Don't Worry, I Know What I'm Doing: Talent Management Practices between South Korean and Foreign-Owned Firms

Abstract

It is frequently argued that Talent Management (TM) has been derived from Western, and there are gaps between spread westernized TM format and contexts of non-western countries when TM is adopted and practiced in a business daily basis. The cultural and institutional gaps to adopt TM are analyzed in this paper through comparing the differences in TM practices between foreign owned subsidiaries and local firms in South Korea using an institutional theory lens. A mixed method approach including 55 semi-structured interviews from South Korean and non-South Korean employees and 155 survey responses is employed. This paper results revealed the clear distinctions that indigenous firms practice inclusive and implicit TM, whereas foreign firms practice global standard exclusive TM program South Korean firms are developing very specific approaches within their traditional cultures such as collectivism and Confucianism to manage talent, and also local employees evaluate this tailored TM approach is effective like other foreign MNCs’ exclusive TM approach. Firms experience and respond to the external exigencies in very different ways and tendencies for isomorphism cannot be assumed.

Keywords:

• Foreign firms
• institutional theory
• local firms
• mixed methods
• South Korea
• talent management

Introduction

Talent management (TM) is evolving from a marginal topic to one of global importance (Dries 2013, Scullion and Collings 2016; Schuler, Tarique, and Khilji 2019). Despite its growing popularity, academic observations suggest a continued absence of theory building and limited examination of the application of TM in non-Western countries (Lewis and Heckman 2006; Collings and Mellahi 2009; Skuza, Scullion, and Mcdonnell 2013; Thunnissen, Boselie, and Fruytier 2013; Vaiman, Collings, and Scullion 2017; Meyers et al. 2020). The topic of TM originates from the US context (Michaels, Handfield-Jones, and Axelrod 2001), a developed capitalist set-up where institutions are well established and influenced by the assumption is that a firms’ profitability improves under Western liberalized regimes as firms respond strategically and flexibly and resolve imperfect internal HR controls (Coughlan and Schmidt 1985). Therefore, there was a scholarly calling to empirically investigate country-specific TM studies (particularly, emerging economics) as many angles as possible (Dries 2013), in order to contextualize and understand the diverse nature of TM (Thunnissen and Buttiens 2017). Talent management scholars found that TM is not a universal management system, rather it is highly contextual (see IJHRM special issue on context matters – Gallardo-Gallardo, Thunnissen and Scullion, 2020) and dependent upon a combination of historical, cultural and institutional factors (Outila, Vaiman, and Holden 2019). In response, TM studies in the national context has been significantly increased. For example, Outila, Vaiman, and Holden (2019) highlight that the private sector threat to the Kremlin stymies the development of TM approaches in the Russian context. In China, Cooke and Wang (2019) suggest a system of TM is part of China’s mandarin legacy, and that talent pipelines and educational attainment remain a central feature of Chinese management systems despite the complications caused by the role of Guanxi. In India, a shrinking IT sector and shifts toward cloud technologies create pressure to retrain almost 60 per cent of the working population leading to increasing rationalization, and problems of a “talent leadership crunch” (Bhatnagar and Budhwar 2019, p. 96). In Oman, high unemployment rates amongst locals have forced the creation of inclusive talent pipelines as organizations are forced to hire local employees over expatriates (Glaister, Al Amri, and Spicer 2021).

While the contextual talent management literature is evolving, “there has been disappointing progress in capturing contextual issues in empirical TM research” (Gallardo-Gallardo, Thunnissen and Scullion 2020, p. 458), and “less attention on theories that explain these contextual differences” (Farndale, Brewster, and Mayrhofer 2019, p. 100). The increasing evidences show that companies from less developed countries mimic and disseminate HRM best practices, including TM, from a developed economy (Chung, Brewster and Bozkurt 2020). The best practices are particularly dominated by the US-oriented models (Boselie, Paauwe and Richardson 2003).

Companies from newly industrialized or emerging economies typically tend to borrow global HRM best practices from the United States which involves dominance effects (Chung, Brewster and Bozkurt 2020). However, embedded national contexts are different. Thus, there have been questioned whether the best practices can be replicated and perform well in different institutional contexts, as high performance and improved labor productivity are the main purpose to operate HRM best practices (Arthur 1994; Huselid 1995; Koch and McGrath 1996). Therefore, transferring and adaptation of US based best practices have been extensively researched in the international HRM field (Cooke et al. 2019) with the ongoing hot debates regarding the approach, such as convergence vs. divergence, universalism (standardization) vs. localization, and country-of-origin, dominance vs. localization effects and these are still controversial (Demirbag, Tatoglu and Wilkinson 2016; Pudelko and Harzing 2007).

