Global staffing and control in emerging multinational corporations and their subsidiaries in developed countries. Indian IT EMNCs in Australia
| Date | 04 June 2019 |
| DOI | https://doi.org/10.1108/PR-07-2017-0211 |
| Published date | 04 June 2019 |
| Pages | 1022-1044 |
| Author | Parth Patel,Brendan Boyle,Mark Bray,Paresha Sinha,Ramudu Bhanugopan |
| Subject Matter | Hr & organizational behaviour,Global hrm |
Global staffing and control in
emerging multinational
corporations and their subsidiaries
in developed countries
Indian IT EMNCs in Australia
Parth Patel
Newcastle University Business School, Faculty of Humanities and Social Sciences,
Newcastle University, Newcastle upon Tyne, UK
Brendan Boyle and Mark Bray
Newcastle Business School, Faculty of Business and Law,
University of Newcastle, Newcastle, Australia
Paresha Sinha
Department of Strategy and HRM, Waikato Management School,
University of Waikato, Hamilton, New Zealand, and
Ramudu Bhanugopan
School of Management and Marketing, Faculty of Business,
Justice and Behavioural Sciences, Charles Sturt University, Wagga Wagga, Australia
Abstract
Purpose –The purpose of this paper is to examine the control mechanisms used by multinational
corporations (MNCs) from emerging economies to manage their subsidiaries in developed countries and their
implications for human resource management practices.
Design/methodology/approach –The paper draws on data collected through in-depth case studies
and interviews with senior subsidiary managers of 12 major Indian information technology (IT) MNCs
operating in Australia.
Findings –Indian IT MNCs rely heavily on the use of people-centric controls exerted through global staffing
practices (via the transfer of parent-country nationals), which, in turn, influence their subsidiary’s discretion
over their HR practices. The use of people-centric controls allows Indian IT multinationalsto replicate parent-
country HRM practices in their Australian subsidiaries in an ethnocentric manner and significantly leverage
the people-based competitive advantages from India through short- and long-term expatriate assignments.
Research limitations/implications –The study investigates control and HRM practices from a single
country and a single industry perspective. It provides an insight into the normative means of control in
foreign subsidiaries of MNCs and enhances our understanding by explaining the integrated relationship that
control mechanisms (and their people-centric components) have with HRM practices including the global
staffing approaches and expatriate management practices of emerging MNCs.
Practical implications –Indian MNCs are using thei r business model to levera ge the Australian
immigration and skille d visa programme to mainta in cost advantages. Howev er, the immigration
legislation in develo ped countries needs to be capable of allowi ng emerging multinat ional corporations
(EMNCs) to maintain such advantages as developed countries seek to attract foreign direct investment
from emerging economies.
Originality/value –The results indicate that the control practices of EMNCs are similar to the controls
exerted by MNCs from developed countries. They also show that EMNCs do not adopta portfolio approach to
global staffing, and that the people-centric components of their control have a clear impact on their
subsidiaries’HRM practices.
Keywords Australia, India, HRM, Control mechanisms, Emerging multinational corporations,
Global staffing
Paper type Research paper
Personnel Review
Vol. 48 No. 4, 2019
pp. 1022-1044
© Emerald PublishingLimited
0048-3486
DOI 10.1108/PR-07-2017-0211
Received 18 July 2017
Revised 26 February 2018
Accepted 16 December 2018
The current issue and full text archive of this journal is available on Emerald Insight at:
www.emeraldinsight.com/0048-3486.htm
1022
PR
48,4
Introduction
There has been significant research on how multinational corporations (MNCs) control their
network of subsidiaries and the extent to which they standardise or localise their subsidiary
human resource management (HRM) practices (Edwards, Tregaskis, Collings, Jalette and
Susaeta, 2013; Edwards et al., 2016; Festing et al., 2012). Much extant research, however, has
focused on MNCs from developed countries operating in developing countries (Belizon et al.,
2016; Chen et al., 2005; Fey and Bjorkman, 2001; Glover and Wilkinson, 2007; Lovett et al., 2009;
Pudelko and Tenzer, 2013; Schaaper et al., 2011). Limited research has been conducted on
emergingmultinationalcorporations (EMNCs), their HRMpractices includingthe management
of their global workforce and the manner in which their subsidiaries operate in developed
countries(Chang et al., 2009; Fan et al., 2013, 2016; Horwitz, 2017; Horwitz and Budhwar, 2015;
Ma et al.,2016;Taoet al., 2017; Thite et al., 2012; Ying Chang et al., 2007). This paper contributes
to this underdeveloped but growing research agenda by examining the control practices of
Indian MNCs and the consequence for discretion over HRM practices in their subsidiaries
located in developed countries. Specifically, it examines people-centric control (i.e. controls that
rely on people) and global staffing –an enduring research agenda in international HRM.
Indian MNCs in the information technology (IT) industry offer a particularly interesting
context for the study of MNC control and HRMdue to their “onsite-offshore”business model,
which requires the deployment of offshore talented knowledge workers to perform skilled
work in foreign countries (Agrawal et al., 2012).The control exerted by these firms should, in
theory, be high, resulting in subsidiaries having little to no autonomy with respect to their
HRM. However, there is an assumption in the current literature that EMNCs predominantly
adopt a polycentric or “adaptive”approach to managing their subsidiaries in developed
countries (Thite,2015, 2016; Thite et al., 2012, 2014; Thite, Budhwar and Wilkinson, 2016), as
this allows them to develop a global workforce, learn best-practice and reduce reliance on
parent-country operations (Thite, 2014). For instance, scholars have postulated that, unlike
developed-country MNCs which bringtheir expertise to developingcountries, EMNCs seek to
gain knowledge from developed markets. They are expected to manage their subsidiaries by
being more locally responsive including adopting staffing strategies that emphasise hiring
host-country managers with local expertise (Thite et al., 2012). It is, therefore, assumed that
EMNCs will emulatehost-country HRM practices (including people management and the use
of host-country staffing) rather than imposing their home-country HR policies and practices
(Chang et al., 2009).In this paper, we build on the insightsdeveloped by Patel (2014), Patel and
Bhanugopan (2017), Patel, Bhanugopanand Bathula (2016), Patel, Boyle and Bray (2016) and
Patel et al. (2018) to question the generalisability of this proposition. Specifically, from a
control perspective, we argue that the learning EMNC thesis separates the discussion of
people management in host country from the strategic control needs of the MNC, and also
appears to be incompatible with the “onsite-offshore”business model followed in sectors
where EMNCs are internationally competitive, such as Indian IT –where Indian MNCsenjoy
internationalcompetitive advantages throughaccess to an abundance of cheap skilled labour
sourced from their home country.
Emphasis has been lately placed on the MNC’s use of informal or normative (soft) control
mechanisms in managing headquarters (HQ)–subsidiary relations (Egbe et al., 2012; Gong,
2003; Johnston, 2005; Kostova and Roth, 2003; Kostova et al., 2016; Paik and Sohn, 2004;
Singh et al., 2016). These mechanisms include approaches to global staffing (Collings and
Scullion, 2009; Scullion and Collings, 2006) and people management via international HRM
(Dowling et al., 2008). Given this backdrop, research has discussed the impact of control on
replication (or not) of HRM practices (Almond and Ferner, 2006; Edwards, Marginson and
Ferner, 2013; Ferner et al., 2004), but for the most part, researchers have failed to discuss the
use of specific HR practices in unison with the use of people-centric controls at the centre of
the arguments in this paper, although the two are obviously linked (Lazarova et al., 2017;
1023
Global staffing
and control in
EMNCs
To continue reading
Request your trial