Adoption of High‐Performance Work Systems by Local Subsidiaries of Developed Country and Turkish MNEs and Indigenous Firms in Turkey

• Date: 01 November 2016
• Author: Adrian Wilkinson,Ekrem Tatoglu,Mehmet Demirbag
• Published date: 01 November 2016
• DOI: http://doi.org/10.1002/hrm.21706

Human Resource Management, November–December 2016, Vol. 55, No. 6. Pp. 1001–1024

© 2015 Wiley Periodicals, Inc.

Published online in Wiley Online Library (wileyonlinelibrary.com).

DOI:10.1002/hrm.21706

Correspondence to: Mehmet Demirbag, University of Strathclyde, Department of Strategy and Organization,

Strathclyde Business School, Level 7, Livingstone Tower, 26 Richmond Street, Glasgow G1 1XH, United Kingdom,

Phone: +44 (0)141 553 6004, Fax: +44 (0)141 553 6162, E-mail: mehmet.demirbag@strath.ac.uk

ADOPTION OF HIGH-PERFORMANCE

WORK SYSTEMS BY LOCAL

SUBSIDIARIES OFDEVELOPED

COUNTRY ANDTURKISH MNEs

AND INDIGENOUS FIRMS

IN TURKEY

MEHMET DEMIRBAG, EKREM TATOGLU, AND ADRIAN

WILKINSON

High-performance work systems (HPWSs) are seen as important in helping

strengthen competitive strategies of developed-country multinational enter-

prises (DC MNEs). Commensurate with global competitive pressures and inter-

nationalization strategies, emerging-country MNEs (EC MNEs) and indigenous

fi rms are also increasingly adopting HPWSs. HPWSs are not only seen as simply

performance enhancing systems, but also as facilitators of internationalization.

MNEs represent an important test bed for the HPWSs and their applicability in

different national contexts. In this article, we contribute to the extant literature by

focusing on HPWS adoption level within domestic subsidiaries of DC MNEs and

EC MNEs along with stand-alone indigenous fi rms in a single-country setting by

keeping the host-country environment as constant. ©2015Wiley Periodicals, Inc.

Keywords: international HRM, high-performance work systems, multinational

enterprises, Turkey

The debate on convergence/divergence of

management practices between multi-

national enterprise (MNE) affiliates and

local firms is not new. Equally, the idea

that different human resource manage-

ment (HRM) practices are subject to different

dynamics of convergence or divergence has also

been around for several decades (Chen, Lawler,

& Bae, 2005; Fenton-O’Creevy, Gooderham,

& Nordhaug, 2008; Gooderham, Nordhaug, &

Ringdal, 1998; Pudelko & Harzing, 2007; Sahadev

& Demirbag, 2011; Tregaskis & Brewster, 2006).

What is new, however, is the unprecedented

growth in the number of emerging-country MNEs

(EC MNEs) and their desire to become global

players. They have increasingly established their

presence in developed countries and are set-

ting up alliances with developed-country MNEs

1002 HUMAN RESOURCE MANAGEMENT, NOVEMBER–DECEMBER 2016

Human Resource Management DOI: 10.1002/hrm

The evolution of

institutions and the

type of capitalism

operating within the

home countries of

these EC MNEs may

hinder or shape the

effective introduction

of HPWSs, based

within a liberal

market context.

likelihood of adoption of individual HRM prac-

tices as components of HPWS. While models

developed in this study do not establish causality

between dependent and independent variables,

we intend to contribute to the extant literature by

focusing on HPWS adoption level within domestic

subsidiaries of DC MNEs and EC MNEs along with

stand-alone indigenous firms in a single-country

setting, keeping the host-country environment

as constant for all three types of organizations.