The aim of this paper is therefore to understand how US-style exclusive TM practices are adopted into new non-Western settings, South Korea (hereafter Korea) through comparing the key differences in the perceptions and practices of TM between local and foreign firms operating within Korea. Korea represents a particularly interesting underexplored context as a newly industrialized and emergent country (Park et al. 2022). Cooke (2019) described emergent countries as “relatively more developed economies within the developing country category” (p. 439) such as Taiwan and Singapore. In the early 1950s, Korea was poorer than many sub-Saharan African countries, as an agricultural country with poor natural resources and few land (Ranis 1995). The foreign aid (particularly, US aid) was the only national income after World War II under a colony of Japan and the Korean War (Kim and Kim 2012). In 1960, however, labor-intensive and export-oriented industries, through cheap, unskilled but efficient and literate workers (Rodrik, Grossman, and Norman 1995; Ranis 1995), drove Korea’s rapid economic success (namely, “Miracle on the Han River”) (Lee, Laplaca, and Rassekh 2008; Holliday 2000). Korea is now ranked 15th from 140 countries in the Global Competitiveness Index, ranking first place for ICT adoptions; first place for macro-economic stability; third place for its enabling environment; eighth for its innovation capability and twenty-seventh for its skills (Schwab 2018).

Korea has undergone profound reforms since 1997 including the neo liberalization of economic governance, transformation of Chaebol¹ structures and increasing labor market flexibility (Lee 2019). Talent management was a means through which the Korean government sought to adopt Western management practices to improve organizational practice and emphasize individual performance and abilities (Adler 2001, Bae, Chen, and Rowley 2011). Korean firms were not ready when TM was pressured to initiate by the government, and the firms faced the high level of difficulties and dilemmas to practice TM within the companies (Park 2020). Confucian HRM logic and structure (e.g., a seniority-based lifetime employment) had to be replaced by market-driven’ discriminated TM practices (e.g., performance-based fixed-term labor contracts) to conform the pressure by government (Reay and Hinings 2009; Kitchener 2002; Hensmans 2003).

The contribution of this paper is two-fold. First, this paper rejects the concepts of “isomorphism” from the institutional theory which has been rarely employed in the TM field. Festing and Schafer (2014) asserted that theoretical underpinnings of TM are still lacking so employing various theoretical insights and conduct empirical studies in the field were encouraged to advance TM knowledge. This paper makes a contribution in filling this gap. Second, this is the first study to compare and examine TM in local and foreign-owned companies within the context of Korea to understand how US-style exclusive TM practices are adopted into new non-Western settings. This study shows how TM perception and practices are affected by the types of ownerships during the institutional transition period in the same national context. This paper is structured as follows: first institutional theory is examined and then the arrival of TM in the Korean context is analyzed. The research methods and findings are followed by a discussion and conclusion. A series of implications, limitations and recommendations for further research are presented.

Theoretical background of the study

Institutional theory and isomorphism

The institutional perspective evolved during the early 1990s and since Wright and Mcmahan (1992) encouraged the use of institutional theory in HRM research in order to understand the determinants of HRM practices. Since this time, institutional theory has been widely used to shed light on a wide variety of organizational phenomena (Scott 2001; Björkman 2006). In particular, the theory has been employed for HRM practices in foreign-owned subsidiaries of MNCs (Fenton-O'Creevy, Gooderham, and Nordhaug 2004) and comparative studies of HRM practices across other countries’ contexts (Gooderham, Nordhaug, and Ringdal 1999).

From the organizational perspective, the institutional environment, normative pressures from the state, socially constructed beliefs, rules and norms exert over organizations (Zucker 1987; Björkman 2006). Organizations are under pressure to adapt and be consistent with their institutional environment (Mäkelä, Björkman, and Ehrnrooth 2010; Björkman 2006). Although those forms are not necessarily connected to more effective organizational outcomes, organizations conform and adopt practices or routines in order to gain legitimacy and acceptance which facilitate their survival (Meyer and Rowan 1977; Björkman 2006, Mandis 2013).

The ideas of new institutionalism ask why organizations look alike (Dimaggio and Powell 1983; Meyer and Rowan 1977; Zucker 1977) and emphasize legitimacy (Greenwood et al. 2008). Little attention had been given to understanding the isomorphic diffusion of processes of western-style HRM practice (Björkman 2006). Consequently, institutional process related research increased. According to Greenwood, Hinings, and Whetten (2014), institutional related empirical papers were concerned with institutional processes, rather than explaining how organizations are actually structured and managed within contexts. This focus has been criticized and it is now time to rethink this shift and focus on holistic studies of organizations (Greenwood, Hinings, and Whetten 2014). This paper emphasizes not only the practice of TM but also examines how organizations are designed and manage TM.

