HR

Transferring HR practices within
multinational corporations
Ingmar Bjrkman, Swedish School of Economics and Business
Administration
Jon E. Lervik, Lancaster University Management School
Human Resource Management Journal, Vol 17, no 4, 2007, pages 320335
There is extensive evidence that planned transfers of management practices by
the headquarters of multinational corporations (MNCs) to foreign subsidiaries are
not always successful. In this article, we outline a model of factors influencing
the transfer of HR practices to MNC units abroad. The article has two main
contributions. First, we develop a more holistic understanding of the outcome of HR
practice transfer as encompassing three dimensions: implementation, internalisation
and integration. Second, we expand current explanations of transfers of practices to
foreign units. We argue that transfer of HR practices is a social process where the
governance mechanisms used by the MNC, characteristics of the subsidiary HR
systems, the social relationship between the subsidiary and MNC headquarters, and
the transfer approach taken by headquarters management will influence the outcome
of the process.
Contact: Prof. Ingmar Bjrkman, Swedish School of Economics and Business
Administration, PO Box 479, 00101 Helsinki, Finland. Email: ingmar.
bjorkman@hanken.fi
ultinational corporations (MNCs) engage in transfer of organisational

practices to foreign subsidiaries for multiple purposes. Organisational
practices can be viewed as valuable resources or competences that one
seeks to replicate and exploit throughout the firm (Zaheer, 1995; Szulanski, 1996).
Consistency sought through the transfer of organisational practices can also
contribute to developing a common corporate culture, enhancing equity and
procedural justice within the MNC (Kim and Mauborgne, 1993), and managing
external legitimacy of the MNC as a whole (Kostova and Zaheer, 1999). However,
there is ample evidence that planned transfers of practices do not always work out
in the way intended by headquarters, and it has been shown that subsidiaries
belonging to the same MNC differ in the extent to which they implement and
internalise corporate practices (Kostova and Roth, 2002). The objective of this article
is to contribute to our understanding of why there are differences between MNC
subsidiaries in the extent to which they adopt HR practices that MNC headquarters
attempt to diffuse worldwide.
In this article, we outline a model of factors influencing the transfer of HR
practices from MNC headquarters to foreign units. Our focus is on the organisational
structures, mechanisms and processes influencing transfer of HR practices. We
acknowledge that also the MNC home country and subsidiary host country context
factors influence HR practices found in foreign subsidiaries. MNC subsidiaries are
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Journal compilation 2007 Blackwell Publishing Ltd., 9600 Garsington Road, Oxford, OX4
2DQ, UK and 350 Main St, Malden, MA, 02148, USA.
Transferring HR practices within MNCs
operating in both global and local institutional contexts (Rosenzweig and Singh,
1991) and are thus subject to opposing pressures (Rosenzweig and Nohria, 1994) or
institutional duality (Kostova and Roth, 2002). The impact of regulatory, normative
and cognitive institutional pressures (Scott, 1995) on HR practices in MNCs have
been extensively recognised and documented in the literature (Rosenzweig and
Nohria, 1994; Gooderham et al., 1998; Kostova, 1999; Ferner et al., 2001; Kostova and
Roth, 2002; Ferner et al., 2005). We acknowledge the importance of institutional
contexts for the configuration of HR practices in MNCs. However, we know less
about the impact of organisational factors on MNC headquarters attempts to
introduce HR practices in overseas affiliates. We therefore turn our attention to
organisational factors impact on HR practice transfer.
The article has two main contributions. First, we examine three dimensions of
transfer outcomes implementation, internalisation and integration thereby
contributing to a more holistic understanding of the transfer of organisational
practices in the MNC context. Most studies have conceived transfer of practices as
implementation, typically examining the extent to which practices in foreign
subsidiaries resemble those of MNC headquarters (Rosenzweig and Nohria, 1994;
Hannon et al., 1995). Kostova (1999) expanded this view by also addressing the
attitudinal dimension of transfer, analysing the level of internalisation of the
transferred practice in the recipient units. A third dimension that has not been
examined concerns to what degree an introduced practice becomes integrated and
connections are established with other processes and practices in the recipient unit
(Lervik, 2005).
Second, we develop a comprehensive conceptual model of factors influencing the
outcome of the transfer process. We argue that transfer of HR practices is a social
process where the governance mechanisms used by the MNC, characteristics of the
subsidiary HR systems, the social relationship between the subsidiary and MNC
headquarters, and the transfer approach taken by headquarters management will
influence the outcome of the process. We draw upon in particular social capital
theory (Nahapiet and Ghoshal, 1998), studies of knowledge transfer in MNCs (Gupta
and Govindarajan, 2000; Minbaeva et al., 2003) and change management processes
in MNCs (Geppert et al., 2003) when developing propositions concerning the
relationship between the four sets of factors and the three different transfer
outcomes.
TRANSFER OF HR PRACTICES: IMITATION, INTERNALISATION
AND INTEGRATION
In developing our conceptual model, we propose that one can conceptualise three
dimensions or criteria for assessing whether transfer is accomplished: to what degree
practices are (1) implemented, (2) internalised and (3) integrated in the recipient unit.
These three dimensions of transfer constitute the dependent variables in our
conceptual model.
Implementation
Implementation refers to the empirically observable behaviours constituting the
enactment of the transferred practice (Kostova and Roth, 2002). We acknowledge that
2007 The Authors.
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Ingmar Bjrkman and Jon E. Lervik
transfer of an organisational practice might lead to changes beyond or different from

