International Human Resource Management-MJ Version

(Ann) #1

and externalised, are often referred to as ‘global commodity chains’ (Gereffi,
1999). Another set of examples of firms which have segmented the production
or service provision process are the airlines which also use bases in Asia, com-
monly India, to carry out routine IT services such as data entry and processing.
In these cases, the various units across the world are performing quite distinct
functions, leading to variations in the type of HR practices that the firm
deploys. Thus there will be little incentive for such firms to transfer practices
across sites. International integration can also take the form of the standardis-
ationof operations, with the units in different countries carrying out very similar
activities. Examples of this are the automotive and electronic manufacturers,
which have developed increasingly standardised products and, relatedly, simi-
lar manufacturing techniques. Investment banks, similarly, have sought to
develop a unified set of services to clients who are often multinationals them-
selves. Given that the nature of the operations in different countries have
important similarities, there is considerable scope for such firms to transfer
practices across borders.
In summary, the pressures to achieve international integration reflect the
nature of competition in particular sectors. We have seen that the scope for
transfer is constrained in MNCs which operate in sectors that are characterised
by nationally specific tastes or regulations. Moreover, in MNCs which have seg-
mented their international operations, there will be little incentive to transfer
practices across borders. In contrast, in those sectors in which MNCs have
developed standardised operations, the transfer of employment practices is
likely to be more attractive to management. It is in such ‘standardised’ MNCs
that the forces of the country of origin and of dominance will be felt most
acutely, whereas for the sectors which are constrained by national differences,
and those in which MNCs have developed ‘segmented’ international opera-
tions, the influence of the country of origin and of dominance will be more
muted. The strength of these forces is not determined only by the extent and
form of international integration, however, but also by the characteristics of
the various host country employment systems in which MNCs operate.


Host country effects

There are a number of aspects of a national business system which can limit
the scope a multinational has to transfer practices. The system of employment
law to a greater or lesser degree poses constraints to employers in implement-
ing practices at workplace level. Moreover, the nature of key labour market
institutions, such as unions and works councils, presents similar limitations,
both directly through affecting the form of employee representation, and indi-
rectly through the impact these institutions are able to exert on other areas of
employment relations. There are also cultural barriers to transferring practices
to host environments. Broad’s 1994 study of a Japanese transplant in the UK,


402 International Human Resource Management
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