The liability of mimicry: Implementing “global human resource management standards” in United States and Indian subsidiaries of a South Korean multinational enterprise

Abstract

There is increasing evidence that multinational enterprises (MNEs) from less dominant economies tend to mimic and disseminate human resource management (HRM) practices sourced from a dominant economy, usually the United States, to overcome their "liabilities of origin." However, our understanding of the specific challenges involved in the implementation of such practices by firms across different national and subsidiary contexts remains limited. Drawing on evidence from a case study of a South Korean MNE, we examine the extent to which, and ways in which, global HRM policies mimicking U.S. practices are implemented across its sales, manufacturing, and research and development subsidiaries in the United States and India. We find discernible differences in the implementation of the global policies both between the two host country sites and across the three function-specific subsidiaries in each country, identifying a range of national and subsidiary-specific factors that inform these variable implementation outcomes. In addition to legitimacy challenges related to the source, appropriateness, and process of transfer, we note a unique form of legitimacy challenge-"the liability of mimicry"-whereby local actors can challenge head office policies on the basis of a claim to superior expertise in the dominant practices, as a particular concern of MNEs from emerging economies.

South African MNCs’ HRM Systems and Practices at the Subsidiary Level: Insights From Subsidiaries in Nigeria

“…Companies would prefer to compete for a skilled, informed workforce who regularly engages in improvement activities. Such companies would ensure that industry-level collective bargaining matched salaries for similar jobs across companies, thus making poaching more difficult (Chung et al 2020;Ma et al 2013).…”

“…The most widely cited feature that creates pressures for decentralisation is national culture (Abugre, 2018;Chung et al 2020;Chung et al 2014;Neal, 2016). MNCs need to be sensitive to their foreign host subsidiaries' prevailing attitudes and values to operate effectively (Harzing & Pinnington, 2014;Xing et al 2016).…”

“…National institutions provide a framework for how companies operate within domestic and international markets. Thus, MNCs build their policies and practices around their historical roots and national context (Almond et al 2017;Chung et al 2020). For instance, US MNCs are notably anti-union in their approach (Bergiel et al 2012).…”

“…A prevailing view in IHRM literature is that, despite globalisation, MNCs tend to adopt their home country HRM practices and approaches in subsidiaries in host countries (Chung et al 2020;Meyer et al 2018;Welch & Björkman, 2015). Correspondingly, the methods and systems in the MNCs' countries of origin persistently shape the behaviour and HRM methods in their subsidiaries (Ouyang et al 2019;Welch & Björkman, 2015).…”

“…They argued that a hierarchy of economies within the global system gives rise to a 'dominance effect' at any particular time. They noted that countries in dominant positions have advanced conventional methods of improving productivity and sustaining competitive advantage, which has invited emulation and interest (Andersen & Andersson, 2017;Chung et al 2020;Geary et al 2017). The rationality of the 'dominance effects' is that the legacy and force of institutions do not solely form the transfer of HRM practices.…”