the planned prescriptions of headquarters. Organisational change does not always
lead to the expected outcomes (Beer et al., 1990). The research issue is to what degree
practices are transferred and whether headquarters prescriptions and intentions are
actually enacted in practice in various subunits. Most of the research on HRM in
MNC subsidiaries has focused on the degree to which subsidiary practices resemble
those of the parent organisation (e.g. Rosenzweig and Nohria, 1994; Hannon et al.,
1995; Bjrkman and Lu, 2001). Other studies in institutional sociology emphasise the
reshaping and reinvention that may also follow from transferring practices (Lervik
and Lunnan, 2004). We do not examine adaptation and reinvention in this article.
Our focus is on developing a more holistic understanding of transfer and examining
the extent to which headquarters prescriptions are enacted by subsidiaries for
purposes of efficiency, coordination and/or legitimacy in the MNC as a whole.
Internalisation
The second dimension concerns to what degree externally imposed rules become
internalised in the recipient unit, when it is taken for granted and accepted by
employees, and when the employees see the value of using this practice (Kostova,
1999). Successful transfer is not only about recipients replication of objectively
observable activities, but also a question of to what degree recipients attribute
meaning to the practice; to what degree employees in the recipient unit view the
practice as valuable for the unit and become committed to the practice (Kostova and
Roth, 2002: 217). The shared attitudes towards a practice are important for its
effectiveness and its continued effective operation in the subunit. A ritualistic
imitation of practices (Meyer and Rowan, 1991 [1977]), where recipients do not
believe in the practice or do not see the value of the practice, is likely to yield
disappointing results and is also more likely to be discontinued. Internalisation is
thus an important dimension of transfer.
It is unlikely that high levels of internalisation exist without the practices having
been implemented in the first place. Empirically, this assumption is supported by
Kostova and Roths (2002) study, where they found a correlation of 0.42 between
practice implementation and internalisation. Therefore, when analysing the level of
internalisation of certain HR practices, it seems appropriate to control for the level
of implementation, and we will incorporate this in the propositions developed later
in this article.
Integration
The third dimension concerns to what degree a transferred practice is connected and
linked up with existing routines and practices in the recipient location. Szulanski
(1996: 28) conceives the process of transfer as a partial replication of a web of
coordinating relationships. Transferring practices means severing the web of
linkages to other routines in the sender context and re-establishing linkages in the
recipient context. The importance of integration between various activities and
processes is also entertained in research on organisational routines (March and
Simon, 1958; Feldman and Pentland, 2003).
The notion of integration resonates with research on configurational HRM. This
perspective does not focus on individual HR policies and practices, but rather on
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how a set of HR practices in an organisation are internally consistent and working

