balance the often conXicting needs of global eYciencies and coordination
(integration) with responsiveness to factors such as political pressures in each
local market (diVerentiation) (Doz and Prahalad 1991 ). To manage the global/
local dilemma, there are several important areas for HR managers’ attention, as
discussed below. For HRM in transnationalWrms, alignment between the business
and HR strategy, structure, and HR practices, and external factors such as national
culture and institutional characteristics, is argued to lead to enhanced outcomes
for individuals and organizations (De Cieri and Dowling 2006 , in press).
- 1 HRM Practices
A stream of research has explored the transferability of HR practices from one
cultural context to another (e.g. Sparrow et al. 1994 ). Transnational Wrms
are particularly important vehicles for this transfer of management practices,
sometimes leading to hybrid forms of management, such as ‘HRM with Chinese
characteristics’ (Zhu et al. 2005 ). This transfer may be not only from headquarters
to subsidiary within aWrm; it may cross organizational boundaries, for example,
where indigenousWrms adopt, or mimic, the practices of foreignWrms.
However, there is ongoing debate about the extent to which HRM strategy and
practices are transferable worldwide. According to Myloni et al. ( 2004 ), the extent
to which culture has an inXuence on HR practices varies according to the HR
practice. Further, Aycan ( 2005 ) reiterates the point that culture is not the only
inXuence on HRM practices, providing a framework and series of research pro-
positions to guide analysis of the interaction between cultural and institutional
factors and how they inXuence the design and implementation for HRM practices.
This framework is supported by a body of research literature that has explored
cross-cultural diVerences across major areas of HRM such as strategy and plan-
ning, job analysis, recruitment and selection, performance appraisal, training and
development, and compensation.
To consider recruitment and selection as an example, it is suggested that
recruitment and selection criteria are culture bound. In the USA, emphasis is
typically placed on selection criteria that are predictive of future job performance;
in societies that are collectivist and place emphasis on high power distance,
relationships and networks (guanxi) are important in selection processes. Recruit-
ment and selection methods are inXuenced by cultural factors; for example, while
interviews are widely used in many cultures, the way in which they are used varies
considerably. Institutional factors also inXuence recruitment and selection; the
presence of trade unions and legislation such as equal employment opportunity
laws are predicted to lead to more formal, transparent, and bureaucratic recruit-
ment and selection processes (Aycan 2005 ). Industry characteristics, such as
a shortage of skilled labor, andWrm characteristics, such as size, will also inXuence
transnational firms and cultural diversity 519