As a central assumption in institutional theory, organizations share the same environment (Dimaggio and Powell 1983; Westney 1993) including the formal rules and unwritten norms for efficiency and legitimacy (Marsden 1999) will gradually show similar features and become “isomorphic” with each other (Kostova and Roth 2002). Dimaggio and Powell (1983) discovered three types of isomorphism; coercive, mimetic and normative isomorphism, and these were particularly applied to foreign subsidiaries’ HRM and TM practices (Björkman, 2006). For example, Preece, Iles, and Chuai (2011) transposed Dimaggio and Powell (1983)’s three institutional isomorphism mechanisms to TM in the Chinese context.

However, importantly, this homogeneity or similarity has been recently questioned because organizations are not all alike (Greenwood, Hinings, and Whetten 2014) and this has been ignored (Aldrich 2009; Mckelvey and Aldrich 1983). This is the reason why gaining the appropriate differentiation (Lawrence and Lorsch 1967) and comparative analysis in organizational studies is essential. Organizations differentiate and something special or distinction (Greenwood, Hinings, and Whetten 2014), suggesting that comparative approaches need to be more sensitive (King, Felin, and Whetten 2009). This research identifies the differences through comparing TM with variables of firm ownership and size (Van de Ven, Ganco, and Hinings 2013) because organizational forms may differ within their institutional context.

Literature review

Country-specific talent management

Talent management has been one of the most extensively researched theme in the HRM field, with a great popularity (Collings and Mellahi 2009), because academics and practitioners perceive talented employees as competitive advantage, consequently TM is a key to firm’s success (Tyskbo 2021).

In contrast, an inclusive approach is considered to be more egalitarian, holistic and humanistic where “everyone” has capabilities and contributes to the organization (Ashton and Morton, 2005; Lewis and Heckman 2006; Chuai, Preece, and Iles 2008; Iles, Preece, and Chuai 2010). Therefore, talent can be viewed to refer to the entire employee population (Silzer and Dowell 2010) because everyone possess their own unique nature, given from birth (Buckingham and Vosburgh 2001).

The topic of TM originates from the US context (Michaels, Handfield-Jones, and Axelrod 2001), a developed capitalist set-up where institutions are well established and influenced by the assumption is that a firms’ profitability improves under Western liberalized regimes as firms respond strategically and flexibly and resolve imperfect internal HR controls (Coughlan and Schmidt 1985).

An inclusive approach is considered to be more egalitarian where “everyone” has capabilities and contributes to the organization (Ashton and Morton, 2005; Lewis and Heckman 2006; Chuai, Preece, and Iles 2008; Iles, Preece, and Chuai 2010). Therefore talent can be viewed to refer to the entire employee population.

However, its implementation in companies tends to be exclusive in nature, i.e. selectively applied to those considered high performing or high potential (Gallardo-Gallardo and Thunnissen 2016, p. 49). Under the exclusive approach, organizations treat talented employees differently to other normal employees which is called “segmentation” which is a fundamental factor in TM (Ledford and Kochanski 2004).

Indeed, Mcdonnell et al. (2017) also clearly confirmed “the ultimate goal of TM as the sustainable organizational performance” (p. 116), because talented employees are a firm’s competitive advantage (Collings and Mellahi 2009).

Empirical TM studies also found that TM is positively related to firm performance (Collings, Mellahi, and Cascio 2019; Glaister et al. 2018) via the creation of dynamic capabilities (Glaister et al. 2018), the increased sharing of knowledge (Chadee and Raman 2012) and a more strategic approach to managing people (Tansley et al. 2007; Stahl et al. 2012) and therefore the active monitoring of strategic goals (Silzer and Dowell 2010).

Yet, the existence of a set of TM practices that are taken for granted as being related to superior firm performance is not likely to be uniform across nations, particularly, in the emerging countries contexts (Björkman, Fey, and Park 2007) because of cultural and institutional distance (Kostova 1999). The usefulness and subsequent embrace of exclusive, Western forms of TM depend upon country context and practices that might work in the West may not have the same desired effects when applied to the Korean business system (Allen 2014).

The country-specific TM studies have been advanced, however it often shows a lack of contextual sensitivity, although the national dissimilarities and the contextual differences largely influence to the ways to adopt HRM practices in organizations (Tyskbo 2021). Therefore, more empirical research incorporating an awareness of dynamic process to implement TM in non-Western countries is needed. In this article, we build on certain discourse put forward in the institutional theories as well as TM literature in order to fill these limitations.

The Korean context

The case of Korean companies is appropriate to deserve particular attention in theorizing the experiences of TM adoption in emerging economies contexts. Their experiences can not only tell us how convergence (or universalism, dominance effect) is shifted to divergence (or localization) approach in emerging contexts, but also help us anticipate the changing nature of transferring and adaptation modes in general as emerging MNEs (EMNEs) cannot be ignored nowadays (Chung, Brewster and Bozkurt 2020; Khanna and Palepu 2006).