in concert. External fit concerns the degree to which company strategy and HR
strategy are aligned (Miles and Snow, 1984; Snell et al., 1996), whereas internal fit or
internal integration concerns whether various HR practices such as HR planning,
recruiting, development, and compensation are aligned and work in concert (Delery
and Doty, 1996). Internal/external fit has predominantly been conceptualised and
examined at the firm level, but it has also been examined at the foreign subsidiary
level (Bird and Beechler, 1995).
A high degree of integration is the opposite of decoupling and ceremonial
adoption of a practice. A practice without implications for other managerial
processes and decisions can be considered as merely a ritualistic adoption. It may
merely be formal adoption to satisfy headquarters demand for compliance, but
where the adopted practice is decoupled from other ongoing activities to minimise
impact on operations in the recipient organisation (Brunsson, 1989). Integration
thus refers to a crucial criterion for accomplishing organisational objectives
for introducing practices related to efficiency and coordination. Surprisingly, the
literature has not examined integration of HR practices in the receiving unit. As
argued above concerning internalisation, when analysing the level of integration
of certain HR practices, it seems appropriate to control for the level of their
implementation in the subsidiary.
We will now examine factors proposed to influence the transfer of HR practices
to foreign MNC units, with separate propositions presented for each of the three
dimensions of the outcome of the transfer.
FACTORS INFLUENCING TRANSFER OF PRACTICES IN MNCs
In accounting for transfer of HR practices within MNCs, we focus on organisational
mechanisms and the role of actors in the transfer process. Existing research on HRM
in MNC subsidiaries has demonstrated that the external context within which
transfer takes place is important in terms of inter-organisational resource
dependencies, institutional duality, or cultural differences (Newman and Nollen,
1996; Kostova and Roth, 2002). However, recent research on knowledge transfer in
MNCs has examined a broader array of organisational processes and mechanisms
that influence transfer. Ghoshal and Bartlett (1988) examined how normative
integration mechanisms such as staff transfer, mentoring and international travel
influenced the creation and diffusion of innovations within MNCs. Gupta and
Govindarajan (2000) examined information sharing between MNC subunits and
found subunits motivation and capacity to share and receive knowledge to be
important. Bjrkman et al. (2004) analysed the impact of headquarters control
mechanisms on knowledge outflows in MNC subsidiaries.
This suggests that HR research can gain from borrowing from the cognate area of
knowledge transfer in MNCs. We identify four sets of antecedents that are likely to
influence transfer of HR practices in MNCs. First, we examine MNC governance
mechanisms that are likely to influence transfer. Second, we examine three
dimensions of social capital in headquarterssubsidiary relationships. Social capital
is important for knowledge transfer and innovation (Nahapiet and Ghoshal, 1998;
Tsai and Ghoshal, 1998). Third, we examine characteristics of the existing HR system
2007 The Authors.
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FIGURE 1 Conceptual model

Governance mechanisms
P1 Subsidiary autonomy
P2 Performance evaluation criterion
Intra-organisational social capital
P3 Interaction ties
P4 Shared cognition
P5 Trust
Transfer of
ofHR
HRM
practices
practices
Implementation
Internalization
Internalisation
Integration
Subsidiary HR system
P6 Satisfaction with existing HR practices
P7 HR capabilities
Headquarters management of the process
P8 Due process
P9 Change management
and HR capabilities in the subsidiary. Finally, we pay attention to headquarters

approach to managing the transfer process, and we propose two central aspects: due
process and change management efforts in transfer. The model is visualised in
Figure 1.
MNC governance mechanisms influencing transfer
Subsidiary autonomy MNCs are not total hierarchies, where power and control is
vested at the top, but can rather be seen as federal network organisations (Ghoshal and
Bartlett, 1990), where subsidiaries have independent power bases and varying degrees
of autonomy. Several studies have analysed the HR practices in MNC subsidiaries and
joint ventures from a resource dependence or bargaining power perspective. It has
been shown that the more foreign subsidiaries are dependent on the foreign parent
organisation and the higher equity held by the foreign parent organisation, the more
similar their HR practices are to those of the MNC home country (Hannon et al., 1995;
Bjrkman and Lu, 2001). Subunits with considerable autonomy in decision making are
less likely to enact corporate initiatives, whereas less autonomous subunits are more
likely to succumb to headquarters pressures to adopt practices.
A subsidiary with little autonomy may be forced into implementing headquarters
HR practices. However, recipients cannot be pressured to internalise the practice. On
the contrary, when foreign subsidiaries with little autonomy adopt certain practices
stipulated by MNC headquarters, this may be counterproductive when it comes to
internalisation of the practices because organisational members may view the
implementation of the practices as having been forced upon the unit (Kostova and
Roth, 2002). The level of integration of the HR practices is also likely to be lower in
subsidiaries with a low degree of autonomy than in units with a high level of
decision-making autonomy. In fact, it is probably easier for MNC headquarters to use
pressure on subsidiaries to adopt certain HR practices than to force the units to
integrate the practices with other organisational practices and processes. This leads
us to the following propositions:
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2007 The Authors.
Proposition 1a: The implementation of MNC headquarters HR practices in the

