Are MNCs norm entrepreneurs or followers? The changing relationship between host country institutions and MNC HRM practices

Abstract

Rooted in the literature on comparative capitalism, we examine the effects of host country institutions on the intra-organizational practices of multinational corporations (MNCs), using transnational level survey data, exploring change over time. We found that the less comprehensive institutional mediation of the Liberal Market Economies correlated with greater diversity and a more pronounced difference between domestic firms and foreign MNCs. However, rather than being the predicted norm entrepreneurs, MNCs tended to follow the lead of local firms in adjusting HRM policies and practices towards liberalization. Those most prone to challenging existing orders were in industries facing particular crises of competitiveness. Finally, we found that single regulatory features rather than complex assemblies of institutions exerted particularly strong effects on the individual firms’ practices encompassed in this study.

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