Organizational and comparative institutionalism in international HRM: Toward an integrative research agenda

• Author: Geoffrey Wood,Klaus Meyer,Andreas P. J. Schotter
• Date: 01 January 2021
• DOI: http://doi.org/10.1002/hrm.22053
• Published date: 01 January 2021

ORIGINAL ARTICLE

Organizational and comparative institutionalism in

international HRM: Toward an integrative research agenda

Andreas P. J. Schotter

1

| Klaus Meyer

1

| Geoffrey Wood

2

1

Ivey Business School, Western University,

London, Ontario, Canada

2

DAN Management, Western University,

London, Ontario, Canada

Correspondence

Geoffrey Wood, DAN Management, Western

University, London, Ontario, Canada.

Email: gwood23@uwo.ca

Abstract

Over the past two decades, a growing body of research on human resource

management (HRM) has analyzed the relationship between international HRM and

institutions. This work has primarily been informed by two leading streams of

theory—organizational institutionalism and comparative institutionalism. However,

these two dominant streams have seen much juxtaposition, but little logical integra-

tion. Moreover, scholars have paid little attention to the dynamics of contextualiza-

tion (more specifically, institutional development and evolution), which limits the

relevance of extant research. In this article, we review the extant literatures and their

intellectual origins and develop an integrative research agenda that emphasizes the

multilevel nature of HRM and evolution under external institutional change.

KEYWORDS

human resource management, institutional theory, institutions, international, multinational,

review

1|INTRODUCTION

Human resource management (HRM) research has a long history of

analyzing the effects of institutions on firm practice, both within the

industrial relations tradition (Bendix, 1963; Crouch, 1993; Lincoln &

Kalleberg, 1990) and in comparing HRM between settings (Jackson &

Schuler, 1995; Poole, 1990). Research on international aspects of

HRM refers to external institutions as drivers and constraints of prac-

tices and focuses on two questions: (a) How does (national) institutional

context influence HRM practices and policies? and (b) How do multina-

tional enterprises (MNEs) manage differences between the cross (national)

institutional contexts when they operate across national borders?

In this review, we explore how these fundamental questions of

international HRM have been analyzed through two dominant institu-

tional perspectives, organizational institutionalism, and comparative

institutionalism. The first perspective—broadly, sociological strands of

neo-institutionalism—takes an evolutionary organizational systems

perspective. Here, shared meanings, embeddedness, and initiatives

lead to internalization and subsequent within-firm institutionalization

of processes (DiMaggio & Powell, 2000). As these processes vary

across countries, they contribute to variations in HRM practices

across national contexts; for example, on relative propensity to adopt

“soft”or “hard”practices (Gooderham, Nordhaug, & Ringdal, 1999).

The second perspective—comparative institutional analysis—

emphasizes interdependence and complementarity among the

national institutional domains to which the organization belongs. This

research stream aims to identify and evaluate unique country-specific

conditions, differences, and effects (Hall & Soskice, 2001) and their

impact on organizational practices (e.g., in terms of the degree of par-

ticipation and involvement [Brewster, 1995]).

These two theoretical perspectives vary in their assumptions

about the rationales underlying human behavior, the embeddedness

of patterns of behavior, and the relative importance of social ties.

While HRM scholars frequently draw on concepts from both perspec-

tives, they often neglect differences in the underlying assumptions,

which can result in confusion as to the mechanisms through which

institutions affect HRM practices. Therefore, we suggest that more

clarity is needed in the “institutional”literature regarding underlying

assumptions so we can identify differences and synergies between

different lines of theory. We aim to contribute to such clarity through

a systematic literature review that focuses on the first 20 years of this

century.

DOI: 10.1002/hrm.22053

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We seek to infuse greater theoretical clarity into international

HRM research by distinguishing institutionally informed research in

two schools of thought, highlighting key conceptual differences, and

exploring the possibilities for theoretical synthesis. This typology

draws on earlier work in international management that outlines dis-

tinct traditions of theorizing on institutions—notably the work of

Hotho and Pedersen (2012), Meyer and Peng (2005, 2016), and

Kostova and her coauthors (Kostova et al., 2020; Kostova &

Marano, 2019). Further, we build on and extend the approaches of

earlier HRM reviews that highlight the persistence of distinct national

business systems and associated HRM practices, despite pressures

toward convergence (Cooke, Veen, & Wood, 2017; Cooke, Wood,

Wang, & Veen, 2019). These reviews highlight theoretical trends but

are largely thematic and practice driven. In contrast, our approach is

to categorize work primarily with a theory focus, highlighting the ten-

sions between authors seeking to ensure broad compatibility of their

arguments and very different theoretical starting points. This

approach enables us to identify theoretical dilemmas, their implica-

tions for practice, and potential ways forward.