subsidiary will be negatively associated with the level of subsidiary autonomy
vis--vis MNC headquarters.
Proposition 1b: Controlling for the level of implementation, the internalisation
of MNC headquarters HR practices in the subsidiary will be positively
associated with the level of subsidiary autonomy vis--vis MNC headquarters.
Proposition 1c: Controlling for the level of implementation, the integration of
MNC headquarters HR practices in the subsidiary will be positively associated
with the level of subsidiary autonomy vis--vis MNC headquarters.
Performance evaluation criterion If subsidiary managers believe that the

implementation of specific HR practices explicitly or at least implicitly are used to
evaluate their performance, this is likely to influence their propensity to work
towards their implementation. In other words, subsidiary managers perception of
the importance attached by headquarters to the use of the specified HR practices as
a performance evaluation criterion is likely to motivate them to adopt these
practices. In addition to communicating the criteria used to assess the performance
of the subsidiary management, MNC headquarters may put in place financial
compensation systems that further stimulate the implementation of the practices
(Roth and ODonnell, 1996).
However, as with subsidiary autonomy, subsidiary employees cannot be
pressured to internalise the HR practice, and the use of extrinsic motivators may
be counterproductive when it comes to subsidiary employees attitudes towards
the practices. As it is easier for MNC headquarters to measure the degree of
implementation of the practice than their integration with subsidiary operations
more generally, the latter are not likely to be used. Hence, subsidiary managers may
engage in a ceremonial implementation of these practices (Meyer and Rowan, 1991
[1977]; Kostova and Roth, 2002) rather than integrate them with other practices and
processes in the unit. We consequently propose that:
subsidiary will be positively associated with the perceived importance of
implementation of the HR practices as a performance evaluation criterion.
of MNC headquarters HR practices in the subsidiary will be negatively
associated with the perceived importance of implementation of the HR practices
as a performance evaluation criterion.
MNC headquarters HR practices in the subsidiary will be negatively associated
with the perceived importance of implementation of the HR practices as a
performance evaluation criterion.
Intra-organisational social capital

Social capital theory has recently been proposed as a fruitful framework for
explaining knowledge transfer and integration between subunits (Nahapiet and
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Ghoshal, 1998). We draw upon this theory to examine how the relationship between
MNC headquarters and the subsidiary may influence the transfer of HR practices.
Nahapiet and Ghoshal (1998: 243) define social capital as the sum of the actual and
potential resources embedded within, available through, and derived from the
network of relationships possessed by an individual or social unit. They distinguish
between three interrelated dimensions of social capital: structural, relational and
cognitive. Tsai and Ghoshal (1998) showed that trust and shared vision
manifestations of the relational and cognitive dimensions of social capital influence
resource exchange among MNC business units. Furthermore, Kostova and Roth
(2002) found that subsidiaries trust in headquarters and identification with the
parent organisation was positively related to transfer of organisational practices to
overseas units.
The structural dimension of social capital is concerned mainly with the
interpersonal linkages between people or units, such as the existence of network ties
between actors; the pattern of ties in terms of e.g. density, connectivity; and the
existence of networks created for one purpose that may be used for another. The
cognitive dimension of social capital encompasses organisational phenomena such as
shared representations, interpretations, language, codes, narratives and systems of
meaning among parties. The relational dimension of social capital focuses on the
personal relationships, friendships and relations of mutual respect that individuals
have developed through a history of interactions and includes trust as a central
concept.
While there is some overlap between these three dimensions of social capital, they
are sufficiently distinct to be treated as separate constructs (Nahapiet and Ghoshal,
1998). In this article, we will use the concepts interaction ties, shared cognition and
trust when referring to the three dimensions of social capital in the MNC
headquarterssubsidiary relationship. Nahapiet and Ghoshal (1998) developed the
argument that each of the three dimensions has a direct impact on knowledge
sharing. Tsai and Ghoshal (1998) provided the first empirical application of the social
capital concept in the MNC context, and they argued that interaction ties and shared
cognitions influence resource exchange and combination with the MNC both directly
and through the trust that develops among MNC units. In this article, we follow
Nahapiet and Ghoshal (1998) in proposing a direct effect of interaction ties, shared
cognition and trust. The three dimensions of social capital are interrelated and each
of them is likely to have a direct influence on transfer of HR practices among MNC
units.
Interaction ties The structural dimension of social capital is closely related to what
in international management research is usually termed as normative (or social)
integration mechanisms. Intra-MNC integration mechanisms can broadly be split
into two groups: bureaucratic or formal ones and normative or informal ones
(Martinez and Jarillo, 1989). Bureaucratic mechanisms are considered to play an
important role in MNC management, constituting the necessary foundation for
controlling and coordinating operations. However, bureaucratic mechanisms may be
insufficient as means of control and coordination as the MNC grows larger and more
complex (Martinez and Jarillo, 1989). Therefore, they are increasingly complemented
(although not replaced) by more informal mechanisms aiming at increasing
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2007 The Authors.
normative integration, such as personnel rotation, short-term visits, participation in

