How can the country of origin of a multinational corporation impact on management practice in their foreign subsidiaries and what other factors may impact on the implementation of HRM and IR practices in MNC subsidiaries?
Regarding the country of origin (COO) effect, I have focused on the strong impact that multinational corporations have on management practices in their foreign subsidiaries, through their ethnocentric or national systems strategy. According to Van Tulder (1995; cited by Harzing and Noorderhaven) "even the most global MNC's in many respects still appear to be strongly rooted in their country of origin". The ethnocentric approach by MNCs is an example of "cross national isomorphism" (Ferner, 1997), which occurs when MNCs successfully transfer COO management practices into host country operations. Despite the impact of the globalization process, which increases the connectivity and interdependence of the world's markets and businesses ( Scholte, 2000), the ethnocentric strategy is still used nowadays by MNCs.
Another detactable COO effect is the use of expatriates by the parent company. The continued hiring of home country nationals for key management positions aids in preserving the COO effect. According to Ferner (1997; cited by Harzing and Niels, 2003) the management preferences of the home country nationals will become embedded in organizational cultures, procedures and processes in their foreign subsidiaries.
The standardization of management policies is another COO effect. According to Kopp (1994; cited by Ferner, 1997) American MNCs can measure and reward manager's perfomance in their foreign subsidiaries.
Other than COO effect there are other factors which may impact the implementation of human resource mana ...