Converging HRM practices? A comparison of high performance work system practices in MNC subsidiaries and domestic firms in Pakistan
| Pages | 931-948 |
| DOI | https://doi.org/10.1108/ER-01-2018-0021 |
| Published date | 02 August 2019 |
| Date | 02 August 2019 |
| Author | Mansoor Ahmad,Matthew M.C. Allen,Muhammad Mustafa Raziq,Wali ur Rehman |
| Subject Matter | Hr & organizational behaviour |
Converging HRM practices? A
comparison of high performance
work system practices in
MNC subsidiaries and domestic
firms in Pakistan
Mansoor Ahmad
Department of Management Science,
COMSATS University Islamabad, Islamabad, Pakistan
Matthew M.C. Allen
Business School, The University of Manchester, Manchester, UK
Muhammad Mustafa Raziq
National University of Sciences and Technology, Islamabad, Pakistan, and
Wali ur Rehman
Department of Management Science,
COMSATS University Islamabad, Islamabad, Pakistan
Abstract
Purpose –Existing work on convergence/divergence among HRM practices in MNCs and local firms mainly
focuses on Europe and the USA. Limited research examines these organizations in Pakistan, hindering our
understanding of what policies MNCs are likely to adopt there as well as the extent of any differences between
HRM in MNC subsidiaries and local firms. The purpose of this paper is to examine the similarities and
differences between the HRM practices of MNC subsidiaries and domestic firms to assess if there is evidence
for convergence or divergence.
Design/methodology/approach –The authors targeted MNC subsidiaries and domestically owned firms
working in the banking, information technology and pharmaceutical sectors in Pakistan. These sectors have
enjoyed a steady inflow of foreign direct investment and have a sizeable number of MNC subsidiaries. Out of
1,081 companies, some 392 participated in a face-to-face survey (response rate of 36.4 percent). The authors
ran a series of binary logistic regression models to test the hypothesized relationships between HR practices
and nationality of ownership.
Findings –The authors reveal that a small minority of both types of firm use some practices, such as high
compensation contingent on performance and performance review, appraisal and career development. However,
domestic firms use some practices, such as extensive training, performance appraisals and performance-related pay
significantly less than their multinational counterparts. The autho rs argue that these differences reflect institutional
influences in Pakistan as well as a potential opportunity for local firms to change their HRM practices. In other
areas, such as recruitment and employee involvement, there are no differences between the two groups.
Originality/value –The authors deepen our understanding of the types of HR practices that local
companies in an emerging economy are likely to adopt as well as those that they are unlikely to adopt.
Existing research has tended to downplay HRM in Pakistan and the different use of individual HRM practices
among MNC subsidiaries and local firms. This research reveals that some companies in Pakistan have
sophisticated HRM practices in place in some areas; however, MNC subsidiaries make greater use of some HR
practices, reflecting different cultural norms between the two groups.
Keywords Training, Human resource management
Paper type Research paper
Introduction
An important strand in the HRM literature has long questioned whether a global model of HRM,
centered on high performance work systems (HPWS), will emerge or whether country-specific
models will prevail (Budhwar et al., 2016; Chen et al., 2005; Pudelko and Harzing, 2007;
Employee Relations: The
International Journal
Vol. 41 No. 5, 2019
pp. 931-948
© Emerald PublishingLimited
0142-5455
DOI 10.1108/ER-01-2018-0021
Received 21 January 2018
Revised 12 October 2018
21 November 2018
Accepted 22 November 2018
The current issue and full text archive of this journal is available on Emerald Insight at:
www.emeraldinsight.com/0142-5455.htm
931
Converging
HRM practices
Brewster et al., 2016). Empirical studies have presented convincing evidence to support both
positions; the debate, therefore, is far from over. We compare the HPWS practices and policies of
MNC subsidiaries and domestic firms in Pakistan and assess any convergence/divergence
among these policies.
There is a paucity of literature on HRM in South and South East Asia, especially
Pakistan (Budhwar et al., 2016; Ahmad and Allen, 2015), creating a need to understand how
the HRM practices of indigenous firms compare to those of MNCs (Chiang et al., 2017;
Budhwar et al., 2016). We examine how domestic cultural factors influence the adoption
of HPWS practices in Pakistan between MNC subsidiaries and local Pakistani firms.
The lack or inadequate implementation of formal regulations or institutions in Pakistan
provides companies with greater discretion over their HRM practices, potentially
leading to differences in practices between local and foreign companies (Vaiman and
Brewster, 2015).
We hypothesize that cultural differences between the two groups of companies are likely
to be more important for some HPWS, such as performance reviews, learning opportunities
and performance-related pay, than for others, such as recruitment and selection, leading to
variation in the prevalence of some polices, but not others among the two groups. We test
these hypotheses against a unique data set covering the banking, information technology
and pharmaceutical sectors in Pakistan. Our findings confirm our hypotheses: domestic
firms use some practices, such as extensive training, performance appraisal and contingent
pay, significantly less than their multinational counterparts. For other HPWS practices,
such as recruitment and employee involvement, there are no statistically significant
differences between the two groups. We argue that these differences reflect cultural
differences between the two groups with connections (or sifarish values) being more
important in local firms than MNC subsidiaries.
We contribute to the oft-debated issue of HR policy transfer under the theoretical lens of
institutional theory by providing evidence from an important, but under-researched
country. We deepen our understanding of the types of HR practices that local companies in
an emerging economy are likely to adopt as well as those that they are unlikely to adopt.
Existing research has tended to downplay HRM in Pakistan and the different use of
individual HRM practices among MNC subsidiaries and local firms. Our research reveals
that some companies in Pakistan have sophisticated HRM practices in place in some areas;
however, MNC subsidiaries make greater use of other HR practices, reflecting different
cultural norms between the two groups.
The rest of the paper has three sections. The first section reviews the literature and sets
out our hypotheses. The second section discusses the methodology and results. The final
section discusses our results and concludes.
The convergence–divergence debate in HRM
Globalization has increased interest in the convergence or divergence of firms’HRM
practices in different national and cultural settings. Some research finds that, due to a
common logic of industrialism, similarities in the organization of work throughout the world
are increasing, leading to a convergence of HRM practices around those associated with
US MNCs, as such firms are often seen as “technological leaders”despite the differences
in national cultures, politics and ideology (Kerr et al., 1960; Hall and Soskice, 2001;
Esping-Andersen, 1990). Other research finds that cultural and institutional differences
between countries and regions prevail, resulting in persistent differences in management
systems and practices (Hofstede et al., 2010; House et al., 2004).
In this convergence–divergence debate, HRM scholars have analyzed several factors, most
notably country-of-origin effects (Almond and Ferner, 2006; Ferner and Quintanilla, 1998) as well
as host-and home-country effects (Edwards and Kuruvilla, 2005; Edwards and Zhang, 2008).
932
ER
41,5
To continue reading
Request your trial