The configurations of HRM bundles in MNCs by their contributions to subsidiaries’ performance and cultural dimensions

Abstract

The main goal of the paper is to determine whether the HQs of MNCs evaluate the significances of particular HRM subfunctions to their foreign subsidiaries’ performance differently depending on a specific cultural context and—as a consequence—various configurations of HRM subfunctions may be identified in different cultural contexts. The theoretical assumptions are based on a combination of the configurational and contextual perspectives through a cross-cultural lens. In the empirical research an abductive reasoning process is applied. The research sample covers 200 headquarters of MNCs. To analyze the collected data both descriptive and correlational statistical methods are used. Two patterns of configurational bundle of HRM have been identified: A and B. Pattern A tends to be more system oriented and Pattern B more centralization oriented. Pattern A covers the subsidiaries which, with comparison to their HQ, are of lower power distance, higher individualism, higher masculinity, lower uncertainty avoidance, longer time orientation, and higher indulgence. Pattern B is composed of the subsidiaries with the opposite signs of the cultural distance index. The originality of the study consists in the application of the abductive research model. Thanks to it, we were able to search and find the simplest and most probable explanations for our observations. And the value of the research itself lies in the evidence that the contextual perspective with its configurational implications in the HRM research field is useful in identifying the phenomena that are difficult to identify or unidentifiable otherwise. The findings of the present study provide some knowledge on how cultural distance (external variable) and the significance of HRM to the subsidiary’s performance results (internal variable) interact in impacting on different configurational bundles of HRM subfunctions, their centralization practices and knowledge flows in MNCs.

Toward a more in-depth measurement of cultural distance: A re-evaluation of the underlying assumptions

“…We build on the recommendation of Zaheer, et al (2012: 23) who indicate that in order to investigate the effects of CD towards host countries with different characteristics “it is best to fix one entity as the focal entity and define all other entities of interest with respect to the focal entity, as a positive difference between their characteristics could have quite different effects than a negative difference.” By adopting this approach and using the six dimensions of Hofstede, Stor (2021) has shown that a configuration of different dimensions of positive and negative CDs constitute a contextual factor that influences the evaluation of different human resource management practices and their performance outcomes. Based on this important evidence, we measure the different dimensions of CD separately.…”

“…We address the assumption of equivalence by testing the effects for each dimension of CD separately as we consider that some dimensions can have a greater (or lesser) impact on performance, while others might have no effect at all (Hofstede, 1989; Maseland et al, 2018; Tallman and Shenkar, 1994). Furthermore, although culture represents a complex set of interrelated and potentially interactive dimensions (Beugelsdijk et al, 2017; Lytle et al, 1995; Tsui et al, 2007), that jointly, in a given configuration, produces a specific outcome (Fainshmidt et al, 2020; Stor, 2021), we argue that before attempting to investigate the combined effects of different configurations of the dimensions included in the CD construct, it is essential to understand the specific effects of each dimension.…”

“…KS composite index) which seems to emphasize the liability implications of CD (Beugelsdijk et al, 2018). Nevertheless, a few more recent studies have shown that in some cases, CD can lead to positive outcomes (Boschma, 2005; Vaccarini et al, 2017), which might depend on a combination of different dimensions of CD in specific directions (Stor, 2021), therefore emphasizing the nonequivalent and asymmetric characteristics of the construct (Correa da Cunha, 2019; Magnani et al, 2018; Selmer et al, 2007; Shenkar, 2001; Zaheer et al, 2012).…”

“…Culture represents a complex set of interrelated and potentially interactive dimensions (Beugelsdijk et al, 2017; Lytle et al, 1995; Tsui et al, 2007) that together produces a specific outcome. Future researchers can adopt the metrics developed in this paper and the criteria used for testing the effects of CD to follow the recommendation of Fainshmidt et al (2020) and Stor (2021) and further explore different configurations and interactions among the dimensions. This would be important in terms of increasing our understanding regarding the implications of CD on firm performance.…”

International HRM headquarters as a top management group in Israel

“…While much of the IHRM literature has focused on HR practices in international companies (i.e. Jiang and Yahiaoui, 2019; Stor, 2021; Tyskbo, 2021), there is much underutilized wisdom about IHRM headquarters as a TMG. Further related research about the manner to which IHRM headquarters are integrated and function as TMG in the organizational context may extend inquiry into both upper echelons theory and the contextual theory disciplines.…”