of employment, addressing in particular whether they contribute to the
convergence of these systems.
2 WHY TRANSFER PRACTICES?
The complex nature of the transfer of employment practices begs a key ques-
tion: why do many senior managers look to engage in such transfer at all? Why
do they not simply take a highly decentralised approach, allowing actors in the
various countries in which the firm has subsidiaries to determine the type of
employment practices that are compatible with the particular national con-
text? Some do, of course, seeing the pressures of ‘multi-culturalism’ (Ghoshal
and Bartlett, 1998) as significant enough to warrant a hands-off approach from
senior management to employment practice. This nationally responsive style
was termed ‘polycentric’ by Perlmutter (1969) more than 30 years ago.
Perlmutter (1969: 13) argued that the polycentric style recognises that ‘since
people are different in each country, standards for performance, incentives and
training methods must be different’.
The rational approachThere are three broad categories of explanation that have been used to explain
the attractiveness of transfer. The first, which I term the rationalapproach, sees
the transfer of employment practices as a potential source of enhanced effi-
ciency. For many writers on HRM in MNCs, the strength of competition in the
global product markets that MNCs tend to inhabit means that a firm is missing
an opportunity to enhance its own efficiency if it does not engage in the shar-
ing of ‘best practice’. One particularly influential book about the multinational
company that takes this rational approach is Ghoshal and Bartlett’s (1998)
Managing across Borders. In this work, the authors argue that the mature stage of
evolution for a firm which spans many different countries is the ‘transnational’
form, which is based on an ‘integrated network’ of plants sharing expertise and
knowledge with each other (see Chapter 2 for a further discussion). The transfer
of employment practices is a central part of such a firm. The authors go so far
as to argue that ‘in the future, a company’s ability to develop a transnational
organisational capability will be the key factor that separates the winners from
the mere survivors in the international competitive environment’ (1998: 299).
The rational approach is also evident in some of the work that examined the
transfer of Japanese employment practices in MNCs from Japan as they
expanded into Europe and North America in the 1980s and 1990s. Abo (1994),
for example, saw the dilemma facing senior managers in Japanese firms
Transfer of Employment Practices Across Borders in MNCs 391