Strategic HRM Report: EMNCs in Developed and Emerging Markets

This report provides a comprehensive analysis of International Human Resource Management (IHRM) strategies, focusing on Emerging Market Multinational Corporations (EMNCs). It examines how cultural and institutional differences impact the dissemination of HRM practices when EMNCs operate in developed and other emerging markets. The report delves into the challenges EMNCs face during the cross-border transfer of HRM practices, including issues related to cultural alignment, legal frameworks, and demographic diversity. Furthermore, it explores various approaches EMNCs can adopt to effectively manage their subsidiaries in both developed and emerging markets, such as researching cultural orientations, understanding legal guidelines, and implementing cross-cultural training programs. The report concludes with recommendations for improving the dissemination process and managing dual pressures for different HR needs, emphasizing the importance of adaptation, hybrid approaches, and open communication between parent and host country units. The report uses relevant IHRM theoretical and research material to support its analysis.

STRATEGIC AND COMPARATIVE HUMAN RESOURCE
MANAGEMENT

Table of Contents
Introduction................................................................................................................................4
Discussion..................................................................................................................................4
Effect of institutional and cultural differences on the dissemination of HRM strategies and
practices by EMNCs...............................................................................................................4
Challenges faced by EMNCs during transfer of HRM practices across the border and
potential approaches for managing subsidiaries in emerging and developed market 800.....6
Conclusion and recommendation...............................................................................................8
Reference list..............................................................................................................................9
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Abstract
In this report, the focus of discussion is about comparison of human resource management in
a developing and developed nation. Various cultural and institutional differences that impacts
on dissemination of HRM policies are discussed in this report. Moreover, the challenges
faced by EMNCs while transferring the HRM practices are discussed. In addition, different
approaches are discussed that EMNCs can adopt for management of their subsidiaries in
developed markets. At last, recommendations are provided that can improve the
dissemination process.
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Introduction
Human resource management (HRM) policies and different practices are disseminated as a
part of knowledge transfer between different organizational units. This covers several stages
that include identification of policies and practices that can be transferred, process of
transferring and utilization of the knowledge by the receiving unit. Cultural and institutional
factors impact in this process of dissemination, which is a major subject of research in current
age. The practices and policies differ between developed and developing countries. Hence,
disseminated policies from developing countries are hard to adopt in developed countries. In
this report, challenges by an EMNC while transferring HRM policies have been discussed.
Discussion
Effect of institutional and cultural differences on the dissemination of HRM strategies
and practices by EMNCs
Cultural and institutional differences impact on the process of knowledge transfer from MNC
in developing country to its subsidiary in developed countries by making it hard to adopt.
Rigid cultural norms and principles in the country of origin are tougher for subsidiaries in
host countries who follow lenient principles or vice versa (Ying Chang et al. 2007). For
example, Taiwan follows the principle of harmony and low in individualism. In addition, they
have a high level of power distance and moderate masculinity. On the other hand, the UK is a
developed country, which follows individualism. Hence, the HRM policies in this developing
country of Taiwan are hard to disseminate in the UK.
Institutional HRM policy differences like recruitment and selection also impact in
transferring the organizational culture from a developing country to a developed host country.
In developed countries, management uses different modern tools of recruitment like
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recruitment agencies and executive search consultants. However, in a developing country,
these tools are not used frequently for managerial and other professionals vacancies
(Sparrow, 2016). For these kinds of recruitment, developing countries adopt internal selection
process, where employees are given promotion. On the other hand, Haddock-Millar et al.
(2016) mentioned that institutions in a developed country rely more on different selection
tools like aptitude test, a competency-based interview that developing countries. These
institutional differences can create a barrier while transferring knowledge and practices from
a developing to a developed country.
There is a difference in process like training and development between developing and
developed countries. Difference in institutional HRM practices like training and
development also impact in the dissemination process. Different MNC units in developing
countries adopt the process of on job training and other professional training. While in
developed countries management believes in constant mentorship that helps in continuous
development of an employee (Sparrow et al. 2016). In addition, differences in other HRM
practices like pay and rewards within an institution can be seen between developed and
developing countries. In developed country units of MNC, management focuses more on
performance-oriented rewards. However, developing countries like Taiwan adopt egalitarian
policies while distributing rewards and benefits (Pietersen, 2018).
On the other hand, difference in organizational culture is a great factor that affects the
dissemination process of policies and practices from EMNC in developing country to its
counterparts in developed countries. For example, the process of performance appraisal
varies to a greater extent among developed and developing countries. This process is an
integral part of a company's organizational culture. Units of developing country focus less on
objective quantifiable results as compared to its subsidiaries in developed nations. Reward
range is kept narrow and feedback process is less adopted to maintain good relations with
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employees. The best performer in these units of developing countries is encouraged but worst
is not criticized or punished, rather they are encouraged. However, in the developed nations
like UK, application of control techniques of systematic and formal performance appraisal is
done. Moreover, difference in other parts of organizational culture like working flexibility
also hampers the dissemination process. Management of EMNC units in a developing nation
like Taiwan is more intended in providing permanent jobs to workers on a full-time basis.
While in developed nations a major portion of the workforce in part-time (Lee et al. 2018).
Different other cultural factors like participation of management also impact on
dissemination process. In most developing nations, management wants to maintain harmony
with the workforce and enforce different participatory management tools like work councils,
employee management councils and others. However, it is a job task to disseminate the
principle of collectivism and harmony in developed countries counterparts. As opined by Lee
