a very low proportion of their input/output from/to headquarters. They are
responsive to the local market, and adapt both products and marketing to local
circumstances. This is made easier by the fact that products are often produced
locally, which is reflected in a relatively high percentage of subsidiaries that
have a production function. Not surprisingly, the total level of control exer-
cised by headquarters over these subsidiaries is rather low, especially the two
direct control mechanisms: personal centralized control and bureaucratic for-
malized control, which are used to a very low extent. The multidomestic con-
figuration is most typical of French and British and to a lesser extent Finnish
and Swedish MNCs.
In a sense, a transnational companycombines characteristics of both global
and multidomestic companies, in that it tries to respond simultaneously to the
sometimes conflicting strategic needs of global efficiency and national respon-
siveness. In addition, the transfer of knowledge is very important for these
companies. Expertise is spread throughout the organization, and subsidiaries
can serve as a strategic centre for a particular product–market combination.
Although we cannot yet identify ‘typical’ transnational industries, the phar-
maceutical industry comes close and many MNCs in the food industry are also
moving towards a more transnational type of company. Subsidiaries in this type of
company are more dependent on other subsidiaries for their in- and outputs
than on headquarters, which confirms the network type of organizational
structure which is said to be typical of transnational companies. Subsidiaries
are usually very responsive to the local market, and are more likely to have a
strategic role such as production or R&D. The level of control exercised over
subsidiaries in transnational companies is nearly as high as for global compa-
nies. This is mainly due, however, to a high level of control by socialization
and networks. The transnational configuration is most typical of American,
Dutch and Swiss MNCs.
6 HUMAN RESOURCE MANAGEMENT IN MNCS
Now that we have discussed the strategy and structure of MNCs in some detail,
it is time to link this discussion with the main focus of this book: human
resource management. We will look at recent developments in IHRM theory in
more detail in the next chapter. However, there are two aspects of HRM in
MNCs that we would like to briefly introduce here. First, we will look at the
link between international mindsets on the one hand and MNC strategy, struc-
ture and HRM on the other, focusing on Perlmutter’s (1969) seminal study.
Secondly, we will links these mindsets to the notion of transfer of HRM prac-
tices within MNCs, a subject which will be discussed in much more detail in
Chapter 15.
58 International Human Resource Management