Why Multinational Corporations Seek To Transfer Their Home-Country HRM Essay

Why Multinational Corporations Seek To Transfer Their Home-Country HRM Policies to Their Overseas Subsidiaries - Essay Example This research will begin with the statement that the strategies of multinational organizations are quite complex having to address a wide range of issues related to different cultural and economic conditions. In this context, many firms chose to promote similar policies in regard to their various sectors aiming to reduce relevant risks. In the HRM area, such practices are quite common. In fact, it has been proved that a high percentage of organizations prefer to transfer their home-country human resource management policies to their overseas subsidiaries. At a first level, this practice can be possibly considered as justified allowing the easier establishment of the organization in the host country, at the level that no time is wasted on the preparation of locals for working in key positions of the organization’s branch in the host country. The reasons for which organizations transfer their home-country human resource management policies to their overseas subsidiaries are pres ented and evaluated in this paper. Emphasis is given on the difficulties of this project and on the possible ways for resolving the problems involved. The most common reason for the transfer of home-country human resource management policies to overseas subsidiaries is the need of organizations for promoting homogenous policies in all their sectors so that conflicts and failures are minimized. Such issue is highlighted in the study of Wilton where reference is made to the example of Japanese firms that had to establish branches and operational units abroad. Japanese firms tend to promote team working and task sharing; however, after entering the US market the Japanese firm had to align their HRM strategies with the US laws and ethics. In order to avoid conflicts with local laws and culture, the Japanese firms transformed their HRM policies promoting ‘task demarcation and functional specialization’. From a similar point of view, Sparrow notes that firms may choose to tra nsfer their home-country human resource management policies to their overseas subsidiaries in order to reduce costs related to training of new employees. Such perspective can be valuable only if the time during which the home country HRM policies are used in the overseas subsidiary is limited; if such practice is continued for a long period of time, then the cost involved would be much higher compared to the development of new HRM policies, aligned with the local culture.