The dominant culture of Korea can be described as collectivism, commitment, paternalism and seniority under Confucianism prevailed and group harmony was valued over the maximization of profits (Kim and Gray 2008). The change reflects the country’s the International Monetary Fund (IMF) induced shift from “harmonious community” to a “Talent management arrived in Korea after the 1997 Asian financial crisis along with other Western management practices” (e.g., performance-based wage systems and merit-based promotions) as these were introduced and guided by the government (Park 2020).

Korean firms had to conform to one governance structure over another, Korean companies shifted to the market-driven Western HRM perspectives, and the existing old and legitimized practices (e.g., seniority-based payment, egalitarian HRM) were weakened. Consequently, the local firms and industries have experienced significant conflict and resistance to maintain the existing beliefs in Korea due to the fear of losing their stability and familiarity (Kang and Yanadori 2011) as Thornton, Jones, and Kury’s (2005) study also observed.

However, interestingly, MNCs in Korea were not severely affected unlike domestic firms after the 1997 Asian Financial Crisis. This is what Greenwood et al. (2011) contend that not all organizations are affected equally by institutional pressures (Thunnissen and Buttiens 2017). Bae and Rowley (2001) compared HRM system level between MNCs (such as American, European and Japanese firms) in Korea and local firms in 1996 and 2000. The criteria for comparison included: (1) Recruitment, (2) Job Security, (3) Training and Development, (4) Remuneration based on performance, and (5) Employee Participation. The findings highlighted that local firms’ score on “Job Security” decreased between 1996 and 2000, whereas the score of foreign subsidiaries in Korea increased (p. 93).

Bae and Rowley (2001) claimed two reasons why foreign subsidiaries’ job security was not affected by Asian Financial Crisis; firstly, IMF did not strongly recommend the labor-market flexibility and downsizing in foreign MNCs’ subsidiaries as much as local companies, secondly, foreign firms already used external labor markets. Thus it can be assumed that adopting TM practices (seeking talent in external labor markets, retention through job security) was easier for subsidiaries located in Korea than for local firms, as such practices tend to be an outcome of trial and error in alternate investment locations (Latukha 2015).

Meanwhile, recent studies found that Korean employees become individualistic and competitive, as the institutional norms have been pressured to change and adopt the global standard practices (for example, USA-style), particularly after Asian financial crisis in 1997 (Kim 2019). Collectivism still remains to work in the workplace, at the same time, employees are familiar to the Western-style individualized HRM as it has been accepted and become a new normal which is a dynamic collectivism which individualistic and collectivistic values are dually activated (Hamamura 2012, Kim and Hamilton-Hart 2022).

Therefore, it leads to the below research questions:

1. How are the necessity of TM adoption perceived differently between local and foreign firms in Korea?

2. To what extent do the existing cultural matters influence on exclusive TM practices?

3. How do employees evaluate on TM practices?

Methodology

The exploratory sequential mixed method design (Creswell and Clark 2011) was used in this study. The qualitative approach seeks out first and second research questions how local employees perceive the necessity of exclusive TM adoption, and the quantitative approach helps to answer third research question to see how employees from local and foreign firms assess their TM effectiveness. Mixed methods can strengthen qualitative research findings (Maxwell and Mittapalli 2010) and a combination of quantitative and qualitative techniques will help to counteract the weaknesses of individual methods and build stronger conclusions (Johnson and Onwuegbuzie 2004).

Fifty-five semi-structured interviews were conducted within thirty firms between August and December 2015. These included Korean and non-Korean interviewees including CEOs, executives, HR, line managers and general employees. All interviews were tape-recorded and transcribed by the researcher to build familiarity (Bazeley and Jackson 2013) as transcribing involves transforming from an oral language to a written language with own set of rules (Kvale 2008). Tables 1 and 2 show the participants’ characteristics.

Table 1. Interviewee profile.

Sectors		Nationalities
Healthcare	12	Korean	39
Beverage	6	Non-Korean	16
Chemical	6
Manufacturing	20
Service	11
Types of company		Gender
Foreign	23	Male	47
Local	32	Female	8

Table 2. Interviewee characteristics.

