To what extent is strategic human resource management possible within international firms to overcome problems of coordination and control? Research which has been done in international HRM has resulted into the production of several models that have the ability of providing linkage of HRM practices to various levels in the international development of Multi National Companies (MNCs); where the four phases associated with MNC internationalisation or the life cycle level of the MNC (Milliman et al. , 1991). The stages have in turn brought about furthering of research on IHRM through the advancement of Perlmutter’s work and producing a linkage to the effect culture has on HRM as far as the stages of MNC development.
Brewster, C., Sparrow, P., & Harris, H. (2005) arguments is that several factors come into play in the determination of a trade off between integration and adaption including the legal as well as regulatory constraints, parent country culture, cultural distance, industry, technology, the manpower composition, the type of subsidiary that exist and the extent to which the MNC is dependant on its host country. Pegging argument on open system approach in addition to dependence in resources and institutional theory emphasis is placed on the vital role played by the organization as well as the national environment.
The view on MNC subsidiaries is that they are located in two contrasting contexts: whole organization point of view and the host country environment view. When these views are put into consideration, it is clear that subsidiaries will always be faced by varied and more often contradicting forces that arise from these two contexts. On one hand there is pressure of conforming to conditions prevailing locally and making a response that is locally inclined while there is an equal demand for integrating globally and having a reflection of consistency within the MNC.
The sociocultural environment has an important role in the determination of the level of performance of the organization and this therefore makes it important for subsidiaries of MNCs to adhere to the local regulations and the local values within the host country. However, the fact that subsidiaries are a vital component of the MNC it is inevitable for them to receive some degree of control as observed by (Chang, Y.
Y., Mellahi, K., Wilkinson, A. (2009a), and also they face pressures to be a replica of the organisational characteristics of their parent companies (Chow, C. W., Shields, M., & Wu, A. (1999). The view based on resources together with dependency theory give the framework upon which examination can be done regarding the impact that organizational characteristics may have on HRM practices transfer. For resource-based theory more emphasis is laid on the alignment of HRM with a keen interest on organizational competencies so as to ensure that there is sustenance of a competitive advantage (Ericksen, J., & Dyer, L., 2005).
The resource dependence approach has its basis on the argument that any organization may not be able to have all the required resources to achieve its sustainability and thus the need for the organization to depend on other factors (Pfeffer & Salancik, 1978). It has also been revealed from research on International Human Resource Management (IHRM) that if there is great dependence on the subsidiary it will result in greater degree of the parent organization control.
It is in recognition of this that several studies have been emphatic on the corporate –level type of organization, where factors that relate to parent company characteristics are highly considered including international competitive strategy, the experience at international level as well as management values relating to HRM in addition to some specific characteristics of the relationship that exist between the parent company and its affiliates including communication and control.