Therefore, this study examines people manage-

ment aspects of domestic subsidiaries of EC MNEs

in comparison to both DC MNE subsidiaries and

indigenous firms in a key emerging country—

Turkey. A focus on the possible adoption level of

HPWSs by these three types of organizations is

also particularly important for (1) theory contri-

bution in terms of internationalization’s effect on

adoption level of HPWS by EC MNE subsidiaries,

(2) foreign investment firms seeking an entry to

an EC market, and (3) EC governments in devel-

oping training and education policies. Finally, the

findings of this study will also assist EC MNE man-

agers in understanding how best to adapt HPWSs

and benchmark their practices with DC MNEs.

Literature Review and Hypotheses

Development

While there have been a plethora of studies exam-

ining HRM practices in an effort to identify con-

vergence or divergence between MNE subsidiaries

and local firms, more recent research suggests that

sets of HRM practices are best treated as a system

(Chen etal., 2005; Guthrie etal., 2008; Wright &

Bosewell, 2002) often described as “high-perfor-

mance work systems” (Wright & Bosewell, 2002).

The HPWS term is often used interchangeably

with high-involvement work systems (Lawler,

1986) and high-commitment work systems (Legge,

2005). Zacharatos, Barling, and Iverson (2005)

contend that HPWSs encompass elements of both

high-involvement work systems (Bae & Lawler,

2000; Guthrie, 2001) and high- commitment work

systems (S. Wood & de Menezes, 1998). While

there remains continued debate on a single set of

HRM practices that comprise HPWS (Guest, 2011),

in general HPWSs consist of competence-based

performance appraisal, performance-based com-

pensation, internal communication, employee

empowerment, alignment of HRM strategies

with overall strategy, employee training, and

talent management programs (Marchington &

Wilkinson, 2012). It is argued that HPWSs influ-

ence employees’ abilities and motivation and are

considered as important factors in determining

workforce productivity, innovation, and firm per-

formance (Chen etal., 2005; Guthrie etal., 2008;

(DCMNEs). We believe that the questions related

to the convergence and divergence debate need

to be reformulated, as EC MNEs are increasingly

imitating (or, according to some commentators,

“copycatting” DC MNEs) to become regional or

global players (Chittoor, Sarkar, Ray, & Aulakh,

2009; Luo, Sun, & Wang, 2011). Indeed, people

management in acquired subsidiaries of EC MNEs

in developed markets emerges as a highly signifi-

cant part of the integration or autonomy dilemma

(Kale, Singh, & Raman, 2009). EC MNEs often try

to adopt best management practices such as high

performance work systems (HPWSs) originating

from more developed countries (K. R. Bartlett,

Lawler, Bae, Chen, & Wan, 2002; Chen etal., 2005;

Guthrie, Liu, Flood, & MacCurtain, 2008; Khavul,

Benson, & Datta, 2010; Madhok & Keyhani,

2012). However, the evolution of institutions and

the type of capitalism operating

within the home countries of these

EC MNEs may hinder or shape the

effective introduction of HPWSs,

based within a liberal market con-

text. It is argued that HPWSs may

be adapted into many different set-

tings, but such systems are more

likely to be sustained in contexts

where there are strong complemen-

tarities (G. Wood & Lane, 2012).

From a comparative perspec-

tive, there have been a number of

studies comparing HRM practices

of DC MNE subsidiaries and indig-

enous firms in their country of

operation, though the results are

mixed and difficult to interpret

(Guthrie et al., 2008; Tregaskis &

Brewster, 2006) (for a more detailed

account of comparisons between

DC MNE subsidiaries and local firms, see Mellahi,

Demirbag, Collings, Tatoglu, & Hughes 2013).

While HPWSs are specifically identified by advo-

cates of the divergence and convergence theses

(Pudelko & Harzing, 2007), neither specifically

take EC MNEs into account in their arguments.

Furthermore, there have been several studies com-

paring HRM practices of DC MNE subsidiaries

with those of local firms; however, there is a clear

paucity of research focusing on the convergence/

divergence debate within the context of EC MNEs’

subsidiaries.

In this study, we seek to go a step further and

examine HPWS adoption level among three dif-

ferent types of organizations, namely, DC MNE

subsidiaries, EC MNE subsidiaries, and indigenous

firms in Turkey. We specifically aim to examine

similarities and differences by identifying the