Do subsidiaries of MNEs demonstrate a convergence across their HRM practices in a less developed host-country? Evidence from Ghana

Importance and Key Findings This paper examines employee voice, recruitment and selection, retention, training and development and talent management practices engaged by subsidiaries of MNEs operating within Ghana. The paper... [ view full abstract ]

Importance and Key Findings
This paper examines employee voice, recruitment and selection, retention, training and development and talent management practices engaged by subsidiaries of MNEs operating within Ghana. The paper seeks to examine whether subsidiaries of MNEs in Ghana demonstrate a convergence across their HRM practices in a less developed host country? And if so, what explains such convergence or divergence? We report on multiple case studies involving five MNEs subsidiaries originating from the UK, France, Germany and India. We applied cross-case and thematic analysis techniques to explore similarities and differences in their HRM practices. We found that MNEs subsidiaries demonstrate more convergence across their HRM practices. The divergence found was in relation to the HRM practice implementation processes owing to sectoral differences, mode of establishment and ownership structure, but the HRM structure, scope and HRM strategy adopted by MNEs subsidiaries all demonstrated convergence. It appears that the host-country have less influence in driving their convergence but rather the country-of-origin effect, competitive isomorphic pressure (domestic and international) and global integration benefits were driving their convergence across their HRM practices.
Theoretical Base
The concept of the convergence debate was first observed and advanced in the management literature by Kerr et al. (1960) during the industrial revolution, where firms originating from different host and home countries were demonstrating similar organizational patterns and management structures (McGraw & Harley 2003). This concept gained both theoretical and empirical support through the advancement of globalization and the spread of the information, communication and technology across the world creating borderless countries with respect to education and training and trade and investment among others (Smith & Meiskins 1995). The pressure for MNEs with global operations to integrate their activities is driven by the need for co-ordination and control (Harzing 2001) and the need to be internationally competitive (Smith & Meiskins 1995), resulting in the desire for MNEs to develop and implement global standardized HRM practices across all subsidiaries regardless of national institutional differences between the home and host countries.
This pressure for MNEs global integration drive could create avenues for the manifestation of the dominance effect or the country-of-origin effect in HRM practice configurations (Tuselmann, McDonald & Thorpe 2006). Nachum (2003) and Lane (2000) found that the pressure for global integration is more extensive among MNEs with global business operations and MNEs with operations in highly international competitive industries. MNEs global integration programs are likely to be achieved through the global best practice model which supports the convergence debate in HRM irrespective of dissimilar institutional settings among countries in which MNEs operate. One theoretical lines of argument for the convergence thesis is the “rational actor model which assume that firms pursue economic success by implementing practices that contribute to economic goals under the conditions of bounded rationality” (Mayrhofer et al. 2011, p.51). Accordingly, in globalization settings, flexibility, rationality, best practices and cost effectiveness underpins Capitalism, thus the emergence of similar organizational configurations and practices are expected to be noticeable (Smith & Meiksins 1995; Mayrhofer et al. 2011). Indeed, Drori, Meyer & Hwang (2006) argued that Western institutions, national business systems, cultural values and belief systems have dominated global development and international trade (dominance effect) which in turn is driving the rationalization of Western HRM models across the world irrespective of national and institutional differences (Edwards et al. 2013; Smith & Meiksins 1995). The underpinning assumption of the dominance effect draws attention to the competitive strength of firms originating from developed countries occupying dominant positions in the world economy (Pudelko & Harzing 2007). The competitive edge credited to HRM practices of such dominant countries leads to the description of such HRM practices as ‘global best practices’ (Pudelko and Harzing 2007; Aguzzoli & Geary 2014). According to Edwards & Ferner (2004) and Pudelko & Harzing (2007), the perceived economic benefits usually associated with HRM and industrial relations practices of advanced economies is a source of encouragement for MNEs from emerging and less developed economies to mimic elements of such HRM and industrial relations practices. To support this claim several studies provide evidence to indicate that US MNEs adoption of direct employee involvement practices has become a global best practice in HRM (Pudelko & Harzing 2007). In this paper this proposition is evaluated across a number of HRM practices within the context of Ghana.
Research Questions
Do the subsidiaries of MNEs in Ghana demonstrate a convergence across their HRM practices and if so, what explains such convergence or divergence in HRM practice?
Methods
This is a multiple case study strategy with large MNEs subsidiaries located in Tema, Kumasi and Accra. One benefit of multiple case studies is that it allows for cross-case (comparative) analysis and as such strengthens the study outcomes within different backgrounds or contexts (Cox & Warner 2013). The sample for the study was drawn from five MNEs subsidiaries originating from the UK, Germany, France and India with operations in the manufacturing and the services sectors.
Findings and Discussion
The paper found that all the MNEs subsidiaries HRM practices were designed by the parent companies (headquarters) in their respective countries-of-origins and replicated in the host country (Ghana). Although there was some level of discretion given to the subsidiaries in the adoption of some of the HRM practices, such discretion were only applicable when headquarters HRM practices contradicted the host country’s legal regulations (labour laws). In instances where the host country’s laws (labour laws) remain silent, then the HRM policy or practices of the headquarters must be replicated and implemented without any modifications. This suggests that MNEs explore pathways within host country’s institutional and legal settings to adopt HRM practices similar to headquarters practices to ensure global standardization (Muller 1998) as well as to ensure easy coordination and control (Harzing 2001).
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multinational enterprises; HRM practices; Ghana; convergence-divergence thesis; cross-case analysis [ view full abstract ]

multinational enterprises; HRM practices; Ghana; convergence-divergence thesis; cross-case analysis