Interviewee	Foreign/Local firm	Position	Company type	Korean/Non-Korean
H1-F	F	Executive	Healthcare
H2-F	F	Executive	Healthcare
H3-F	F	HR manager	Healthcare
H4-F	F	Assistant Manager	Healthcare
H5-F	F	President	Healthcare
H6-F	F	Senior Manager	Healthcare
H7-F	F	Director	Healthcare
H8-F	F	HR Manager	Healthcare
H9-F	F	Middle Manager	Healthcare
H10	L	Director of HR	Healthcare
H11	L	Assistant HR Manager	Healthcare
H12-F-NK	F	Head of HR	Healthcare	Hong Kong
H13-F-NK	F	Head of HR	Healthcare	Japan
M1	L	Middle Manager	Manufacturing
M2	L	Manager	Manufacturing
M3	L	Head of HR	Manufacturing
M4	L	Manager	Manufacturing
M5	L	Manager	Manufacturing
M6	L	Head of HR	Manufacturing
M7	L	Senior Manager	Manufacturing
M8	L	Manager	Manufacturing
M9	L	Vice President	Manufacturing
M10	L	Middle Manager	Manufacturing
M11	L	Middle Manager	Manufacturing
M12-F	F	HR Middle Manager	Manufacturing
M13-F	F	Senior Manager	Manufacturing
M14-F-NK	F	Director	Manufacturing	German
M15-NK	L	Assistant Manager	Manufacturing	Chinese
M16-NK	L	Senior Manager	Manufacturing	Japan
M17-NK	L	Manager	Manufacturing	Cote d'Ivoire
M18-NK	L	Assistant Manager	Manufacturing	Uzbekistan
M19-NK	L	Senior Manager	Manufacturing	USA
C1	L	Manager	Chemical
C2	L	Middle Manager	Chemical
C3	L	Middle Manager	Chemical
C4	L	Assistant Manager	Chemical
C5-F	F	Senior Manager	Chemical
C6--NK	L	Manager	Chemical	India
S1	L	Executive	Service
S2	L	Middle Manager	Service
S3	L	Manager	Service
S4	L	Assistant Manager	Service
S5-F	F	Executive	Service
S6-F--NK	F	Director	Service	USA
S7-NK	L	Senior Manager	Service	USA
S8-NK	L	Senior Manager	Service	USA
S9-NK	L	Vice President	Service	USA
S10-NK	L	Vice President	Service	USA
S11-NK	L	Senior Manager	Service	Canada
B1	L	Assistant Manager	Beverage
B2-F	F	Head of HR	Beverage
B3-F	F	Manager	Beverage
B4-F	F	Head of Marketing	Beverage
B5-F	F	Assistant Manager	Beverage
B6-F-NK	F	Head of Finance	Beverage	India

* F’ is female; ‘NK’ is non-Korean (e.g., H12-F-NK), otherwise Korean male.

The data-set was analyzed using Thematic analysis though manually, through Nvivo version 11, and cognitive mapping. The primary data were coded sentence by sentence to discover themes from the data (Rubin and Rubin 2012). Free-Mind software was finally utilized to confirm validity and reliability of conducted cognitive mapping analysis, and reduce researcher bias (Carter et al. 2014) as there is an increasing academic inquiry to adopt the validity and reliability process of qualitative.

The qualitative data findings were then augmented by a quantitative survey. Responses were gathered via a snowball sampling technique of companies listed on the stock exchange, KOSPI (Korea Composite Stock Price Index), HR professionals whose companies hold a membership of Korea Human Resource Management Association because these companies show their willingness to adopt sophisticated HRM systems (such as TM). The interview participants from the first phase of the study are also participated. Interviews take place in late 2016 and late 2017. Total 161 questionnaires were collected from 56 companies. The questionnaires were in Korean but were originally constructed in English. Conventional translation and back-translation were employed (Brislin 1980). The results were identified in the descriptive analysis via SPSS, and also t-test was carried out to examine possible differences between local and foreign owned subsidiaries. Finally, the results of qualitative and quantitative were integrated, not just for simply on the thinking of “more is better” (Bryman and Bell 2011) but to triangulate, expand the breadth of a study, and complement inform the other analytical strand (Greene, Caracelli, and Graham 1989). Key characteristics of survey respondents and their companies are presented in Table 3.

Table 3. Survey respondents’ profile.

Gender		Ownership type
Male	64	Local firms	55.9
Female	36	Foreign firms	42.9
Age group		Status
Less than 30 years	15.8	CEO	2.6
31–35 years	23.4	Executives	6.5
36–40 years	27.8	Upper Managers	7.7
41–45 years	20.9	Middle Managers	52.9
46–50 years	4.4	Lower Managers	18.1
51–55 years	7.0	Entry Level	12.3
Over 56 years	0.6
Are you a leader?		Are you a talent?
Yes, I am	24.5	Yes, I am	21.4
No, I am not	75.5	No, I am not	20.8
		I do not know	39.6
		TM is not practiced	18.2

Bold indicates the majority (highest number) of respondents.

