Coordinated vs. liberal market HRM: the impact of institutionalization on multinational firms

Abstract

The impact of institutionalized contexts on the HRM activities of multinational firms has become a focus of increasing attention in recent literature. However, theories of how different types of business systems or market economies may influence HRM, and the impact of context on multinational corporations (MNCs) operating under these different conditions are still not fully tested. In this paper the influence of the extent of institutional embeddedness of different national contexts (based on varieties of capitalism theory) on the HRM activities of MNCs is explored through the use of extensive survey data from four countries: the UK, Germany, the Netherlands and Sweden. Evidence is found of differences in HRM practices between foreign- and domestic-owned MNCs, as well as between MNCs and domestic organizations. Although less than expected, the restricted amount of leeway within a coordinated economy also appears to have differential effects on the various HRM practices explored in these foreign and domestic organizations.

Keywords:

• context
• Europe
• institutional theories
• international human resource management
• multinational corporations

Notes

1. We have included the public sector in this analysis not just to ensure a direct comparison with the Varieties of Capitalism literature, but also because we believe that this gives a more accurate picture of HRM, and national embeddedness, in each country. There is a danger that this may blur differences between private sector organizations, especially among both foreign and indigenous MNCs, but we control for sector to ensure reliability of the comparisons that we do make.