joint training and management development programs, inter-unit meetings, and
participation in cross-unit teams, task forces and committees (ODonnell, 2000).
Through the use of informal integration mechanisms between MNC headquarters
and foreign subsidiaries, individuals are likely to develop interpersonal networks as
well as open and positive attitudes towards other nationalities and cultures (Edstrm
and Galbraith, 1977). Previous research indicates that the creation and transfer of
knowledge within the MNC builds on lateral and horizontal relationships between
units (Ghoshal and Bartlett, 1988; Gupta and Govindarajan, 1991) and individuals
(Tsai and Ghoshal, 1998). Therefore, in situations with at least some degree of
uncertainty among subsidiary actors concerning what constitutes efficient and
appropriate HR practices, intensive interaction ties are likely to be associated with
mimetic motives for adopting practices from headquarters. Possibly, MNC
headquarters management may also use the existence of interaction ties to put
pressure on the subsidiary to adopt certain practices.
Additionally, the existence of headquarterssubsidiary interaction ties is likely to
lower the costs of transfer of practices as relevant actors already know relevant
persons in the other organisation or at least whom to contact so as to facilitate the
implementation of the focal practices. The interaction ties may also make it easier for
subsidiary actors to obtain help in finding useful ways to integrate the focal HR
practices with other organisational practices and processes. We find it less likely that
the mere existence of inter-unit interaction ties will positively influence subsidiary
attitudes towards the HR practices; in fact, if pressure is used, it may even lead to
negative attitudes on the part of subsidiary actors (Kostova and Roth, 2002), and we
therefore posit a non-significant relationship to exist between interaction ties and
internalisation. Therefore,
subsidiary will be positively associated with the intensity of the interaction ties
between the focal subsidiary and MNC headquarters.
of MNC headquarters HR practices in the subsidiary will not be significantly
associated with the intensity of the interaction ties between the focal subsidiary
and MNC headquarters.
with the intensity of the interaction ties between the focal subsidiary and MNC
headquarters.
Shared cognition In our treatment of the cognitive dimension of social capital we

follow Nahapiet and Ghoshal (1998) in focusing on the extent to which subsidiary
and MNC headquarters management share language, vocabulary and narratives. To
the extent that subsidiary and MNC headquarters managers share a common
language and a common vocabulary, it facilitates not only the ability of subsidiary
managers to gain access to and obtain information from people in headquarters and
thereby recognise the value of the proposed HR practices. It also facilitates the
2007 The Authors.
327
subsidiarys capacity to gain insights from the other party that are important in order
to assimilate and integrate the practices in the own organisation (Nahapiet and
Ghoshal, 1998). The ability to communicate in a shared natural language such as
English or Chinese is important, as is the parties overlap in terms of vocabulary and
the meaning attached to highly specialised terms in a certain language. MNC
scholars have pointed out that the existence of shared company-specific
communication codes may serve as valuable assets and facilitate transfer of
knowledge among individuals and units (Kogut and Zander, 1996).
Shared narratives may contribute to the adoption of headquarters HR practices.
Stories, which can be full of detailed information, can facilitate the exchange of
practices and detailed tacit experience (Nahapiet and Ghoshal, 1998). Common
stories about the successful use of HR practices at headquarters as well as in other
MNC subsidiaries may lead to mimetic motivations for the implementation and
integration of practices in the subsidiary and may furthermore lower the costs
associated with their implementation and integration. Based on these arguments, the
following propositions are suggested:
subsidiary will be positively associated with the level of shared cognition
between the focal subsidiary and MNC headquarters.
associated with the level of shared cognition between the focal subsidiary and
MNC headquarters.
with the level of shared cognition between the focal subsidiary and MNC
headquarters.
Trust Central to most conceptualisations of trust in the literature on intra- and