In particular, 24 per cent of respondents were belonged to Research and Development (R&D) department which was followed by 16.2 per cent of Sales. In a large part, respondents’ roles were general group members (80 percent) and only 20 per cent of respondents were leaders of the groups (including departments, teams or parts). Meanwhile, 21.4 and 20.8 per cent of participants interestingly responded, “they are formally identified as talent” and “they are not formally identified as talent” respectively. Industries represented in the sample included Industrial machine (18.1%), Consulting (18.1%), motor car (11.9%), Food and Beverage (9.4%), Banking (8.1%) and others. Firm size also differed, 29% and 22% of local firms were middle and large-sized, respectively. For foreign firms, around 37% were upper middle-sized, and around 22% were middle-sized firms.

Findings

Quantitative study

This research found that local and foreign firms understood TM concept from an exclusive perspective, however, in terms of necessity and existence of TM, there were clear differences. Interviewees described TM “In my opinion, [TM is] discriminative and treat brilliant people as enough as their performance” (M2), “Key-man of companies? What can the key-man contribute to [the company] or how can we keep them? …management! I think” (C1) which the understandings share with the existing TM literatures to view TM as “a categorization of talent” (Michaels, Handfield-Jones, and Axelrod 2001) and “internal talent pools and succession planning” (Boudreau and Ramstad 2005) in an exclusive way (Hartmann, Feisel, and Schober 2010).

Necessity and existence

However, whereas 16 among 17 Korean interviewees (“94%”) from foreign firms responded that “TM is necessary, need to have” (H1-F), among interviewed 22 Korean employees from local firms, merely 4 employees (“18%”) answered “clearly” that the company needs to adopt Western standard exclusive TM approach: “In OOOO [company name], no reason to bring US style management model, we have never experienced insufficiency of funds, [we do] not need particular talent” (M7, local senior manager), “If talent come to the company only because of high salary without loyalty, [we] wouldn’t go so far” (H11, local HR department).

This result from foreign firms shows that TM is a key organizational priority, but local firms did not view TM as being an organizational priority. Similarly, only 6 of 20 local firms “30%” answered “clearly” YES in regard to TM existence. Nonetheless, 70% of Korean firms’ interviewees answered vaguely their TM nonexistence: “currently we do not have TM, now we are just on the stage of setting up training” (S1, Executive), “we do not have a particular TM programme because we do not need it” (S4), whereas “100%” from foreign-owned subsidiaries responded that TM system exists including practices and a definition within their organizations.

Notably, the foreign firms in Korea shared similar TM programme names and contents regardless of their firm-size such as “In a year, we run Talent Review twice” (M15-NK), “3 years ago, the name of ‘potential review process’ has been changed to ‘talent and associate review’” (H6-F), “We have 9 boxes” (H8-F), “We do lots of things such as Succession Plan and 9 boxes … (S5-F).

These are exactly consonant with the literature, such as talent review and talent pool (Mäkelä, Björkman, and Ehrnrooth 2010), succession planning (Cappelli 2009), talent identification (Latukha and Selivanovskikh 2016), pivotal positions (Hartmann, Feisel, and Schober 2010). TM practices of foreign subsidiaries in Korea, regardless of their firm sizes, correspond largely to those currently seen as “typical” in large Western multinational corporations (Stahl et al. 2007).

However, in local firms, only large companies used TM jargons and run similar programmes with foreign firms.

Cultural influences

Whenever the research asked to local firms’ HR professionals regarding TM existence, participants hesitated to confirm whether they had TM system or not, their answers were very ambiguous through commonly answered with similar words, “implicit” (M6), “[most of them are] not written in documents” (S2), [we do TM but the process is] not accurate” (M3), “Officially [as a HR policy]… [We] haven’t ever put TM in a statutory form, however, we have something implicit…experiential…about talent, we have something like that” (M6). Whereas foreign firms had explicit talent processes.

This supports the notion of informal management, collectivistic and Confucian organizational culture in Korea. TM practice such as employee differentiation is likely to be problematic so it cannot be openly discussed because of the different beliefs and values in Korea as one of Asian Confucianism countries (Kim and Scullion 2011). Collective and informal systems make tasks faster and can control behaviors in ambiguous or unexpected situations (Gover, 2010). In order to practice TM, the companies did not specify a set of written rules rather TM process was practiced by subtle signals and unspoken rules (Ouchi 1980), thus interviewees could not confirm clearly that they had TM system because TM was enacted in informal Korean local culture (Yang and Horak 2019). This is coupled with “In local firms, frequently TM is practiced without systematic approach, the owner has been taken care of some employees secretly to be remained in the shade” (B2-F).

Korean organizational culture has also influenced the TM decision making process. Informal organization relies on the structure of employees’ personal relationships, social groupings, and communal affairs (Biancani, Mcfarland, and Dahlander 2014). Informal selection (Bae, Chen, and Rowley 2011) was carried out which determining individuals whether they are key talent or not (Mcdonnell et al. 2017) by a top (e.g., CEO or Owner) within local companies’ organizational structure. However, diverse actors were involved in each of TM decision making stages (Mäkelä, Björkman, and Ehrnrooth 2010) as the final decision concerning who is included in a talent pool was typically made in the talent review meetings (Mäkelä, Björkman, and Ehrnrooth 2010) for foreign firms in Korea. In the talent review process, the competencies that may be relevant for future performance, or in positions where the required skills that led to success in the current and past roles were assessed by top and HR managers at corporate or divisional headquarters (Mäkelä, Björkman, and Ehrnrooth 2010, Evans, Pucik, and Björkman 2010).

