COMPARATIVE EMPLOYMENT RELATIONS

Comparative Employment Relations

Comparative Employment Relations

As international borders disappear and organisations cross national and cultural boundaries (Ohmae, 1989), there is an increasing need for these organisations to recognise the importance of managing the employment relationship. From the perspective of international business, increasing complementarity between technology, capital and location, based on the mindset of a borderless world, has forced organisations to look for new forms of competitive edge. Human resources have been proposed as one of the most important sources of competitive advantage in this global environment (Barney, 1991; Dyer, 1993). Multinational corporations (MNCs) need to develop multidimensional capabilities as a means of increasing their competitive advantage in the global arena (Bartlett & Ghoshal, 1987a and Bartlett & Ghoshal, 1987b). It is crucial to consider the importance of achieving competitive advantage by ensuring that people management issues are considered in the management processes of the international firms.

Despite the growing literature in the field of international management, surprisingly little is known about how MNCs manage their human resources, particularly across national borders (Ferner, 1994; Schuler, Dowling & De Cieri, 1993; Welch, 1994). The inadequate examination of human resource management (HRM) issues in the multinational context exists despite common acknowledgment of the area's importance (Dowling & Schuler, 1990; Schuler et al., 1993; Tung, 1984; Welch, 1994). Similarly, despite an increase in recent studies that examine the country of origin effect, Ferner (1997) concludes that there is only a small body of research in the field. Similarly, several criticisms of the area raised by the literature are addressed in this study, for example the ameri-centric nature of much of the research and the inclusion of decentralisation (as mentioned by Ferner (1994)). This paper addresses these inadequacies by exploring the different mechanisms and processes used by domestic and international organisations in their management of the employment relationship. More specifically, this research examines the extent to which subsidiaries balance the use of both home-country and host-country employment relations (ER) practices across three regional groupings of firms, based on the triad given in Ohmae, K., 1989.

Divergence and convergence in the employment relations of MNCs

One of the most important challenges faced by MNCs is to decide how their foreign subsidiaries should be managed in the host nations (Schuler et al., 1993). As a consequence, HRM managers of MNCs operating in host nations have to address the question of whether to adopt the practices of their parent companies or to assimilate into the host country by adopting localised practices (Monks, 1996). Internationalisation poses important employment relations challenges that are often difficult to resolve. However, the complications that arise at the level of the national subsidiary suggest that the key test of the HRM manager as a focus of employment relations depends on being able to balance the demands of efficiencies at the international level while simultaneously maintaining the operational life of the organisation in host nations.

Some affiliate practices may resemble the MNC's home-country practices, others may more closely resemble host-country practices, while others may be global in nature (Soenen ...