HR's strategic role within MNCs: helping build social capital in Latin America

Abstract

In this article, we adopt a holistic perspective in considering the impact of the country's environment as well as the multinational corporations (MNCs) strategy on human resource (HR) practices. More importantly, we argue that within MNCs human resource management (HRM) is playing a central role in the process of balancing local and global forces. HR can be critical in helping MNCs' deal with local differences while also helping the company implement practices that are critical for its global strategy. Specifically, we argue that HR plays a key role in developing social capital, which may provide the necessary ‘substitutes’ for formal control that would otherwise be neglected. Our contribution lies primarily in outlining how this new role of creating human capital confers on HR the task of filtering mission-critical practices through a ‘localization mesh’ that ensures success. In addition, given the importance of social capital as an informal mechanism that allows MNCs to coordinate and integrate activities, we suggest ways in which an MNC can build social capital within the context of the Latin American pan-regional cultural values.

Keywords:

• MNC
• human resources
• social capital
• Latin America

Notes

1 Although many researchers argue that each country in Latin America should be dealt with separately, much research has shown commonalities in values within the region. Based on Hofstede's (1980) research, Latin American countries tend to be collectivist, high on power distance, as well as high on uncertainty avoidance. In addition, most Latin American countries are considered high-context in their communication style.