Societal institutions and HRM practices: an analysis of four European multinational subsidiaries in Bangladesh

Abstract

Using the ‘societal-effect’ approach, a variant of the institutional theory developed and tested in Europe, this study investigates the impact of societal institutions on human resource management (HRM) practices of European multinational subsidiaries in Bangladesh, which is now on the list of the Next-11 economies of the world. In-depth case studies of four European multinational subsidiaries revealed the presence of different degrees of influence – partly attributable to societal effect – on the human resource practices of these subsidiaries. Our study added a new dimension to the interface between the strong and weak institutions and how such interfacing accords both legitimacy and reverse legitimacy to MNC subsidiaries and their societal institutions respectively. Another interesting finding of the study is the emergence of political system as a societal institution and, hence, a determinant of HRM practices in these subsidiaries. The study's implications are given.

Keywords:

• Bangladesh
• HRM practices
• multinational subsidiaries
• Next-Eleven countries
• ‘societal-effect’ approach

Notes

^†Both authors contributed equally to this paper. Their names appear in alphabetical order.

1. Education in Bangladesh has three major stages: primary, secondary, and higher. The entry age for primary education is six. Primary education spans over five years, while secondary education spans seven, with three sub-stages: three years of junior secondary, two years of secondary, and two years of higher secondary. The certificates awarded by a regional board, known as the Intermediate and Secondary Education Board, following the successful passing of the secondary and higher secondary exams, respectively called the Secondary School Certificate (SSC) and Higher Secondary Certificate (HSC). Higher secondary is followed by graduate-level education in general, technical, engineering, agriculture, business, and medical streams. These streams require five to six years for a Master's degree.In the general education stream, higher secondary is followed by four years of college or university education through the Pass/Honours route. A Master's degree requires one or two years for holders of a Bachelor's degree with Honours or Pass, respectively. Higher education in the technical area also starts after higher secondary level. Engineering, agriculture, business, medical, and information and communications technology are the major technical education areas. Except for medicine, each area requires a five-year course of study for the first degree.