inter-organisational trust are the notions of risk and vulnerability (Mayer and Davis,
1995). In the absence of risk, trust is irrelevant because there is no vulnerability. In
the MNC context, adopting a new practice from headquarters may have adverse
consequences. A subsidiary may perceive a risk that MNC headquarters does not
have the ability, integrity or benevolence (Mayer and Davis, 1995) to ascertain the
successful transfer of the practices. Instead, subsidiary actors may believe that efforts
at adopting the HR practices will lead to high transfer costs and/or a post-transfer
situation where the subsidiary is less efficient than with its old practices. When the
subsidiary management has high trust in MNC headquarters management, this may
shape the perception that the focal practice is indeed efficient and might therefore
trigger mimetic rather than coercive motives for implementation of the practice (Tsai
and Ghoshal, 1998; Kostova and Roth, 2002).
Several studies have confirmed that the existence of a trustful relationship
between the sender and the receiver of knowledge tends to enhance intra-MNC
knowledge transfer and exchange (e.g. Szulanski, 1996; Nahapiet and Ghoshal, 1998).
Kostova and Roth (2002) also found that subsidiary trust in headquarters and
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2007 The Authors.
identification with the parent organisation influenced the transfer of organisational

practices to foreign subsidiaries. Therefore, we put forward the following
propositions:
subsidiary will be positively associated with the level of subsidiary management
trust in MNC headquarters.
associated with the level of subsidiary management trust in MNC headquarters.
with the level of subsidiary management trust in MNC headquarters
Subsidiary HR system
Satisfaction with existing HR practices The subsidiary managements satisfaction
with its existing HR practices is likely to influence how they perceive and interpret
new HR practices proposed by MNC headquarters management. If they are highly
satisfied with existing practices, they are more unlikely to implement headquarters
practices in the subsidiary. Resistance towards replacing existing practices may be
particularly strong if these have been developed by subsidiary management, often
leading to a not-invented-here attitude and lack of motivation to implement the
proposed practices observed in a multitude of studies (e.g. Katz and Ellen, 1982;
Szulanski, 1996). The attitudinal reactions against the new HR practices are likely
to be particularly strong if perceived to be forced upon the subsidiary as a
replacement of its own well-functioning procedures and processes. Neither are
practices implemented through coercion likely to become integrated with other
subsidiary practices as subsidiary managers are unlikely to perceive them as
important for the performance of the unit. Thus, we expect that:
subsidiary will be negatively associated with the satisfaction with the practices
that they are replacing.
of MNC headquarters HR practices in the subsidiary will be negatively
associated with the satisfaction with the practices that they are replacing.
MNC headquarters HR practices in the subsidiary will be negatively associated
with the satisfaction with the practices that they are replacing.
HR capabilities The capabilities held by the receiving organisation are important

for its capacity to successfully receive practices (Cohen and Levinthal, 1990). Thus,
subsidiaries with high-level HR capabilities are more likely to effectively acquire and
assimilate the practices in their own organisation and are also more likely to exploit
them in their unit. Line managers are more likely to support the integration of new
2007 The Authors.
329
HR practices with other organisational practices in subsidiaries where the HR

capabilities are perceived by subsidiary management to be high, typically meaning
that the HR function is playing a strategic role in the unit (Truss et al., 2002). Hence,
ceteris paribus, both implementation and integration of HRM practices will probably
be more extensive in subsidiaries with extensive HR capabilities.
Controlling for the implementation of the adopted HR practices, the relationship
between subsidiary HR capabilities and internalisation of the practices is less clear.
However, internalisation of HR practices is expected to be relatively high in units
with strong beliefs in the organisations HR capabilities. Furthermore, integration of
received HR practices is likely to be higher in subsidiaries with higher levels of
pre-existing HR practices and capabilities. We therefore propose the following:
subsidiary will be positively associated with the perceived HR capabilities of the
subsidiary.
associated with the perceived HR capabilities of the subsidiary.
with the perceived HR capabilities of the subsidiary.
MNC headquarters management of the process

