy. To accomplish this, Jarillo and Martinez's [1990] business strategy framework for parents and their subsidiaries was recast in an IHR strategy setting. Then, the relationships between the two dimensions of IHR strategy that emerged, global integration and local responsiveness, and a set of interorganizational interdependency variables were explored. Several new and informative associations between the interorganizational interdependency variables (subsidiaries' dependence on parent's resources, local resources, and hot institutions) and IHR strategy were observed in a sample of one hundred subsidiaries of Japanese, U.S. and European MNCs operating in Taiwan.