The effects of market economy type and foreign MNE subsidiaries on the convergence and divergence of HRM

E. Farndale, Chris Brewster, Paul Ligthart, Erik Poutsma

Research output: Contribution to journalArticleScientificpeer-review

Abstract

This study explores patterns of human resource management (HRM) practices across market economies, and between indigenous firms and foreign MNE subsidiary operations, offering a novel perspective on convergence and divergence. Applying institutional theorizing to improve our understanding of convergence/divergence as a process and an outcome, data collected from nine countries at three points in time over a decade confirm that convergence and divergence occur to different extents in a nonlinear fashion, and vary depending on the area of HRM practice observed. Patterns of adoption and convergence/divergence are explained through the effect of institutional constraints, which vary between liberal and coordinated market economies, and between indigenous firms and foreign MNE subsidiaries. Specifically, we expected, and largely found supporting evidence confirming that compensation and wage-bargaining level practices show more evidence of being institutionally constrained, and hence were less likely to converge, than contingent employment, training, and direct information provision practices. The study contributes a more graded conceptualization of convergence/divergence (from constant no difference, through robust convergence, non-robust convergence, non-robust divergence, and robust divergence to constant difference), allowing us to tease out the subtle manifestations of the process that can incorporate the complex dynamic reality of international business.
Original languageEnglish
Pages (from-to)1065–1086
JournalJournal of International Business Studies (JIBS)
Volume48
Issue number9
DOIs
Publication statusPublished - 2017

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Human resource management
Wages
Industry
Subsidiaries
Divergence
Multinational enterprises
Market economy
Compensation and Redress

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title = "The effects of market economy type and foreign MNE subsidiaries on the convergence and divergence of HRM",
abstract = "This study explores patterns of human resource management (HRM) practices across market economies, and between indigenous firms and foreign MNE subsidiary operations, offering a novel perspective on convergence and divergence. Applying institutional theorizing to improve our understanding of convergence/divergence as a process and an outcome, data collected from nine countries at three points in time over a decade confirm that convergence and divergence occur to different extents in a nonlinear fashion, and vary depending on the area of HRM practice observed. Patterns of adoption and convergence/divergence are explained through the effect of institutional constraints, which vary between liberal and coordinated market economies, and between indigenous firms and foreign MNE subsidiaries. Specifically, we expected, and largely found supporting evidence confirming that compensation and wage-bargaining level practices show more evidence of being institutionally constrained, and hence were less likely to converge, than contingent employment, training, and direct information provision practices. The study contributes a more graded conceptualization of convergence/divergence (from constant no difference, through robust convergence, non-robust convergence, non-robust divergence, and robust divergence to constant difference), allowing us to tease out the subtle manifestations of the process that can incorporate the complex dynamic reality of international business.",
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The effects of market economy type and foreign MNE subsidiaries on the convergence and divergence of HRM. / Farndale, E.; Brewster, Chris; Ligthart, Paul; Poutsma, Erik.

In: Journal of International Business Studies (JIBS), Vol. 48, No. 9, 2017, p. 1065–1086.

Research output: Contribution to journalArticleScientificpeer-review

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