This is also aligned with the survey findings, regarding the question who has to be involved in the effective implementation of TM, the priority was slightly different between local and foreign firms. For local firms, the ranking was Executives, HR and Senior Managers, whereas for foreign subsidiaries, Senior Managers, Executives and HR. Local firms considered the involvement of “Executives” as the most important to implement TM effectively however foreign-owned firms suggested that “Senior managers” were more important. Korean TM appears to be based on seniority and Confucian hierarchy, it highlights the importance of organizational structure and hierarchy within local firms rather than foreign firms. Table 4 summarizes the main findings of the qualitative study.

Table 4. The main findings of the qualitative study.

	Local firms	Foreign firms (USA, German, Sweden)
Understanding of TM concept	Exclusive TM	Exclusive TM
Necessity of TM adoption	USA-origin TM is not necessary	TM is necessary and essential
TM practices	Large firm) TM practices (e.g., Talent Review) are clearly implemented	TM practices (e.g., Talent Review) are clearly implemented
	SMEs) exclusive TM practices are secretly run
The most important decision-maker in TM process	Executives (hierarchical, Confucian local culture impacts on TM process)	Senior Managers

Exclusive TM

Although the reasons why the companies adopted TM were same for local and foreign companies; achieving companies set objectives, maintaining key employees, and succession plan, the findings show local firms took more radical exclusive approaches than foreign firms in Korea. First, in regard to talent identification, 49.4 percent of respondents from local firms recognized their status as either talent or non-talent, however only around 33 per cent of respondents from foreign firms were aware of their identification talent and non-talent.

Second respondents were asked if their companies treated talent and non-talent differently, 46.2 percent of respondents from local firms agreed, but only 12.1 percent disagreed that talent was treated differently, whereas the ratio of agreed and disagreed respondents were similar in foreign firms (30 percent and 25.7 percent respectively). A similar tendency was shown in the implementation of Fast-Track schemes (refer to Table 5). The majority (55%) of participants from local firms answered they have Fast-Track programmes but most (63%) of foreign firms responded that Fast-Track was not initiated. It means that local firms took more radical exclusive TM way compare to foreign firms.

Table 5. Fast-track existence.

	Fast-Track		Total
	Yes, has	No, hasn’t
Local firms	47	38	85
	55%	45%	100%
Foreign firms	25	43	68
	37%	63%	100%

Quantitative study

TM evaluation

Respondents were asked to evaluate their companies’ TM practices. In total 5-items were formulated to measure implementing talent management practices. Latukha’s (2014) one-item was employed to rate TM effectiveness (“How effective are your organization’s talent management programmes?’). Other four-item scales were developed by this research’s prior qualitative study. Sample items are “My company follows Talent Management best practices from other leading Western companies” and “My company follows Talent Management best practices from other leading local companies”. In regard to evaluate talent management programmes’ effectiveness which currently operating, respondents were asked to assess the level of performing, items were rated on a five-Likert -point scale, ranging from 1 = “Strongly Disagree” to 5 = “Strongly Agree”. Its Cronbach’s alpha was 0.873.

Levene's Test for Equality of Variances and T-Test show that there was no difference between firm ownerships; local (mean = 2.70) and foreign (mean = 2.50) companies (refer to Table 6 and 7).

Table 6. TM evaluation-mean value.

	Ownership	N	Mean	Std. deviation
TM evaluation	Local firm	89	2.70	0.871
	Foreign firm	70	2.50	0.847

Table 7. Levene’s and T-test.

		Levene's Test for equality of variances		t-Test for equality of means
		F	Sig.	t	df	Sig. (2-tailed)
TM evaluation	Equal variances assumed	0.094	0.759	1.430	157	0.155
	Equal variances not assumed			1.435	150.119	0.153

p-Value of Levene's Test presents 0.759 (>0.05) thus assumed equal variances are correct which there is no difference between two groups, as well as the result of t-test shows similarly (p = 0.155 > 0.05). H1 (two groups are different in regard to TM evaluation) is not accepted.

This result explains that foreign firms fail to justify, adopting a full range of standard TM programmes by global HQs in Korea can be better to implement TM effectively than local firms which localized western TM and practice Korean style hybrid TM.

