to use the ‘best practices’ which can originate from both the parent company
and the subsidiaries. It is of course linked to Perlmutter’s geocentric approach.
Although this is a convenient typology, few MNCs will neatly fit any of
these three ideal types. The extent of transfer will depend on the restrictiveness
of employment regulations in the host environment, the level of cultural and
institutional differences between home and host country and the role and
function of individual subsidiaries. MNCs can follow an exportive approach for
some subsidiaries and an adapative or integrated approach for others.
Moreover, different HRM practices might be subject to different levels of local
adaptation. Rosenzweig and Nohria (1994) for instance found that the extent
of annual paid time off, which is usually determined by local legislation, was
far more likely to resemble local practices than the extent to which bonuses are
used in executive compensation or the extent of participation in executive
decision-making, both of which tended to show a higher level of internal con-
sistency (see Myloni, 2002 and Myloni, Harzing and Mirza, 2003 for a more
extensive discussion).
We refer to Chapter 15 for a further analysis of the reasons for transfer of
HR practices, or more generally employment practices as they are called in that
chapter; explanations for variations between MNCs in the extent of transfer; an
answer to the question, ‘In which countries within MNCs are practices that are
transferred likely to originate?’; and a discussion of the likely nature of the rela-
tions between different groups within MNCs in the transfer process.
7 SUMMARY AND CONCLUSIONS
This chapter provided the second and final background chapter for the remain-
der of this book. We started with a general discussion of the key differences
between domestic and international companies. We then discussed the different
options that MNCs have in terms of strategy and structure in some detail and
showed that these can be combined into a typology of MNCs that stands up to
empirical verification. We also provided a preview of the link between strategy,
structure and HRM, an issue that will be further explored in the next chapter.
8 DISCUSSION QUESTIONS
1 Describe the major types of multinational organizational structures according to
the Stopford and Wells stages model. What are their respective advantages and
disadvantages?
Strategy and Structure of Multinational Companies 61