The three factors discussed above governance mechanisms, intra-organisational
social capital and the subsidiary HR system are characteristics of the MNC,
subunits and relationships between units. These factors are given social facts of the
organisation at the time when a transfer effort is initiated, and as such, these factors
constitute the structural context within which transfer takes place (Reed, 1997).
However, whether HR practices are transferred is not solely determined by the
structural context of transfer. The way in which the transfer process is carried out,
who is involved, and the efforts, skills and attitudes of change agents are also likely
to influence transfer. In particular, we are interested in how the headquarters
management of the process influences dimensions of transfer. We examine two
factors: due process and change management.
Due process The importance of due process has been stressed in the context of
MNC operations (Kim and Mauborgne, 1993), and this aspect is likely to be
important for the transfer of practices to foreign subsidiaries. Foreign subsidiary
managers are more likely to accept decisions on HR practices to be implemented in
their units if they have been involved in the process of decisions and design on HR
practices to be used in different parts of the MNC. Likewise, if subsidiary managers
are provided in-depth explanations for decisions, decisions are more likely to be
implemented (Kim and Mauborgne, 1993). Perceptions of fair process are likely to
influence subsidiary management attitudes towards the focal HR practices. Some
support for this conjecture has been obtained in research indicating that the use of
international project teams may be beneficial for the development and diffusion of
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2007 The Authors.
best HR practices in the MNC (Martin and Beaumont, 1998). Based on these
arguments, we put forward these propositions:
subsidiary will be positively associated with the perception of fair process when
the practices have been decided upon.
associated with the perception of fair process when the practices have been
decided upon.
with the perception of fair process when the practices have been decided upon.
Change management The nature of organisational practices suggests that in

addition to due process also other efforts at managing the process of transfer to foreign
subsidiaries may make a difference. Organisational practices are people dependent
and hinge on the interpretations and attitudes of recipients. Martin and Beaumont
(2001) developed a process model of strategic HR change in MNCs and suggested key
factors that contribute to the successful transfer of HR policies and cultural change.
They emphasise the role of change management champions either from headquarters
or subsidiaries, the importance of constructing a persuasive discourse of change in
communicating the need for change, and drawing an attractive image of the future
state of the organisation (see e.g. Kotter, 1996). Case studies of practice transfer in
MNCs emphasise the role of initiative, change management and rhetorical devices
(Martin and Beaumont, 1998; Geppert et al., 2003).
We draw here upon the literature on organisational change and on leadership.
Various aspects of leadership and management are important in organisational
change. Nadler and Tushman (1990) distinguished between three sets of leadership
activities important for organisational change: (1) charismatic leadership
(envisioning, energising and enabling) that creates understanding and direction; (2)
instrumental leadership (structuring, controlling and rewarding) to ensure capacity
for change; and (3) institutional leadership (ensuring changes stick). Another aspect
that has been emphasised in managing change processes is managers ability to
manage meaning through shaping and reinterpreting stories about the firms history
and purpose (Feldman, 1990) and through using rhetoric and language as a resource
for directing change efforts (Finstad, 1998).
Psychological research on leadership especially focuses on transformational
leadership, which is shown to have a significant influence on various subjective and
objective measures of performance in organisations (Podsakoff et al., 1990; Antonakis
et al., 2003). Transformational leadership also matters in processes of organisational
change (Eisenbach et al., 1999). However, this literature has a clear individualist
perspective. Beyer (1999) argues instead for a sociological perspective on leadership
as collective and relational, and she notes that it seems a romantic oversimplification
to describe organisations as if they had only one leader as a source of leadership
(p. 318). We view change management as a collective phenomenon and argue that
2007 The Authors.
331
the demonstrated attitudes and activities of the headquarters managers towards

facilitating the transfer of HR practices to the focal subunit will influence subsidiary
management interpretations and attitudes towards the practices. We argue that in the
context of transferring organisational practices, what matters is the combined
influence of managers perceived to (1) believe that the proposed HR practices will
help the subsidiary perform better, and (2) make a valuable effort to make the
practice work in the focal subunit. Our final propositions are as follows:
subsidiary will be positively associated with the perceived headquarters change
management behaviours and attitudes.
associated with the perceived headquarters change management behaviours and
attitudes.
with the perceived headquarters change management behaviours and attitudes.
DISCUSSION AND CONCLUSION