Discussion and conclusion

Concerning the dearth of TM research for non-Western countries, within Korea, HRM philosophies have shifted from a “community” to a “market-driven” model, aligned with reforms after the 1997 Asian Financial Crisis (Lee, Laplaca, and Rassekh 2008; Holliday 2000). Korea’s leading companies such as Samsung, LG, Hyundai and POSCO have played a central role in global markets (Kang and Shen 2014) and as such talent management has become a central concern. This study examines the important role of TM in local and foreign firms in Korea and examines the key differences in the perceptions and practices of TM between local and foreign firms operating within Korea.

This paper examined the differences between local and foreign firms to understand the nature of TM to be effective within a Korean context. It examined the differences in TM between local and foreign firms in Korea and contributes to an understanding of TM within a non-Western context. The findings show that the majority of foreign firms (94 per cent) view TM as a necessity, yet only 18 per cent of local firms viewed TM in this way. While all foreign owned subsidiaries confirmed that they were utilizing TM, only 20% of local firms “clearly” considered that TM existed in their companies.

This may be in part due to the fact that TM was adopted by Korean companies via external enforcement after the 1997 Asian Financial Crisis, a pressure that was not experienced by foreign firms. Bae and Rowley (2001) suggest that the IMF did not impact foreign firms in Korea and our findings are consistent with this: “at that time, our company 000 [company name] has no any redundancy at all, vice versa, the business got enlarged because many local firms went bankrupt in the target market, we used overseas funding from HQ as well as exchange rate for a foreign currency was getting lower. From 1996 to 2007, the size of our franchise chains became double expanded, No! not twice, three times increased because the number of local shops were less than 100, but 300 in 2007, not only enlarged number of shops but also the volume of profits” (HR executive, B2-F).

Currently two decades have been passed after 1997 Asian Financial Crisis and Korea paid back the IMF loan in 2001 which was earlier than expiration date. Foreign firms in Korea have still utilized continue to use the standard TM systems from their HQs, yet TM for Korean firms have evolved.

Importantly, as Levene's Test and T-Test results show, although foreign firms have run a full range of TM programmes such as Talent Review regardless of their firm sizes, the average score of TM programmes evaluation was lower than local firms’. Indeed, there was no difference when it comes to implement TM effectively between foreign and local firms. In other words, adopting western standard TM programmes in foreign firms could not demonstrate “TM is effectively utilized” than local firms which are not adopting a full set of western TM programmes but tailoring, operating strategically and maintaining TM in the informal and Confucian Korean organizational culture.

Contributions

First, since TM was being criticized for the dominance of US-based scholars (Beechler and Woodward 2009) with their US-centered thinking in the US-based organizations (Gallardo-Gallardo, Thunnissen, and Scullion 2015, p. 481), the empirical evidence from non-Western countries has been strongly urged by TM scholars (Vaiman and Collings 2015). TM research in Korea which had to adopt a market-driven Western concept an antithesis to the traditional Confucian culture has been under-explored so far. Thus this paper’s empirical findings with region-specific TM background enhance TM literature development.

Second, this paper aims to discover the differences in TM practices between Korean and foreign companies using institutional theory to understand of TM concept in Korea. Institutional theory assumes that foreign-owned subsidiaries are strongly influenced by local institutional factors (Björkman 2006). Accordingly, foreign firms strive to homogenize activities across national boundaries from a global strategy, and enforce their own view of the most efficient ways of handling HRM in other countries (Brewster, Wood, and Brookes 2008).

However this paper found that local firms are more influenced by the local culture (e.g., informal and Confucian organizational cultures) than foreign firms as well as local firms have capabilities to modify western format TM in their rational strategical decision as TM is a key source of competitive advantage (Mcdonnell et al. 2017) than foreign firms’ passive standard TM acceptance by HQs. Institutional theory explains and highlights the inevitability of isomorphism (Dimaggio and Powell 1983) however this paper demonstrates clear distinctions between organizations, differentiated via their nationality yet operating within the same institutional context. Firms experience and respond to the external exigencies in very different ways and tendencies for isomorphism cannot be assumed.

Third, in terms of the managerial implication of the study, this paper shows that the most important TM decision maker is different, such as executives for local firms whereas practical senior managers for foreign subsidiaries. Thus, HR departments need to highlight and encourage the main actors’ involvement in TM process such as talent identification.

Limitation and future research direction

This research has not been targeted in a specific industries or firm size because TM for Korea context has not been empirically researched and developed yet. However, for the future research for Korean TM, data collected from the specific industries (e.g., service or chemistry field) and size (e.g., large or small size) as well as testing the relationship between outcomes and TM would be meaningful to help to understand detailed effects, clarify correlations and causality with regional typical issues (Gallardo-Gallardo et al. 2015).

Disclosure statement

No potential conflict of interest was reported by the author(s).

Notes

1 South Korean family-controlled corporate groups/conglomerates