In doing so, we provide, first, a critical review through capturing

the most recent work and detailing the bounded nature of national

differences. For both lines of theory, we review how they explain

three sets of phenomena: HRM at the level of the MNE, HRM in

MNE subsidiaries, and the transfer of HRM between units of the

MNE. Second, we explore trends and differences in the literature on

institutions and HRM to make the case for much-needed greater the-

oretical clarity. We note that, presently, differences in institutional

approaches are often fudged. We regard this as problematic since

these distinct bodies of theory coexist within well-defined boundaries,

each explaining different aspects of international HRM. However,

they also genuinely complement each other, providing a combined

explanatory power of greater magnitude than their component parts.

Our goal for this review is to serve as a meaningful theoretical

launching point for future HRM research. Beyond sharpening of theo-

retical assumptions and more systematic theoretical integration, we

suggest that institutional perspectives can help HRM scholars to

investigate multi-level and dynamic aspects of HRM. We identify sev-

eral specific suggestions both at level of organizations and their envi-

ronment, and at the level of individuals within organizations.

2|ORGANIZATIONAL AND

COMPARATIVE INSTITUTIONAL THEORY

Scholars draw on a variety of different traditions when discussing the

impact of institutions. In consequence, their definition of “institu-

tions”also varies according to the relative weight assigned to embed-

ded rules and associated practices at the firm, national, and

supranational levels, their relative susceptibility to change, and the

role of actors in reconstituting them (Edwards, Marginson, &

Ferner, 2013; Kostova & Marano, 2019; Wood & Allen, 2020). Most

extensively, scholars draw on two leading theoretical lenses—namely,

organizational institutionalism and comparative institutionalism.

Many empirical studies have treated these two distinct—but, at

times, related—institutional theory traditions as somewhat inter-

changeable (Wood, Phan, & Wright, 2018). There have been few

attempts to synthesize or draw out fundamental incompatibilities,

which suggests a need for a more systematic delineation, identifying

what is common ground and where there are key differences.

In other words, we need a more explicit typology of the institu-

tional domains applied in international HRM scholarship. Thus, as a

foundation for our review, we start with an introduction of organiza-

tional institutionalism and comparative institutionalism (see Table 1

for an overview).

2.1 |Organizational institutionalism

Organizational institutionalism is grounded in sociology and organiza-

tional theory. This literature views institutions as social structures that

determine not only what is legal, but what is legitimate and, thereby,

provide stability and meaning to social life (DiMaggio, 1991; Meyer &

Rowan, 1977; Selznick, 1957). Building on Scott (1995), these institu-

tions are commonly classified as regulative,cultural-cognitive, and nor-

mative. Individuals and firms respond to these institutions by pursuing

actions they believe to be legitimate, which implies that actors within

an organizational field are becoming isomorphic with each other. Thus,

within an organizational field, actors (especially new entrants) pursue

mimetic behaviors, as they expect these behaviors will enhance legiti-

macy. As a result of such isomorphic behaviors, the quest for legiti-

macy helps entrants ultimately attain institutional status. This process

is characterized by ideas becoming adopted, then diffused and

deployed in a wide range of different, and sometimes unintended,

ways (Greenwood & Meyer, 2008). Thereby, rational actors will bring

about similar processes of behavior within organizations in a particular

locale, although they may seek to change them to secure their own

competitive advantages (DiMaggio & Powell, 1983). While this line of

institutional theory suggests a convergence within given contexts,

cross-national variations in institutional structures result in manage-

ment practices that vary across national contexts (Edwards, Sánchez-

Mangas, Jalette, Lavelle, & Minbaeva, 2016; Gooderham et al., 1999).

An important stream of literature within organizational institution-

alism focuses on organizational imprinting (Johnson, 2007; Marquis &

Tilcsik, 2013) or “institutional logics”(Thornton & Ocasio, 1999) that

shape firms' actions even when the originalmotivators of these behav-

iors no longer apply. In turn, institutional logics represent historically

specific recurrent patterns of behavior, encompassing rules, interpreta-

tions, values, norms, and practices that underpin economic and social

life (Lewis, Cardy, & Huang, 2019). In some contexts, this can lead to

inertia in business practices. Thus, in international HRM, institutional

logics contributes to country-of-origin effects, as MNEs applypractices

abroad that they developed in their home country (Lam, 2003; Wu,

Lawler, & Yi, 2008). In other words, institutional logics mold the inter-

pretationsand choices of human resources (HR) departments, yet multi-

ple logics might create conflicting pressures (Gümüsay, Smets, &

Morris, 2020;Lewis et al., 2019).

206 SCHOTTER ET AL.