et al. (2017) in developed countries, the participation of management is less and they also use
less or no participatory tools. Rather, they tend to adopt an elaborate system of control, which
is done by budget setting and various monitoring systems. This helps in achieving both short
and long term financial performance.
Therefore, it can be said that difference in cultural factors and institutional processes creates a
barrier in disseminating policies and practices from developing country units to developed
country counterparts. However, management of units in developing countries can discuss and
train employees from developed countries to increase their adaptation, which can solve the
issue.
Challenges faced by EMNCs during transfer of HRM practices across the border and
potential approaches for managing subsidiaries in emerging and developed market 800
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Multinational companies face many challenges while transferring HRM practices across the
border. Types of challenges regarding this matter differ from an emerging market to
developed countries. Common challenges are mentioned below,
● Matching culture-dependent business practice
In case of emerging markets, it can be found that businesses are culture-oriented. As stated by
Ahmed and Akram (2016), organizations of these places adhere to local culture and this fact
has a great impact on HRM practices. Culture-dependent norms are challenging for EMNCs.
For example, employees of subsidiaries in emerging markets prefer holidays at local festivals.
However, it may be difficult for EMNCs to allow this practice. This decision of management
may impact on the job satisfaction level of employees and it can be difficult for EMNCs to
retain employees. For example, Indian employees want to celebrate their cultural events and
EMNCs are unable to cooperate each time as they are bound to serve customers from all over
the World. On the other hand, this challenge is less effective in case of developed countries.
In developed countries, organizations are less dependent on cultures and it is easier to transfer
HRM practices in developed countries by EMNCs. For example, Australian workers are more
professional by nature and culture of this country has less effect on employment.
● Challenge regarding legal aspects
Different countries have different kinds of legal structures and this fact must be considered in
transferring HRM practices across the border. As mentioned by Popa et al.(2015), the
government of different countries develops different legislations to protect basic rights of
employees. EMNCs face challenges in obeying these legislations while transferring HRM
practices. In case of developed countries, stronger legislations are there in protecting the
rights of employees and this fact is creating challenges for EMNCs. for example, Australian
government has developed strong legal guidelines for managing Human resources. EMNCs
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are bound to follow those guidelines while transferring HRM practices in this country. On the
other hand, China's legal aspects are relatively less effective and it is favorable to owners of
MNCs for transferring HRM practices.
● Demographic diversity
Demographic diversity of emerging markets creates challenges while transferring HRM
practices by MNCs. This aspect differs in emerging and developed markets. As stated by Al
Ariss and Sidani (2016), demographic condition of host countries is challenging for
transferring HRM practices by EMNCs. For example, declining younger population can
affect the process of HRM practice transfer in this country. Practices must be modified
according to older skilled employees in this case. On the other hand, Canada is a developed
country and skilled workers are available in this country. Transferring HRm practice in this
country is easier than emerging markets.
Different potential approaches are there that would be adopted by EMNCs to manage
subsidiaries. Common potential approaches are mentioned below,
❖ Research on nature of business and cultural orientation
EMNCs would adopt researching on cultural orientation and the nature of business in
different countries. According to Mukkelli (2015), employees and business operations of
emerging markets are culture-dependent in terms of emerging markets. It is important to
understand the perception of stakeholders in home and host marketplaces before transferring
HR practices. For example, subsidiaries in developing countries must comply with the
cultural belief of employees to retain talents. Similarly, culture of employees in developed
countries and business nature must be evaluated by EMNCs.
❖ Research on legal guidelines
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Legal structures are different in different countries. EMNCs would adopt the approach of
understanding the legal aspects related to HRM practices in both emerging and developed
market. According to Cocuľová and Ferková (2018), this approach may help EMNCs to
transfer appropriate HR practices that can comply with the legal structure of target countries.
For example, Australian legal structure regarding employment must be evaluated before
transferring HR practices in subsidiaries located in this country.
❖ Ensuring cross-cultural training
Cross-cultural training is very important in case of managing subsidiaries in both developed
and emerging markets. Sparrow et al. (2016) have suggested that EMNCs must train leaders,
managers, and employees regarding the process of dealing with different cultures. All internal
stakeholders must understand and value each other's cultural differences in subsidiaries.
Employees may be asked by management of EMNCs to focus on collective working. On the
other hand, training must be given regarding different culture-dependent norms of business in
case of emerging markets. This approach may help MNCs to develop a collective workforce
that can support them in serving customers from all over the world appropriately.
Conclusion and recommendation
From the entire discussion of this report, it can be concluded that IHRM is a difficult business
operation and MNCs face many challenges in disseminating HRM practice across the border.
Socio-cultural factors and nature of business are different in emerging and developed
markets. These factors affect the HRM practices of MNCs. Parents companies evaluate all
factors that can affect human resources in subsidiaries and modify practices accordingly. This
approach helps MNCs to cope up with institutional and cultural differences in different
countries. It is important to implement effective strategies to manage dual pressures for
different HR needs in home and host countries.
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It can be recommended that operational units of both parent and host countries can conduct
meeting sessions that can help in adaptation of practices and policies. A detailed explanation
of the policies can be given in these sessions. The policies and practices in the parent unit of
developing countries can be modified to a hybrid style, which can help to increase
adaptability of employees from other developed nations. This can help to increase individual
performance and diversity in the organization can be maintained. This middle way approach
can be done by merging identified HRM policies and practices from both the countries.
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Reference list
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Cocuľová, J. and Ferková, M., 2018. Comparison of culturally diverse companies with regard
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Haddock-Millar, J., Sanyal, C. and Müller-Camen, M., 2016. Green human resource
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Popa, C., Reczey, I. and Quansah, D., 2015. The international human capital and the global
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