Evaluate the effects of national cultures and institutions on the ability of multinational companies to control human resource policies and practices in their international subsidiaries. Illustrate your answer with examples - Essay Example

Effects of national culture on multinationals By of the of the School In recent past, multinational corporations have been at the forefront of ensuring success in the global market. Recent trends have also shown that culture plays an important role in this success as it affects the Human resource directly through policy formulation and strategies used (Hofstede, 2002 p., 1356). Local culture has been seen to affect the approach of many multinational corporations towards implementing human resource policies and practices across their international subsidiaries.

In other words, the cultural aspects of various nations are different, and this has largely affected the workforce of these multinationals, in the long run. According to the definition given by Schein (2004, p. 17), culture may be understood as a trend of shared basic notions or assumptions learned by group of people as it solves its challenges of external adaptation and internal integration, that has established well enough to be considered valid, and thus taught to new members as the proper way to feel, think, and perceive in relations to those challenges.

Taking the example of Wal-Mart which is an American company but operates worldwide for instance, they structure their organization such as whether they are operating abroad or in their country of origin the key human resource strategies are adhered to. Despite the various cultures, they have incorporated their practices to conform to various cultures. Normally, team members of multinational corporations may come from different nations with the different culture, habits, economic and religious.

One can argue that all of these variations bring the different thinking and working methods, thus, the way departments to manage the multicultural team is a big challenge for the HRM in the multinationals. The diversity can cause serious damage to group relationships. Today, the key challenge facing the MNCs has been how to balance between local adaptation and the need for global integration. National culture of MNCs location is seen as the main influence in determining this balance. Likewise, it can be argued that culture has affected the way in which MNCs exercise a degree of control over their subsidiaries to ensure their human resources strategies and efforts are directed towards achieving the main goals of the MNC.

Globalisation has today created the challenge or problem of applying human resource management approaches from corporations headquarter and likewise adjusting them locally in subsidiaries. Thus, approaches used by many MNCs have to design HRsystems that balance both local responsiveness needs and global integration, which is a detailed balance that has implications for performance. Hence, many MNCs too have decided to grant a given autonomy to their subsidiaries in relation to developing their HR-systems for management strategic reasons.

Multinational corporations operate in different socio- cultural arena, and there are bound to be intercultural encounters, in reality this is not a new dimension though it is as old as humanity. Many multinationals prefer to use their nationals in key HR positions then spreading the rest among the locals (Dahya et al., 2002 p., 463). While this has been successful with other firms, to others it has not been easy. Cultural perception has interfered with the way businesses are done. Culture shapes human behavior, and this influence reaches beyond various administrative attributes.

One multinational company that succeed the cultural perceptions to the new HR strategies in the expanded market was British multination’s such as British Petroleum Company Plc. They managed to understand the cultural perceptions quickly and merged them with local need while shaping their human resource strategies. The opposite is the case of Cadbury Worldwide, the company that didnt do well in Nigeria due to cultural intolerance. Cadbury Worldwide is a multinational company second largest worldwide by 2008 in the industry of operational.

However due to cultural intolerance and incompatibility of human resource strategies the company that enjoyed a lot of prominence in UK could not penetrate the Nigeria market. Unlike British Petroleum Company Plc. who succeeded, Cadbury (UK) failed to achieve a good "culture fit" between their Human resource practice and their local cultural environment and this effect on their performance. The Yoruba among the Nigerians have various cultural expectations including who should be accorded what positions and roles.

For instance this is seen in the way they perceive women in management positions and human resource structure (Women are second to men) (Dahya et al., 2002 p., 461). This is quite different case in Japanese culture that is welcoming to multinationals as long as few aspects of their culture are incorporated in human resource strategies. For a while now the role that national culture plays and its impact on Multinational Corporation’s performance has been debated and many times underestimated.

More specifically, strategic management area has traditionally concentrated on business concepts that impacts on firm performance are answering the question of why a given group multinational corporation perform better than others. Culture can be singled out in both cases. The persistence of cultural value variations is particularly applicable to large multinational companies that are subject to multiple national cultures in their routine operations (McSweeney, 2002 p., 110). This implies that managing across borders initiate substantial complexity since it forces them to tailor their approaches and practices to each and every unique cultural context they have their operations in Business that multinationals conduct has brought their managers in direct relationship with diverse culture in various nations.

Through analysis, the blunders that various managers make in these cultural environments portray the impact of these multinationals. The era of old Japanese parable concerning the management styles of fish and monkey puts into concern the outcomes of ignorance or lack of what may be billed as the cultural feature in the arena of business and it seems to be a very apt metaphor for the kinds of problems that emerge when individuals belonging to diverse cultures get in touch abruptly or without preparing before much as the monkey in the parable stated that the environment of the fish bore similitude to his and showed its behavior further.

Accordingly, various managers, in the same way, presuppose without consciousness that all groups have the same way of feeling or thinking as they do (McSweeney, 2002 p., 104). Management practices which are appropriated for culture they have trigger uncalled for, probably terrible, outcomes in some other unique culture. So as to advert challenges it is imperative for the contemporary manager to understand the basic concept underlying the “unique culture” As a conclusion, culture goes a long way I am affecting and governing all facets of the life by influencing attitudes, values and behavior of a society that the multinational operates.

The nature of the nation is largely influenced by the cultural orientation of the group of individuals forming it. Thus, it is largely related to the nature of the workforce. Individuals in the workforce correlate to the success of any multinational. References Aniszewska, G. 2007. Organizational culture in management. Warszawa: PWE (in Polish). Ashkanasy, N.M., Wilderom, C. P. M., Peterson, M. F. 2011. The handbook of organizational culture and climate. Sage Publications. Dartey-Baah, K., 2011.

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