In this article, we have developed a model of factors influencing the transfer of
organisational practices to MNC subsidiaries abroad with a particular focus on HR
practices. The conceptual model developed here intends to extend current research
in two ways. First, we have proposed a more holistic conception of what transfer is:
encompassing implementation, internalisation and integration. This is an extension
from existing research that has focused mainly on implementation in terms of
adoption of particular practices or subsidiary practices resemblance to the practices
of headquarters. Second, we have focused on organisational mechanisms and
processes and on the role of actors in the transfer process. Existing research on HR
practice transfer in MNCs has given much attention to cultural and institutional
differences. Although important, we suggest that organisation-internal factors also
deserve more attention. In this article, we draw on related research on social capital,
knowledge transfer and change management in MNCs, and it is our belief that this
constitutes a fruitful agenda for further research regarding transfer of HR practices
in MNCs. It is our hope that the propositions presented here will inspire researchers
to do further conceptual and empirical research on this important topic in the years
ahead.
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Transferring HR practices within

ultinational corporations (MNCs) engage in transfer of organisational

HUMAN RESOURCE MANAGEMENT JOURNAL, VOL 17 NO 4, 2007

2007 The Authors.

Transferring HR practices within MNCs

Ingmar Bjrkman and Jon E. Lervik

transfer of an organisational practice might lead to changes beyond or different from

HUMAN RESOURCE MANAGEMENT JOURNAL, VOL 17 NO 4, 2007

Transferring HR practices within MNCs

how a set of HR practices in an organisation are internally consistent and working

Ingmar Bjrkman and Jon E. Lervik

FIGURE 1 Conceptual model

and HR capabilities in the subsidiary. Finally, we pay attention to headquarters

HUMAN RESOURCE MANAGEMENT JOURNAL, VOL 17 NO 4, 2007

Transferring HR practices within MNCs

Proposition 1a: The implementation of MNC headquarters HR practices in the

Performance evaluation criterion If subsidiary managers believe that the

Intra-organisational social capital

Ingmar Bjrkman and Jon E. Lervik

HUMAN RESOURCE MANAGEMENT JOURNAL, VOL 17 NO 4, 2007

Transferring HR practices within MNCs

normative integration, such as personnel rotation, short-term visits, participation in

Shared cognition In our treatment of the cognitive dimension of social capital we

Ingmar Bjrkman and Jon E. Lervik

Trust Central to most conceptualisations of trust in the literature on intra- and

HUMAN RESOURCE MANAGEMENT JOURNAL, VOL 17 NO 4, 2007

Transferring HR practices within MNCs

identification with the parent organisation influenced the transfer of organisational

HR capabilities The capabilities held by the receiving organisation are important

Ingmar Bjrkman and Jon E. Lervik

HR practices with other organisational practices in subsidiaries where the HR

MNC headquarters management of the process

HUMAN RESOURCE MANAGEMENT JOURNAL, VOL 17 NO 4, 2007

Transferring HR practices within MNCs

Change management The nature of organisational practices suggests that in

Ingmar Bjrkman and Jon E. Lervik

the demonstrated attitudes and activities of the headquarters managers towards

DISCUSSION AND CONCLUSION

HUMAN RESOURCE MANAGEMENT JOURNAL, VOL 17 NO 4, 2007

Transferring HR practices within MNCs

HUMAN RESOURCE MANAGEMENT JOURNAL, VOL 17 NO 4, 2007

Ingmar Bjrkman and Jon E. Lervik

Katz, R. and Ellen, T.J. (1982). A knowledge-based intervention for promoting

HUMAN RESOURCE MANAGEMENT JOURNAL, VOL 17 NO 4, 2007

Transferring HR practices within MNCs

HUMAN RESOURCE MANAGEMENT JOURNAL, VOL 17 NO 4, 2007

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