The transfer of HRM practices from emerging Indian IT MNEs to their subsidiaries in Australia: The MNE diamond model

Abstract

There is a growing body of literature on multinational enterprises (MNEs) and the extent to which they diffuse or transfer their human resource management (HRM) practices in foreign subsidiaries. Much of the research, however, examines the HRM practices of multinational enterprises from developed countries operating in developing countries rather than vice versa. This study investigates the transfer of HRM practices in Indian information technology MNEs with subsidiaries in Australia and draws on data collected through interviews with senior subsidiary managers. The findings indicate that contrary to what is suggested in the existing literature, Indian IT MNEs do not operate using a polycentric HR model but behave in a manner similar to Western MNEs. They adopt a hybridisation approach using headquarter(HQ)-local practices that merge home-country policies with locally responsive HRM practices to suit their Australian subsidiary context. This article discusses the implications of this finding for theory and practice in EMNEs.

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

“…This highlights the need for much more extensive inquiry into EMNEs in different circumstances, building especially on the rapidly growing research on Chinese MNEs in both developed economies (Ouyang et al, 2019) and less developed economies, notably those in Africa (Cooke, Wood, & Horwitz, 2015; Xing, Liu, Tarba, & Cooper, 2016). We note the variability in the way EMNEs may transfer home country practices and the form hybridization of HRM practices may take (Patel et al, 2018). We further argue that internationalization poses unique challenges for EMNEs, but it could also offer an opportunity to develop distinctive capabilities to manage the subtle differences across diverse locations (Amankwah‐Amoah & Debrah, 2017) and strike a delicate balance in managing the multiple embeddedness of subsidiaries (Meyer, Mudambi, & Narula, 2011), since MNEs from a dominant economy may be less agile in responding to such a challenge.…”

“…While some commentators have emphasized the cultural specificity of management styles and practices (Budhwar, 2000; Cappelli, Singh, Singh, & Useem, 2010), formal personnel functions have broadly reflected those of the ex‐colonial power and recent economic liberalization and FDI have further precipitated rapid, if patchy, change (Budhwar & Varma, 2012). Foreign companies have traditionally opted to adapt to local practices in India (Björkman & Budhwar, 2007), but have recently contributed to change in HRM practices where certain sectors such as information technology and business process outsourcing now emerge as relying widely on “best practices” aligned with those in developed economies (Patel et al, 2018).…”

“…The intention is that such mimicry brings the MNEs' HRM policies in line with modern practice and makes transfer, even to subsidiaries in more developed countries, simpler. In some cases, subsidiaries in advanced economies are set up in a polycentric and adaptive approach precisely for the capture and diffusion of such global best practices (Patel, Sinha, Bhanugopan, Boyle, & Bray, 2018), but the mimicry also widely involves dominance effects that are diffused globally through multiple channels (Edwards et al, 2013).…”

Global staffing and control in emerging multinational corporations and their subsidiaries in developed countries

“…Having reviewed the common forms of control used by MNCs and their relation to specific HRM practices, some reflection is required on how they may or may not apply to EMNCs. Extant literature draws attention to two factors that are of particular importance to EMNCsthe liability of country of origin and the liability of foreignness (Patel, Bhanugopan and Bathula, 2016;Patel et al, 2018;Thite et al, 2012Thite et al, , 2014Thite, Wilkinson, Budhwar and Mathews, 2016). The liability of country of origin is due to a perceived weakness of EMNC home-country institutions and economy, relative to their western counterparts (Chang et al, 2009;Wilkinson et al, 2014Wilkinson et al, , 2015 such that EMNCs will seek to emulate management practices found in developed countries.…”

“…It is, therefore, assumed that EMNCs will emulate host-country HRM practices (including people management and the use of host-country staffing) rather than imposing their home-country HR policies and practices (Chang et al, 2009). In this paper, we build on the insights developed by Patel (2014), Patel and Bhanugopan (2017), Patel, Bhanugopan and Bathula (2016), Patel, Boyle and Bray (2016) and Patel et al (2018) to question the generalisability of this proposition. Specifically, from a control perspective, we argue that the learning EMNC thesis separates the discussion of people management in host country from the strategic control needs of the MNC, and also appears to be incompatible with the "onsite-offshore" business model followed in sectors where EMNCs are internationally competitive, such as Indian ITwhere Indian MNCs enjoy international competitive advantages through access to an abundance of cheap skilled labour sourced from their home country.…”